PwC, Deloitte parliament responses reveal conflict, misuse of information issues

PwC Australia and its rival Deloitte Australia have both revealed issues involving conflicts of interest and misuse of government information over the past five years.

PwC Australia has revealed its tally of misconduct in a response to parliament, including noting a second misuse of information breach. Picture: NCA NewsWire / Damian Shaw

PwC Australia and its rival Deloitte Australia have both revealed details of incidents involving conflicts of interest and misuse of government information over the past five years, including the already high profile case haunting PwC’s tax practice.

In its response to questions on notice from the Australian parliament, PwC said it had taken action over two “matters involving conflicts of interest and/or the misuse of government information” in the past five years, including the firm’s use of confidential tax briefings.

PwC has revealed another matter involving conflict of interest and misuse of government information occurred in 2018 but said it was “no second misuse of information breach”.

“PwC, like other firms, was asked about disciplinary actions and PwC confirmed it had taken discipline against a partner over an internal process oversight where the partner did not obtain approval for an exclusivity undertaking in an engagement,” a PwC spokesman said.

The disciplinary matter is understood to have involved a PwC partner failing to obtain approval for an exclusivity undertaking in an engagement while working on a project.

The PwC partner failed to obtain approval from the firm’s central conflicts team after agreeing to the exclusivity obligation, causing them to be hit with a financial penalty from the firm.

The revelation from PwC comes as the firm’s rivals also revealed issues of misuse of confidential information.

Deloitte, in its responses to the parliament, said it had disciplined a staff member in the last year for misuse of government information.

However, Deloitte declined to reveal the nature of the breach due to confidentiality issues with its client. Deloitte said it had substantiated 10 incidents of misuse of confidential or proprietary information in the last financial year.

Boston Consulting Group said it was not aware of any breaches of conflict of interest or misuse of government information, while KPMG and EY did not detail any breaches.

PwC has faced weeks of criticism over the firm’s use of confidential tax information gained from briefings with Treasury.

PwC said it has exited or will remove eight partners from the firm over the tax breaches, in addition another four partners who were “found to have shared confidential information” are no longer with the firm.

PwC’s former chief executive, Tom Seymour, is among the partners removed from the firm over the tax scandal.

Mr Seymour initially resigned from the CEO role but remained a partner pending his retirement in September.

But PwC has since removed Mr Seymour.

In its response, PwC revealed Mr Seymour was the firm’s highest earning partner, taking home $4.62m last year.

PwC said it had sacked 10 partners for misconduct matters in the 2023 financial year, the same as the 10 removed in 2022.

In the 2021 financial year, eight partners were removed from the firm, this was down on the 15 removed in 2020.

PwC said it had recorded 12 complaints of bullying in the 2023 financial year, as well as 19 complaints of sexual harassment. This was up on the six bullying complaints recorded in 2022 and eight sexual harassment matters.

However, PwC said its response was based on data recorded in the firm’s case management systems, noting “matters also may be raised informally and not captured in our systems”.

PwC said it had conducted a number of business specific culture reviews of the firm over recent years, this included a two-year survey of culture in the firm’s assurance operation.

The Deals, Tax, PwC Private, and Legal teams also faced a two-year review running to 2022.

The Tax practice was subject to an external review by Bruce Quigley “into the design effectiveness of our tax governance and internal control framework” which was kicked off in 2021.

This was prior to the Tax Practitioners Board revealing it had taken action against PwC’s former head of international tax Peter Collins for sharing confidential government tax briefings with fellow staff.

“We have since commissioned an updated review by Bruce Quigley of the design effectiveness of our tax governance and internal control framework which will commence in August 2023”.

PwC has also commissioned corporate veteran Ziggy Switkowski to review the firm, after the extent of breaches of confidentiality were revealed by the parliament.

Mr Switkowski’s report into the firm is due in September.