Parliament has launched another inquiry into consultants, this time scrutinising the structure and culture of the sector currently dominated by a handful of large firms that receive billions in government contracts.
The structures of major accounting, audit, and consultancy firms – including the lucrative partnership model – and their associated governance measures will go under the microscope of the Parliamentary Joint Committee on Corporations and Financial Services.
Its inquiry will also explore how authorities could respond and penalise firms and personnel guilty of bad behaviour, opening up potential reforms for the local sector.
It follows intense scrutiny of PwC after it breached government confidentiality to monetise privileged information through a scheme that helped multinationals minimise tax.
“As more and more information about the PwC Australia and PwC Global matter has come to light through the work of the Senate, it has become incredibly clear that a major review of the sector, so vital to the proper functioning of the markets, is undertaken,” the committee’s chair, Senator Deborah O’Neill said.
Ms O’Neill has led the government’s scrutiny of the PwC tax leaks scandal through Senate Estimates and a separate and ongoing Senate Finance and Public Administration Committee inquiry into the consulting sector, which has called for the firm to publicly name the staff involved.
She said the committee will work to uncover “the full extent of failure points and make recommendations for change necessary to ensure the national interest prevails”.
“What is clear from the various hearings, inquires and reports tabled to date, is that the PwC matter was a calculated breach of trust at the cost of the Australian people,” Ms O’Neill said.
“My colleagues and I will not cease our inquiries until all involved in this scandal have been fully named and held to account. More broadly, it is imperative that the entire sector is properly investigated in order to maintain the proper function of the Australian market.”
In 2020, Senator O’Neill made explosive allegations in the Senate about a toxic culture at Big Four firm EY, including senior personnel exploiting staff and not declaring conflicts of interest.
The new probe will go beyond the embattled firm to probe the structure, behaviour and influence of similar companies, including, but not exclusively the ‘Big Four’ — Deloitte, EY, KPMG and PwC.
According to the terms of reference, the committee inquiry will the global and national firm structures, including their legal basis, and the “extent to which governance obligations applying to a professional services firm may vary depending on the structure adopted”.
The committee will look for any “gaps” in best practices like reporting and transparency; executive accountability; personnel vetting; cultural practices; duties of care; and the management of conflicts of interest.
Retired partners at larger consultancies in Australia are reportedly paid $140,000 a year after they leave the firm, in some instances moving into other roles that could create a conflict of interest.
Mechanisms available to government and other authorities to monitor and sanction misconduct and poor performance are also included in the inquiry’s terms of reference, as is “any other related matters”.
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