PwC’s tax leaks disclosure to US regulator brings global risk

afr.com:

PwC Australia has belatedly reported the details of an official investigation into its tax leaks scandal to a powerful US audit watchdog, a move that dramatically widens the risk to the firm’s global operations.

The Australian firm also missed its statutory 30-day deadline to self-declare “reportable events” to the US Public Company Accounting Oversight Board (PCAOB) by more than a year, increasing the risk the board takes enforcement action.

Macquarie Business School emeritus professor James Guthrie said PwC had to report the leaks matter because it affected the global partners of PwC and especially partners in the US. “This a big deal because it’ll have an effect upon the reputation of PwC in the US.”

PwC Australia was tardy in disclosing the tax leaks matter to the US PCAOB. Eamon Gallagher

The big four firm has been under fire locally since May, when The Australian Financial Review reported on a cache of emails that showed multiple PwC partners received correspondence relating to a plan to exploit confidential government tax information.

The PCAOB, created in 2002 by the US Congress because of the failure of self-regulation by auditors, polices accounting firms and can issue sanctions for bad behaviour including million-dollar monetary penalties and limits on a firm’s ability to continue auditing public companies. The board also has extensive coercive powers to demand documents and information from firms.

A PwC spokesman said the firm had made the required disclosure to local and US regulators about the tax leaks matter.

“PwC Australia has made disclosures to regulators on these matters. Since the deep root cause analysis on this matter began in early May, we have taken the necessary steps to keep regulators