PwC

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PricewaterhouseCoopers
Type Member firms have different legal structures; both UK and U.S. firms are limited liability partnerships
Industry Professional services
Founded 1849 (London)[1]
Headquarters

London, United Kingdom[2]
(Global)

New York City, New York
(United States)
Area served Worldwide
Key people Dennis Nally (Senior Partner)[3]
Products Assurance
Tax Advisory
Consulting
Financial Advisory
Actuarial
Legal
Revenue increaseUS$26.20 billion (2009)[4]
Employees 163,000[4]
Website pwc.com

PwC (officially PricewaterhouseCoopers) is a global professional services firm headquartered in London, United Kingdom.[2] It is the world's second-largest professional services firm (after Deloitte) and one of the 'Big Four' accountancy firms.[5]

It has offices in 757 cities across 151 countries and employs over 163,000 people.[4][6] It had total revenues of $26 billion in 2009, of which $13 billion was generated by its Assurance practice, $7 billion by its Tax practice and $6 billion by its Advisory practice.[4]

The firm was formed in 1998 by a merger between Price Waterhouse and Coopers & Lybrand.[1] The trading name was shortened to PwC in September 2010 as part of a major rebranding exercise.[7]

As of 2009 it was the eighth largest privately-owned organisation in the United States.[8]

Contents

[edit] History

The firm was created by the merger of two large firms, Price Waterhouse and Coopers & Lybrand in 1998.[1] These two firms each have histories dating back to the nineteenth century.

[edit] Price Waterhouse

Samuel Lowell Price, an accountant, started his practice in London in 1849.[9] In 1865 Price went into partnership with William Hopkins Holyland and Edwin Waterhouse. Holyland left shortly after to work alone in accountancy and the firm was known from 1874 as Price, Waterhouse & Co.[9] (The comma was dropped from the name much later.) The original partnership agreement, signed by Price, Holyland and Waterhouse could be found in Southwark Towers, one of PwC's important legacy offices (now demolished and is the new site for The Shard) in London.

By the late nineteenth century, Price Waterhouse had gained significant recognition as an accounting firm. As a result of trade between the United Kingdom and the United States of America, Price Waterhouse opened an office in New York in 1890,[9] and the American firm itself soon expanded rapidly. The original British firm opened an office in Liverpool in 1904[9] and then elsewhere in the United Kingdom and countries abroad, each time establishing a separate partnership in each country: the worldwide practice of PW was therefore a federation of collaborating firms that had grown organically rather than being the result of an international merger.[9]

In a further effort to take advantage of economies of scale, PW and Arthur Andersen had discussed a merger in 1989[10] but the negotiations failed mainly because of conflicts of interest such as Andersen's strong commercial links with IBM and PW's audit of IBM.

In March 2002, Arthur Anderson,LLP affiliates in Hong Kong and China completed talks to join PriceWaterhouseCoopers, China.[11]

[edit] Coopers & Lybrand

In 1854 William Cooper established his own practice in London, which became Cooper Brothers seven years later when his three brothers joined.[1]

In the USA in 1898, Robert H. Montgomery, William M. Lybrand, Adam A. Ross Jr. and his brother T. Edward Ross formed Lybrand, Ross Brothers and Montgomery.[1] Coopers & Lybrand is the result of a merger in 1957 between Cooper Brothers & Co; Lybrand, Ross Bros & Montgomery and a Canadian firm McDonald, Currie and Co.[1] In 1990 in certain countries including the UK Coopers & Lybrand merged with Deloitte Haskins & Sells to become Coopers & Lybrand Deloitte,[1] in 1992 renamed Coopers & Lybrand.[12]

[edit] The merger

In 1998, Price Waterhouse merged with Coopers & Lybrand to form PricewaterhouseCoopers (written with a lowercase 'w') in an attempt to gain a scale that would put the new firm in a different league.[13]

[edit] Recent history

By the late 1980s the firm had created a large professional consulting branch, as did other major accountancy firms, generating much of its fees. Management Consulting Services (MCS) was the fastest growing and often most profitable area of the practice, though it was cyclical. The major cause for growth in the Nineties was the implementation of complex integrated ERP systems for multi-national companies.

