The global chairman of PwC has pledged to “aggressively” review how the firm can better hunt for frauds following Wirecard and other accounting scandals.
“We want to make sure we’re moving forward [on the detection of fraud] to ensure the relevance of the profession,” said Bob Moritz, who has run the accounting and advisory giant for four years.
“Wirecard is yet another example of the fact we need to look at this and do it aggressively over the next few years,” he said.
The audit profession has come under scrutiny following a series of high-profile corporate failures and accounting scandals, capped by the collapse of German payments processor Wirecard in June. Wirecard’s longtime auditor was Big Four firm EY, which said that third parties had provided it with false documentation in connection with the German company’s 2019 audit.
Mr Moritz said PwC had to “double down” on the quality of its audits during the coronavirus pandemic as investors “have needed more and better trusted information from corporates” given the economic turmoil unleashed by the crisis.
Mass remote working and increased financial pressure on businesses have increased the risk of fraud during the crisis.
The comments from Mr Moritz came as PwC revealed on Tuesday that its global revenues grew by 1.4 per cent to $43bn in the year to July, down from a 7 per cent increase in the previous financial year.
The firm said the numbers “mask” the impact of Covid-19 on its business. Its global revenues fell 6 per cent in the final quarter of its financial year as the pandemic gathered momentum, it said, leaving revenues in some countries down as much as 30 per cent.
PwC said it had suffered as major clients reduced or delayed spending on advisory services, as well as large projects taking longer to complete and payments being delayed.
Revenues from its assurance work, including company audits, climbed 3 per cent to $17.6bn. Its advisory practice had revenues of $14.7bn, a 4 per cent increase, while its tax and legal services generated $10.7bn, up 2 per cent from a year earlier.
Mr Moritz warned that for PwC “there is no doubt that the next 12 months and beyond are going to be difficult”.
At the height of the pandemic, 95 per cent of PwC’s 284,000 employees worked remotely. The firm is now allowing staff to return to offices voluntarily, depending on test and tracing capability, social-distancing restrictions and the safety of public transport systems serving its offices in 157 countries.
PwC’s own economists predict that the global economy will contract by 5.5 per cent by the end of 2021. The fallout for its own business means that PwC’s UK business has delayed publishing its annual results for 2020 until January — five months later than planned — and will also hold back distributing yearly profits to partners during that time, partly in order to preserve cash.
Since the pandemic, PwC said it has cut about 5 per cent of its workforce in Australia and has made redundancies in some other jurisdictions. In the UK, PwC has cut partners’ monthly pay by 20 per cent.
“We made a general decision that the [costs of the] pandemic would come at the expense of partners, rather than using government stimulus packages in various countries,” said Mr Moritz.