In a recent submission to the Australian Parliament's joint inquiry into the audit and consulting sector, Margaret Beattie, PwC Australia's former General Counsel, called for the creation of an independent watchdog to oversee the Big Four accounting firms.
Beatie pointed to "cultural and behavioural problems" that contributed to the PwC Australia tax leaks scandal. Beattie argued that "self-regulation of the big four was inadequate" and that stronger oversight is needed to ensure "the profit motive does not override adherence to government policy and community expectations." To fill these gaps, she proposed a central oversight body to coordinate investigations and annual reviews of firms' conflict-of-interest protocols.
In her response, Beattie also detailed the conduct problems within PwC's international tax practice. For example, she recounted how PwC had "abused LPP" (Legal Professional Privilege) to prevent the Australian Tax Office from accessing key documents. "Certain parts of the tax group had not been following the protocols, they had not been following the legal engagement letters, and the effect of that meant that the privilege claims that had been made ... were not valid," she wrote.
Despite these concerns, Beattie did not support partnership limits, a proposal currently under consideration by Treasury. "I do not think the partnership model needs to be deconstructed in favour of a corporate vehicle," she said. "I believe the committee may wish to consider recommending that governance bodies of large accounting firms comprise at least 50 per cent external membership."
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