Review of PwC tax leaks scandal will not stop conflicts of interest engulfing consulting firms

Australia’s ABC reports that  an internal review into PwC following the tax leaks scandal is unlikely to stop further scrutiny of the big four accounting giant and other consulting firms.

The firm was hoping that its review would draw a line in the sand over the damaging revelations that some of its senior partners misused confidential Australian government information to help big multinational companies avoid paying more tax.

The review is unlikely to satisfy those calling for much bigger changes, including federal politicians who want to see PwC partners implicated in the scandal jailed.

The PwC controversy has also reignited a global debate about whether accounting firms need to split their lucrative consulting services from their audit functions.

Jason Ward, principal analyst at CICTAR, thinks that should happen.

He points to one example of where audit and advisory functions could potentially create a conflict of interest, noting that big four firm KPMG does both the audit and consulting work for the head Australian entity DP World — one of the largest port operators in Australia and globally.

According to filing lodged with the corporate regulator, KPMG Australia was paid $455,862 for audit services and additionally paid $394,525 for "income tax compliance/advice" in 2022 by DP World Australia.

"In many countries, it would be against the law to have the same firm providing both audit services and tax advice to corporate clients. This is a clear conflict of interest," Ward says.

"Australia needs to end this practice and catch up to global standards."