PricewaterhouseCoopers

PWC is a major international accounting and consulting firm resulting from the July 1998 merger of Price Waterhouse and Coopers & Lybrand.

PricewaterhouseCoopers (PwC)

• Global Employees: 160,000
• Scope: 150 ‘countries and territories’
• Sales (FY 2001): US $22.3 billion

Brief History

1849 – Samuel Lowell Price establishes practice in London

1854 – William Cooper establishes practice in London

1957 – Cooper Brothers & Co (UK), McDonald, Currie and Co (Canada) and Lybrand, Ross Bros & Montgomery (US) merge to form Coopers & Lybrand

1998 – Price Waterhouse and Coopers& Lybrand form PricewaterhouseCoopers

Services Offered

•Audits • Assurance •Global Risk Management •Dispute investigations •Project finance and privatisations •Human Resources solutions •Securities •Management consultancy •Tax services

Industries Serviced

• Aerospace and Defence, Automotive, Chemicals, Consumer Goods, Education, Energy, Engineering and Construction, Entertainment and Media, Financial Services, Paper, Government, Healthcare, Hospitality and Leisure, Insurance, Freight, Metals and Mining, Pharmaceuticals, Real Estate, Retail, Technology, Telecommunications, Transport.

FTSE 100 Audit clients

• ARM Holdings, Amersham, BG Group, BOC Group, Barclays, Brambles Industries, British Telecom, CGNU, Centrica, Daily Mail and General Trust, Friends Provident, GKN, Gallaher, GlaxoSmithKline, Great Universal Stores, Imperial Tobacco, Kingfisher, Land Securities, Lattice Group, Legal and General, Lloyds TSB, Logica, MAN Group, Marks and Spencer, National Grid Group, Northern Rock, Pearson, Powergen, Reckitt Benckiser, Rentokil Initial, Reuters Group, Rio Tinto, Royal and Sun Alliance, Sage Group, Sainsburys, Schroders, Scottish Power, Severn Trent, Shell Trans Trading Co., Smiths Group, South African Breweries, Tesco, Unilever, United Business Media, Wolseley.

Embarrassing Moments

In 2000 PwC were the subject of a major investigation by the US Securities and Exchange Commission. There were 140 cases of staff at the auditor holding financial interests in the companies they were auditing. In February 2001, the Financial Times reported that, “The appointment... of PwC, the leading accountancy firm, to investigate the relationship between Gazprom, the Russian gas giant, and Itera, the fast-growing gas company, has raised eyebrows among even hardened Moscow investors.” The FTcited estimates that PwC had earned $15 million in fees working for Gazprom, and would now be investigating its own past work for the company. The chief suspicion was that unacknowledged ‘below market price’ transactions had been taking place between Gazprom and Itera, something which, if true, PwC should have known about. The FT concluded, “The PwC appointment is the latest example of behaviour by international auditing firms in Russia that raises concerns about potential conflicts of interest.” PwC have also been the subject of several investigations by the Securities and Exchange Commission. In May 2001, the firm agreed to pay $55 million to settle a class action suit raised by shareholders of MicroStrategy, Inc. The software manufacturer had admitted to telling investors it was still profitable while it had in fact been losing millions. A report filed in court said the audit firm "consistently violated its responsibility" to maintain an appearance of independence. It cited an e-mail from a PwC auditor seeking a job at MicroStrategy while he was the senior manager on the team that reviewed the company’s accounting. PwC also received money for reselling MicroStrategy software and recommending it to other clients, and was working on setting up a business venture with its audit client, according to the report . Only the previous year, PwC had settled with 350 plaintiffs who had invested in the California based company First Pensions Corporation. The settlement came after Coopers & Lybrand and partner Hal Hurwitz had been found liable by a jury of misrepresenting First Pensions’ financial condition, concealing material information and abetting the company’s managers in fraud. Although the terms of the eventual settlement were not disclosed, the suit filed in Orange County Superior Court had sought damages of $136 million24.

Notes

This page is based on an extract from Five Brothers: the Rise and Nemesis of the Big Bean Counters: The Big Five audit firms are too big, unfit, unaccountable and increasingly irrelevant to the real economy, Author: Andrew Simms, Julian Oram, Publisher: NEF, Published: 25.03.02 http://www.neweconomics.org/gen/uploads/5br.pdf

1. ^ Public Accounting Report Volume XXIV,No. 17.September 15,2000.