PwC braces for Switkowski report, brings in a raft of changes

PwC Australia will bring in a raft of changes to improve its governance and culture following a review commissioned by the group by veteran company director Ziggy Switkowski that is expected to be published on Wednesday.

The firm is expected to announce that it will align with the corporate governance standards of ASX-listed companies, which includes appointing independent directors and producing financial statements that have been independently audited and improving systems within the firm that were deemed immature, including how it manages risk.

Ziggy Switkowski has led the review into PwC.Credit: Paul Jones

PwC commissioned Switkowski in May to review of the firm’s governance, accountability and culture following the issues identified by the Tax Practitioners Board investigation into the use of confidential information by senior staff and their colleagues at the firm. The report was handed to PwC earlier this month.

PwC was left reeling after it was revealed this year that the Tax Practitioners Board had found PwC’s former head of international tax, Peter Collins, had shared confidential government briefings on multinational tax reform with PwC staff and clients to help them allegedly sidestep new laws.

A few months later, the Senate’s corporations and financial services committee released more than 140 pages of emails between PwC partners and staff that indicated more than 60 staff had been involved or aware of the tax leak.

The committee, led by Labor Senator Deborah O’Neill, also released a report revealing the alleged scale of the firm’s profiteering from the leaking of the information, highlighting what it believed were cultural problems at the firm, describing its conduct as “profoundly unethical”. The Australian Federal Police are investigating PwC’s conduct and several senior partners have left the group in the wake of the scandal.

PwC has already begun work on improving its business after the future of the group’s Australian arm came under threat as a result of failings at the firm.

These improvements include appointing a new CEO, a changeover in senior management, changes to partner remuneration and divesting its government business. The group has also begun looking for new non-executive directors and a non-executive chairman to help guide the firm.

Speculation has been growing in recent months about what the full list of recommendations in Switkowski’s report will include. After the review is announced PwC is also expected to change structures around the appointment of senior roles within the firm.

This follows concerns that the firm had given the chief executive role too much power to make appointments without opening an application process, and concerns about the board’s oversight of how it managed contracts.

PwC has also separately asked two law firms – King & Wood Mallesons, and Allens – to investigate the tax leaks matter. It is unclear whether those reports will be released. The consulting firm is also battling a series of legal complaints from partners it has previously named as being involved in the leaks.

PwC Australia chief executive Kevin Burrowes, who was appointed in June as part of PwC’s reformation program, said the release of the Switkowski independent review was an important day for the firm.

“It marks a moment from which we, and others, can measure progress against our commitments to enhance the firm’s governance, accountability and culture,” Burrowes said.

“From the top down we are committed to rebuilding and re-earning the trust of our stakeholders. We are committed to learning, changing and leading. This is our promise to our people, our partners, our clients and our communities.”

The report is expected to be released on Wednesday afternoon.

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