PwC warns that reforms will cost it audit clients
PricewaterhouseCoopers chairman Ian Powell has warned that the accountant will lose audit clients following a sea-change in the way the market operates, despite announcing that 874 partners have pocketed an average of £705,000 each in 2013.
PwC’s coffers have been boosted of late by a number of high-profile audit wins, such as HSBC and Cairn Energy, as big listed groups look to put that work out to competition on a more regular basis. FTSE 350 companies have been accused of having too cosy a relationship with the Big Four bean-counters, which has led many to review their auditors ahead of Competition Commission reforms that will mandate them to do so every five years.
Despite the successes, Mr Powell pointed out that PwC is the country’s biggest auditor of FTSE 100 blue-chip companies, so it would be “naïve” to think that it wasn’t “likely to lose some” big-name clients. KPMG, Deloitte and EY are second, third and fourth in a small gaggle of auditors that have a stranglehold of the market, which has angered smaller rivals and prompted the regulator’s intervention.
But Mr Powell was buoyed by PwC’s results, which saw revenue grow 3 per cent to nearly £2.7bn in the year to June, with opportunities for further success being eyed up in the Middle East and Central and Eastern Europe. The partners’ share of the profits was up 4 per cent on 2012, while Mr Powell pocketed £3.6m, a rise of £300,000.
At group level, profit was up from £727m to £740m, but Mr Powell stressed that competition for work “remains tough”. The Big Four accountants have been keen to emphasise that they fight ferociously to win work from each other, meaning that there is sufficient competition to keep their fees down.
Mr Powell argued that the result has been that PwC has had to provide-better quality service for the fees that it charges. He told The Independent: “These companies are sophisticated buyers of audit. They understand the firms that have invested enough to do these audits. If you look at pricing pressure, it is intense.”
However, he suggested that the regulator’s reforms could backfire, with a mandatory tender of every five years proving so costly that auditors would become more selective over which work they tried to win.
“This is an inappropriate measure,” he argued. “This puts an additional burden on business and on us at a time when we’re trying to invest.”
The Competition Commission inquiry, led by Laura Carstensen, said that the introduction of mandatory tendering would cost the City about £30m a year. However, the former Slaughter and May lawyer has been accused of underestimating the financial impact, with some estimates putting the figure as high as £140m.
The European Union is also looking to hit the Big Four with its own sweeping reforms, but is losing a race to hit a deadline to agree the proposals by next year. If that timetable is missed, the EU will have to go through the whole process of developing its ideas again.
- 1 Bruce Jenner's 'Interview of the year': Suicidal thoughts, rejection by family members and new wardrobe
- 2 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 3 How to turn off/stop 'seen by' on Facebook: Disable it to make your chats seem less passive aggressive
- 4 'We're not heroes, just tourists': Swedish police officers on holiday stop vicious assault on New York subway
- 5 Buckingham Palace guard who attacked passers-by in 'most most violent piece of CCTV footage' police officer had seen walks free
Bruce Jenner's 'Interview of the year': Suicidal thoughts, rejection by family members and new wardrobe
Top 20 misconceptions people believe are true
Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
'We're not heroes, just tourists': Swedish police officers on holiday stop vicious assault on New York subway
Nepal earthquake: More than 1,100 killed across four countries and in Mount Everest avalanche
The sickening truth about food banks that the Tories don't want you to know
Katie Hopkins on LBC: Listen to caller taking The Sun columnist to task over migrant comments
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...
£22000 - £24000 per annum: Recruitment Genius: This is an opportunity to join ...