TAX AVOIDANCE: PwC Australia flags revenue hole, partner profit cut due to tax scandal legacy
As published on: reuters.com, Monday 4 September, 2023.
PwC Australia on Friday said the spin-off of its government consulting business and other costs from a tax scandal will leave a double-digit revenue hole and require partners take an income haircut.
The "big four" accounting firm reported revenue of A$3.4 billion ($2.21 billion) for the year ended June, up 11% on the previous year. However, the divestment of its government consulting business, which was responsible for roughly 20% of revenue, is likely to see revenue drop this fiscal year.
PwC Australia agreed in June tosell its lucrative government practiceto private equity firm Allegro Funds for A$1 as public sector departments froze ties with the tainted brand and cabinet ministers lined up to condemn its use of confidential tax documents to solicit business.
More than 1,500 of the firm's around 9,000 staff will move to the business, renamed Scyne Advisory, when the deal completes at month-end.
To help offset the revenue hole and avoid job losses or wage cuts, partners who share in PwC Australia profit will take a 30% income hit this financial year.
"We completely accept that past leadership failed to meet the standards our people, our clients, the community and the Australian government rightly expect, and for that I apologise," new CEO Kevin Burrowes said in a statement.
"We didn't get it right, but our focus has, and always will be, on our clients, as we take the necessary steps to re-earn trust with our stakeholders."
The firm has been dogged since January by a national scandal over revelations a former partner leaked confidential tax documents which were then used to drum up work around the world.
An independent review into the firm's governance, accountability and culture will be released later this month followed by the firm's response to its recommendations.
Terms of reference made public in July revealed the review excluded historic actions.
Investigations by external law firms into the leaks have also been commissioned, media reported, however the firm has not committed to making them public. PwC Australia on Friday did not respond to questions about those reviews or whether they would be made public.
PwC Australia will also release its annual transparency report later this year.