The best way to bring companies to book

PwC's Ian Powell believes attempts to break the grip of the 'big four' will only weaken audit quality.

Ian Powell smiles when clients can't place his accent. "It's a bit mixed up," the 55-year-old concedes, with a slightly nasal Midlands twang here, a deeper Northern inflection there. "I worked in Birmingham from '77-'91, Manchester '91-'99, and my family is in Cheshire."

Today, the PricewaterhouseCoopers UK chairman sits with his back to the window of a riverside office in Embankment. The view shows that Mr Powell, a boy from the Black Country when he joined PwC's Brum office nearly 35 years ago, has done good: behind Mr Powell's left shoulder the London Eye revolves slowly, and, to his right, the Shard tower's record-breaking height is only emphasised by the dark clouds that envelop its upper floors.

Mr Powell has been UK chairman at big four accountant PwC for the past four years and is seeking re-election for a second term. At the time of writing, no rivals have emerged from the 873 partners who can challenge him and they have only until the end of the month to declare their candidacies.

This might well suggest that Mr Powell, a restructuring expert perhaps best known as the man who shut down MG Rover when he was the car manufacturer's administrator seven years ago, has so impressed colleagues that none dare risk the embarrassment of losing to him in a landslide.

After all, revenue has been up in each of the past four years and Mr Powell claims that 2011/12 fees will show "high single-digit" growth on the previous 12 months.

Just as likely, though, few would want to take on the problems PwC or any major accountant faces. These range from admitted and alleged failures in audits PwC undertook for JPMorgan and Barclays Capital to European and domestic investigations into the ways the "big four" – the others being KPMG, Deloitte and Ernst & Young – operate.

This month, the JPMorgan saga has weighed particularly heavily on Mr Powell's shoulders.

The Accountancy and Actuarial Discipline Board might sound like a suitably unexciting name for the industry's ruling body, but it wields enough power to have fined PwC a record £1.4m for potentially putting billions of dollars of JPMorgan's client money in danger. PwC failed to notice the cash had not been properly ringfenced, considered a huge risk in the post-Lehman Brothers world, and had already paid JPMorgan $12.5m (£8m) for its error two years ago.

Hefty though the fine may be historically, for some it does not suitably reflect the mistakes made. Tom Martin, the AADB's executive counsel, posed the question: "For a firm with £2.4bn, is this [fine] proportional?" That question might have been rhetorical, but Mr Powell chooses to answer it anyway: "There was no loss to anyone. When you get something wrong, you should stand up and admit it. Something that mitigated the fine was our reaction."

Mr Powell says that PwC, however, is "fighting robustly" an investigation by the AADB into possible misconduct amid allegations it also did not notice BarCap had failed to ringfence client funds between 2001 and 2009.

Although the Lehman collapse has been good for business – PwC has earned well over £400m in fees as administrator of the collapsed bank's London-based business – the cases demonstrate how auditors have become one of the main scapegoats for the crisis.

Michel Barnier, the European commissioner for the internal market, is particularly hell-bent on breaking up the dominance of the big four, believing their audit operations should be split from money-spinning corporate advisory work, such as M&A and restructuring.

Mr Powell admits internal work "analysing the implications" of how a separated PwC might look has started, but the West Bromwich Albion fan believes that Mr Barnier's ideas are impractical and doomed to failure.

"People join PwC because they want business expertise," says Mr Powell, who swapped from audit to restructuring mid-career. "They can work [in advisory] and return to audit as far better, more-rounded auditors. That attracts the very best talent. It's difficult to attract and retain the best auditors if firms can't offer that experience."

Besides, the Chinese walls at PwC are quite literal, at least for the most senior London-based staff. The firm separates many teams between its shiny new building south of the river in London Bridge and the Embankment offices north of the Thames.

The latter is undergoing a £100m renovation, so it can start to meet the standards of its Lord Foster-designed counterpart, which is so trendily low-carbon that it is powered on re-heated chip fat.

Mr Barnier also believes the only way to ensure mid-sized firms can crack the hegemony of the big four is for companies to have an auditor for a maximum of six years. They could not be reappointed for at least another four years.

Mr Powell argues this would only weaken audit quality. Accountants spend millions ensuring their systems meet the demands of multinational companies, meaning they need "some sort of certainty" through length of appointment to make that investment worthwhile.

Of more immediate concern is the Office of Fair Trading's decision to refer the audit market to the Competition Commission in October. The OFT found that 99 per cent of FTSE 100 audits in 2010 were conducted by the big four.

"Look at PwC's share in the FTSE 100, it doesn't seem to change," starts Mr Powell, seeming to undermine his argument from the outset. "That misses the point. The FTSE 100 changes [its membership] all the time. So just to maintain market share is ferociously competitive."

Most importantly, Mr Powell believes PwC's clients are content with the structure of the auditing market. He should know, given that he meets the chief executive, chairman or financial director of two customers every day for an hour at a time.

These are usually international companies, so Mr Powell has an insight into how big foreign investors are starting to look at the UK as a place to do business. "They're concerned about the criticisms from our politicians, especially when they use phrases like 'crony capitalism'. The UK needs to be attractive to business, but significant companies are not looking to invest here because of unpredictable regulation."

Virtually every word in that tub-thumping message sounds like it was spoken in a different part of the country, but the sentences are carefully considered and slowly emphasised. Mr Powell speaks like a man well down the campaign trail, an aura that he is the right person to lead in troubled times.

Focus on: Ian Powell

Age: 55


Family: Married with four children


Employment history: Joined PwC as a graduate trainee in 1977. Made partner in 1991, elected UK chairman in 2008


Family home: in Cheshire, where he spends weekends. Lives in London


Football club: West Brom


Favourite film: Three days of the Condor


Most recent theatre visit: War Horse

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific