PricewaterhouseCoopers said on Wednesday that it had agreed to buy the consulting firm Booz & Company, bolstering its advisory business.
Financial terms of the transaction were not disclosed, though Booz & Company is expected to be PricewaterhouseCoopers’s biggest acquisition in several years.
Still, the union of the two firms is likely to bring scrutiny from regulatory agencies around the world as it again raises the issue of an accounting firm’s buildup of consulting businesses that could pose conflicts of interest.
Of course, while "regulatory agencies" are working out their scrutiny, Francine is already on top of it:
"Booz partners expected to drop consulting assignments that conflict with existing auditing clients." Which regulator will review? #pwc
It's cool, guys, they're on it. No need to involve the regulators, trust us.
PricewaterhouseCoopers and Booz & Company have taken steps to quell any concerns, according to people briefed on the matter. The two companies are expected to review client matters, with Booz partners expected to drop consulting assignments that conflict with existing auditing clients.
Booz & Company partners are expected to vote on the deal in December, with an update on the merger to come by the end of the year. The people briefed on the matter added that they expected PricewaterhouseCoopers to retain the vast majority of Booz’s partners.
There are rumors that pwc is planning on doing something similar [to Deloitte]. In one of the meetings with an audit team, Tim Ryan [one of your Thanksgiving Day hosts] mentioned that there would be bonuses and salary adjustments sometime in December.
What in the name of superficial corporate gratitude is going on here? First, iPhones and holiday ho-downs but now rumors of MID-YEAR RAISES? Is the new logo making that big of a difference already?
~ Update below with link to audio of the proceedings
Last month we caught you up on Campbell v. PricewaterhouseCoopers, the wage and hour lawsuit filed by employees of the firm, claiming to be non-exempt and thus available for overtime. Oral arguments were heard today at the 9th Circuit Court of Appeals in San Francisco and it marks the most recent step in a case that could have wide repercussions in California. Francine McKenna has a good rundown over at Forbes, including sta��������������������rshaw, the plaintiffs’ attorney. PwC and their lead counsel, Dan Thomasch of Orrick, have declined to comment at this time.
In today’s proceedings, both sides were allowed to make their arguments and answered questions from a three-judge panel. We’ve obtained the briefs for both sides and we’ll give you a taste of each. First, from the plaintiffs:
PwC argues that Attest Associates satisfy the Professional Exemption because—notwithstanding the routine and nondiscretionary nature of their work—PwC claims that they are functionally indistinguishable from fully licensed accountants, doctors, lawyers, and engineers. As a matter of law, however, the text, structure, and drafting history of the Professional Exemption limit its application to licensed accountants, and Associates are not licensed. Second, PwC argues that Attest Associates satisfy the Wage Order’s Administrative Exemption because they work “under only general supervision” despite up to six layers of managers who are responsible for Associates’ work. That argument fails, however, because PwC has not pointed to sufficient evidence to create a triable issue of fact that Associates “work along specialized or technical lines”—much less that they do so “under only general supervision”—as required by the Administrative Exemption.
The argument goes into detail from there addressing three key arguments: 1) The Professional Exemption Does Not Apply to Attest Associates; 2) The Administrative Exemption Does Not Apply to Attest Associates; 3) The Rules Governing Professions Other Than Accounting Do Not Help PwC. You can see the brief in its entirety on the next pages.
PwC addresses all three arguments in their brief; this is a portion from the brief’s introduction:
Put simply, nothing in the Wage Order precludes unlicensed accountants from being shown to be exempt under subsection (b) of the Professional Exemption. Plaintiffs’ argument that the “drafting history” of the wage order at issue shows an intention on the part of the [Industrial Welfare Commission] to prohibit unlicensed accountants from being professionally exempt should be rejected, because the language and structure of the Professional Exemption are not ambiguous, and contain no such prohibition. Even the District Court did not accept Plaintiffs’ tortured reading of the text of the Professional Exemption, or claim to find unambiguous intent on the part of the [Industrial Welfare Commission] to exclude from eligibility for the Professional Exemption all unlicensed members of the accounting profession — and inevitably by extension, all unlicensed lawyers, doctors, dentists, optometrists, architects, engineers, and teachers. Doing so is flatly contrary to the overriding principle governing application of exemptions from overtime provisions, which is to consider individual employees’ work duties.
And their brief outlines a direct counter to the plaintiffs’ brief: 1) Plaintiffs’ Argument That Accountants Can Only Qualify for a Professional Exemption Under Subsection (a) Is Unsupportable 2) PwC Is Entitled to Show That Its Attest Associates Satisfy the “General Supervision” Requirement of the Administrative Exemption; 3) The Impact of the District Court’s Order Is Not Limited to the Profession of Accounting.
So what we’ve got here is…failure to agree on how the ambiguous (or not) California law is and how it applies specifically to unlicensed audit associates. Are they really just cogs in the wheel, bowing to their superiors as the plaintiffs argue? Or are they responsible professionals who are engaged in a challenging occupation that warrants exemption? The 9th Circuit will have transcripts and audio from the proceedings available on its website at some point tomorrow and we’ll update this post with them when they’re available. As for a resolution, it will be several months before we find out what the 9th Circuit rules and then, there’s still a trial to be had. Stay tuned.