PwC scandal-inspired cut to audit work will cost it $10m

afr.com:

The nation’s largest corporate auditor, PwC Australia, will give up $10 million in annual fees by cutting the types of consulting services it provides audit clients.

The move is aimed at reducing the risk of conflict and is part of the firm’s effort to win back public trust after its tax leaks scandal. Auditing generates almost one-quarter of PwC’s revenue and is critical to management’s plan to rebuild the embattled firm’s standing in the Australian market.

Sue Horlin, PwC Australia’s new assurance leader. Daniel Munoz

PwC will no longer provide “‘pure” consulting services such as IT advisory and data migration to its listed audit clients from July 2024, said Sue Horlin, PwC Australia’s new head of assurance.

“[This] commitment is about acknowledging that stakeholders expect more action than ever before when it comes to real or perceived conflicts,” she said.

PwC global made a similar policy announcement in September, which PwC operations around the world are expected to take up. The firm’s big four rivals – Deloitte, EY and KPMG – have yet to take up the voluntary measure since last month’s announcement.

Firms are allowed to provide certain types of non-auditing services, under certain conditions, to auditing clients under the sector’s complicated rules, This is despite global concerns that providing non-audit work to auditing clients might compromise auditor independence and related worries about declining audit quality.

PwC says the consulting services it will no longer carry out for audit clients generate about $10 million in client fees, or 1.3 per cent of the firm’s $743 million in audit client fees for FY23. Non-audit services for audit clients made up about $124 million, or 17 per cent of its FY23 audit client