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The failure of PwC to make any reports to CA ANZ about the Peter Collins matter demonstrates major flaws in self-reporting models, according to senators.
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‘Meaningful’ penalty regime needed to deter misconduct, says senator
06 March 2024
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10 minute read
Senators in the Inquiry into consulting firms have highlighted the need for penalties for misconduct to be revised following admissions that none of the partners at PwC reported the PwC tax scandal to Chartered Accountants ANZ (CA ANZ), prior to it becoming publicly known.
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Appearing before an inquiry hearing yesterday, the major accounting body told the inquiry that it did not become aware of the tax scandal involving Peter Collins until knowledge about the matter became publicly available in January 2023.
The accounting body confirmed during questioning that it had not received any official reports in relation to the tax scandal from other partners at PwC before this point.
In an address to the inquiry, CA ANZ chief executive Ainslie van Onselen said that CA ANZ’s complaints process could be improved with enhanced whistleblower and positive reporting obligations for members in relation to others.
She also told the inquiry that CA ANZ’s By-laws enable the accounting body to hold members to account and, in some cases, expel them from the CA ANZ community.
“Being expelled is a great source of shame, and is detrimental to a members professional standing,” said Ms Van Onselen.
“To be expelled from a community of like-minded professionals and to be publicly named and shamed in our Acuity magazine is considered one of the worst possible consequences that could occur to you as a professional.”
Senator Deboarh O’Neil stated this was only a significant consequence to professionals with a particular set of values.
“I’ll put it to you that the ‘revenue is king’ culture and celebrated heroes and rainmakers who were reported to Dr Switkowski operating with calculated and antisocial behaviour were operating out of a different frame,” said Ms O’Neil.
Deputy chair of Parliamentary Joint Committee on Corporations and Financial Services, Alex Hawke also challenged the idea that self-reporting models and encouraging ‘speak up’ cultures would be enough to resolve the issues around poor behaviour.
“You're promoting self-reporting models and ‘if you see something, say something’ cultures as part of solution, but you don't seem to be [angry] that nobody in PwC said ‘hey, we got a problem in here’,” said Hawke.
“I understand name and shame but we're talking about somebody who did the wrong thing and has gotten away with a lot of money. You’re advocating to us that self-reporting or ‘see something, say something’ culture is going to be some sort of salve, but its just not working for various reasons in some of these big outfits.”
Senator Barbara also questioned whether loss of CA ANZ membership was a major disincentive for poor behavior given that a professional who losses membership can set themselves up as a consultant or business advisor without any penalty.
“So, what we need is a penalty regime that actually imposes a penalty and that is meaningful,” said Pocock.
Senator Pocock also said the failure of PwC to report the matter to CA ANZ was the perfect example of how very large partnerships don’t work.
“[It’s clear] that partners of partnerships of 1000 people are unable to blow the whistle with clear knowledge, because we’ve got the emails that show communication between people within PwC who had clear knowledge about what was going and some of them knew that was very wrong the moment those emails were being passed around and no one picked up the phone to make that call,” said Ms Pocock.
“So, that business of partnerships being a collaborative friendly relationship for genuine business sharing is completely undermined by the evidence that we were hearing today.”
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