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PwC Partners Will Be Getting Dirty Looks at the Country Club for the Foreseeable Future

four apples, one rotten. Shadows, light illuminating apples.

Ever since the news broke in early 2023 that a PwC Australia partner brought confidential government tax changes back to the firm for the purposes of monetizing it for corporate tax avoidance, the firm has been struggling to crawl out from under the garbage heap of a scandal. Which is whatever, every Big 4 firm has taken reputational damage on the chin and kept truckin’. But for Big 4 firms in Australia, the fatuous actions of their competitors at PwC have brought unwanted scrutiny and a stain on all of them that isn’t washing off any time soon.

Getting called out by senators in parliamentary ass-whoopings is one thing…

…losing business is quite another. With consulting practices around the world struggling to drum up business these days, the timing couldn’t be worse. According to an article in Financial Review authored by Beaton Research + Consulting Executive Chairman George Beaton, Big 4 firms in Australia are gonna be in struggle mode for a while.

Public trust in professional services has been trashed. The damage that the big four sustained is substantial.

A study conducted by Beaton Research + Consulting into the brand and reputation of firms in the sector makes this clear. For the past 20 years, we have asked thousands of clients directly for their ratings and opinions on hundreds of firms of all sizes.

This year, for the first time, the big four have fallen out of favour for the majority of government clients. More than half of government client respondents, 57 per cent, said they would not consider using a big four firm for their future needs.

This contrasts with 43 per cent last year, representing a significant 14 percentage point drop.

Most of those same government clients now say they are considering using the next-largest firms for their work. Known as the “next four”, these are BDO, Grant Thornton, Pitcher Partners and RSM.

Imagine losing business to Grant Thornton.

But wait! There’s more!

These results confirm news covered extensively in the press: that federal agencies cut spending with the big four consulting firms. The big four’s federal consultancy work reportedly fell from $36.8 million in the last quarter of 2022 to $21.8 million in the same period last year.

But the reaction is not limited to government clients. Trust in the big four is also waning among small-to-medium enterprise clients and large corporate clients.

Early last year, 54 per cent of smaller clients reported one of the big four as their primary adviser. This has halved in less than a year to just 26 per cent.

We should start seeing these hits to the bottom line reflected in Big 4 financials when they start releasing their numbers later in the year.

PwC Australia reported $3.4 billion ($2.2 billion USD) of total revenue for FY23 and underlying revenue growth of eleven percent but added in its September 2023 revenue announcement that “profit remained flat year-on-year against the backdrop of the challenges faced by the business in the last quarter due to the sharing of confidential Treasury information and past failures in professional, ethical or leadership responsibilities.” Revenue season promises to be interesting this year.

One thought on “PwC Partners Will Be Getting Dirty Looks at the Country Club for the Foreseeable Future

  1. Perhaps more scrutiny should also be placed on those who still decide to move forward with pwc/big 4lorn. Bottle of Evergrande at the club happy hour anyone?

    For more giggles & much intelligent insight do see Professor Andy Schmulow on LinkedIn.

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