Westpac, a leading Australian bank, has announced the termination of its longstanding association with PricewaterhouseCoopers (PwC) on Wednesday. The bank has initiated a tender for external audit services, excluding PwC, following an adherence to the "audit firm rotation" best practice. This decision comes after PwC, one of the big four accounting firms alongside EY, Deloitte, and KPMG, had a challenging year where it was compelled to divest its lucrative government business for just $1 due to allegations of partners exploiting confidential government tax plans for corporate clients' benefit.
Prior to this decision, PwC had decided not to re-tender for audit services with Westpac. This move was announced ahead of Westpac's annual general meeting scheduled for December 14. PwC had been Westpac's auditor since 2002 and saw its income rise from $98.4m in 2017 to $136.6m in 2022 due to contracts with Commonwealth Bank, Westpac, and Macquarie.
In light of a damaging tax leaks scandal involving a former partner sharing confidential government information for corporate client tax planning, Commonwealth Bank faced questions about retaining PwC as its auditor. This incident prompted a Senate inquiry into other auditors including KPMG, EY and Deloitte, as well as consulting firms Accenture (NYSE:ACN), Boston Consulting Group and McKinsey.
Despite the controversy surrounding PwC, Commonwealth Bank chairman Paul O’Malley reassured shareholders of "first class" audit services in his meetings with new PwC chief executive Kevin Burrowes. Meanwhile, Macquarie’s chairman Glenn Stevens indicated a review of their relationship with PwC amidst this turmoil.
Outside of the banking sector, PwC lost the chance to win the external audit tender for Lendlease. However, the firm remains committed to diligently performing their role for the remaining term.
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