PwC profit plunges post-tax scandal amid consulting downturn
Big Four firm PwC has copped a 25.9 per cent revenue plunge in the wake of the reputation-shattering tax leaks scandal and a decline in demand for consulting services.
PwC Australia’s revenue across the business dropped to $2.35 billion for the year ended June 30, 2024 from $3.17 billion the year prior, pulling down total profit with it by 24.4 per cent.
Consulting revenue fell by 55.6 per cent to $400 million as PwC sold its government business for $1 to Allegro Funds in November 2023, with the division rebranded as Scyne Advisory.
About 1400 employees and partners were shifted to the new business.
PwC was effectively suspended from Government work following revelations the firm had shared confidential information on new tax laws that was then used by some partners to help companies avoid paying tax.
Efforts to try and re-establish confidence in the business both internally and externally have been underway under new chief executive Kevin Burrowes who said this year’s numbers reflected a “difficult year for PwC Australia”.
“While it will be marked as a period where we had to confront deeply troubling past failings, it is also the year we began our comprehensive reinvention journey and commitment to change,” he said.
“During the year, we introduced a new business strategy and structure, a new leadership team, a new board, new risk systems and new accountability measures. This is ambitious and meaningful change. I am proud of what we are doing, and our people for leading it”
Mr Burrowes was parachuted in from Singapore to rehabilitate the Australian practice after the scandal.
Average partner income continued to fall, this year by 12.7 per cent after a 12.5 per cent drop the year prior. Partner pay ranged from $332,117 to $3.378 million.
There were 22 new partners admitted during the year.
Employee turnover was 32 per cent, excluding those who were reassigned to Scyne, with about 350 made redundant from the business in March and 338 the November before.
There are now about 655 partners across its Australian operations and 6,726 employees.
Incoming chair John M. Green — who has also been appointed as the first independent chair of PwC’s new governance board — said confronting the firm’s past failings had cast “a long shadow for our people”.
He assured the firm had “a revitalised culture at its core”.
There were 38 serious misconduct matters tabled with the firm’s ethics panel during the year, down from 43 in the previous year.
PwC said on Tuesday that it had made “significant progress” in its pledge to reform the organisation’s governance, with 36 of 47 actions addressed.
The firm was eviscerated by a Senate inquiry, which lashed its leadership and culture.
Fellow Big Four consulting firms EY and Deloitte have also been forced to cut staff amid a broader consulting downturn.
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