PwC Australia lays off over 300 employees after leading bank breaks off 55-year audit relationship

• PwC Australia to terminate over 300 jobs as Westpac Bank cuts audit ties after 55 years.
• The Big 4 firm faced significant public backlash in February 2023, due to a tax scandal.

PwC Australia lays off employees

On November 8th, PwC Australia announced the sacking of 338 positions, which make up for more than 4% of its 7,600-member workforce.

The job reductions primarily affect PwC’s Adelaide office, where 141 employees, predominantly in the trust and consulting teams at a service center, have been terminated.

Additionally, 197 staff members across the Australian offices have been let go.

Approximately 1,400 out of PwC Australia’s 9,000-plus staff have also transitioned to its government consulting practice, Scyne Advisory.

The Big 4 firm attributed the following factors to its job cuts decision,

• Sluggish economic growth
• Tax scandal
• Diminished business size following the spin-off of its government consulting practice, Scyne Advisory.

PwC Australia tax scandal

PwC Australia faced significant public backlash in February 2023, due to the tax scandal.

It was revealed that a senior partner, serving as a government adviser, shared information about upcoming tax law changes with colleagues, to secure business from US technology companies.

This revelation led to the suspension of contracts between PwC and numerous clients in both the public and private sectors.

The tax scandal, which came to light in January 2023, has had significant repercussions, leading to the departure of PwC Australia’s chief executive and several senior partners. Many public and private-sector clients have suspended their ties with PwC, impacting major names such as Google, Uber Technologies, and Meta Platforms, according to Reuters.

Westpac severs ties with its Auditor PwC

The biggest blow came when Westpac, one of Australia’s major banks, terminated its 55 years of association with PwC.

Since 2002, PwC has been the auditor for Westpac. Before that, PwC partners and their predecessor firms had been auditing the bank since 1968.

By Australian regulations, auditors are required to spend no more than five consecutive years out of seven with a company. However, auditing firms can extend their tenure by rotating the staff involved.

It’s noteworthy that PwC’s lead Westpac audit partner assumed the role less than two years ago, in December 2021, as indicated in a recent Westpac corporate governance statement.

Westpac told the media that they opened the auditing contract for bidding. Notably, PwC won’t be part of the bidding process for new auditing services.

As per a report by Reuters, Westpac paid PwC about A$34 million ($22 million) in audit and audit-related fees in the 2023 financial year, roughly 1% of the local consultancy’s A$3.4 billion in revenue that year.

Closing…

PwC UK has also disclosed plans to reduce its workforce by 600 positions, constituting approximately 2.4% of its 25,000 employees.

The majority of the cuts will affect personnel in its advisory division, with an additional impact on individuals in the tax department, according to the report by Financial Times.

This development follows PwC’s earlier announcement that over 1,000 of its UK partners would be receiving £906,000 (A$1,730,000) each, indicating a slight decrease from the previous year’s record payouts. The previous year, partners received a £920,000 basic salary supplemented by a £100,000 bonus.

Meanwhile, in PwC Australia, the average partner experienced a 12% remuneration decline in the previous financial year.

Partners at PwC Australia are anticipated to face a pay cut of up to 30% in the current financial year.