On Wednesday, Pricewaterhouse Coopers (PwC) Australia made an announcement regarding significant job reductions, attributing them to a decelerating economy and the repercussions of a nationwide scandal involving leaked tax documents. These cutbacks come as a major audit client decided to sever its relationship with the firm.
This audit and consulting giant faced significant scrutiny this year following the disclosure that a former partner had exposed government tax proposals and leveraged them to secure contracts with international companies seeking to reorganise their tax operations in Australia.
According to report by Reuters, a spokesperson stated that PwC Australia will lay off 338 employees due to the economic slowdown and the firm's reduced size following the separation of its government consulting division during the peak of the scandal.
After being rebranded as Scyne Advisory, the new advisory firm has absorbed around 1,400 of PwC Australia's staff, out of their total workforce of over 9,000. The job cuts amount to approximately 4% of the remaining 7,600 employees at the firm, and among those affected were several individuals whose offers to transition to Scyne Advisory were withdrawn.
A parallel series of job reductions is also occurring at the British firm, with approximately 600 positions slated to be eliminated. The tax plan controversy, which was exposed in January, has resulted in the departure of PwC Australia's CEO and several senior partners.
Additionally, it led to a freeze in relationships with clients from both the public and private sectors, embroiling prominent customers such as Google (under Alphabet), Uber, and Meta Platforms (the parent company of Facebook).
Westpac Group, Australia's fourth-largest bank by market capitalisation, severed its 55-year audit relationship with PwC just hours before the announcement. Westpac's decision to terminate the relationship, which dated back to 1968, was conveyed in a concise two-paragraph statement.
The bank did not reference the tax leak issue or provide a specific reason for the termination but mentioned its intention to seek a new external auditor as part of "best practice for audit firm rotation."
PwC has been Westpac's auditor since 2002, and prior to that, PwC partners and their predecessor firms audited the bank since 1968. Australian regulations stipulate that auditors can spend a maximum of five consecutive years out of seven with a company, with the option to extend their tenure by rotating staff involved.
However, PwC's lead audit partner for Westpac assumed the role less than two years ago, in December 2021, according to a Westpac governance statement issued earlier this month.
A spokesperson from PwC Australia expressed understanding of the board's decision and pride in the firm's history as Westpac's auditor. In the 2023 financial year, Westpac paid PwC around A$34 million ($22 million) for audit and audit-related fees, accounting for approximately 1% of the consultancy's A$3.4 billion in revenue that year.