However, PwC came under increasing pressure to avoid conflicts of interests by not providing consulting services to its audit clients. Since it audited a large proportion of the world's largest companies, this was beginning to limit its potential market. These conflicts were going to increase when additional services such as the outsourcing of ERP systems were offered. For these reasons, in 2000, Ernst & Young was the first of the Big Four to sell its consulting services, to Capgemini.[14]

PwC therefore planned to capitalize on MCS's rapid growth through its sale to Hewlett Packard (for a reported $17 billion) but negotiations broke down in 2000.[15]

PwC announced in May 2002 that its consulting activities would be spun off as an independent entity. An outside consultancy, Wolff Olins, was hired to create a brand image for the new entity, called "Monday" [16]. The firm's CEO, Greg Brenneman described the unusual name as "a real word, concise, recognizable, global and the right fit for a company that works hard to deliver results."[17] These plans were soon revised, however. In October 2002, PricewaterhouseCoopers sold the entire consultancy business to IBM for approximately $3.9 billion in cash and stock. PwC's consultancy business was absorbed into IBM Global Business Services, increasing the size and capabilities of IBM's growing consulting practice.[18]

[edit] Global structure

The legal structure of a limited liability partnership [LLP] is very different from that of a Corporation, and as such the global firm is in fact a collection of member firms, that are run autonomously in their respective jurisdictions. The senior partners of member firms sit on a global board of partners and there is also an 'umbrella' organisation called PricewaterhouseCoopers International Limited, a UK[19]-based company which provides co-ordination. Dennis Nally, the former Chairman of the US firm, became Chairman of PwC International on July 1, 2009.[3]

[edit] Services

[edit] Global

PricewaterhouseCoopers has three main service lines:[20]

PwC's service lines face the market in each country by broad industry specialisations such as:

These sub-divisions may vary slightly in some territories.

[edit] Consulting activities

PwC has developed several broader consulting initiatives in the Enterprise Risk Management (ERM) framework, including a global effort to assist corporations with outsourcing, as well as a global political risk assessment with the political risk advisory firm Eurasia Group.[25]

Advisory services offered by PwC also include two actuarial consultancy departments; Actuarial and Insurance Management Solutions (AIMS) and a sub branch of "Human Resource Services" (HRS). Actuarial covers mainly 4 areas: pensions, life insurance, non-life insurance and investments. AIMS deals with life and non-life insurance and investments while HRS deals mainly with pensions.[26]

PwC serves the U.S. Federal Government through their Public Sector practice. PwC has over 2000 professionals based in the Washington Metro Corridor.[27]

[edit] Major clients

Europe and North America account for about 81% of PwC's annual revenue,[28] with Europe alone accounting for 45%.[28] The firm's dominant practice, auditing, accounts for over 50% of PwC's revenue.[20]

One client, the Academy of Motion Picture Arts and Sciences, gives PwC the unique distinction of having been (in various incarnations) the tabulator and certifier of votes for the Academy Awards since 1934.[29]

PwC audits 40 per cent of companies in the FTSE 100 Index[30] and 45 per cent of the Fortune 1000 energy companies.[31]

[edit] Name and branding

The firm's name arose from the merger of Price Waterhouse and Coopers & Lybrand in 1998.

On 20 September 2010, PricewaterhouseCoopers became officially known as PwC, with the announcement of a brand repositioning, including a new logo.[7] The new logo was designed with the assistance of Wolff Olins.[32]

[edit] Logos

Current and past logos of PwC and merged companies.
Current PwC Logo  
Logo of PwC before its 2010 rebranding.  
The PW logo before the 1998 merger  
The C&L logo before the merger  

[edit] Staff

Because PricewaterhouseCoopers' only product is the output of its employees, the firm has a competitive recruiting program. PricewaterhouseCoopers was recently included in Fortune's "100 Best Companies to Work For" list, coming in at number 58 in 2009.[33] In the UK the company has been voted number one in the Times Top 100 Graduate Employers for 7 consecutive years.[34] PricewaterhouseCoopers is one of the top 10 companies for working mothers.[35] Training is also a top priority, and in 2010 PwC captured top honors on Training Magazine's "Top 125" list for the third consecutive year, becoming the first company ever to achieve a "three-peat."[36] In October 2008, PricewaterhouseCoopers was named one of "Canada's Top 100 Employers" by Mediacorp Canada Inc., and was featured in Maclean's newsmagazine. Later that month, PricewaterhouseCoopers was also named one of Greater Toronto's Top Employers, which was announced by the Toronto Star newspaper.[37] PricewaterhouseCoopers in Ireland was named as the winner of the Best Company to Work for in Ireland 2008 by the Great Place to Work Institute in their annual list of Ireland's top employers.[38]

[edit] Criticisms

[edit] Willie Nelson

In 1990, the Internal Revenue Service seized most of the assets of Willie Nelson, claiming he owed $32 million in back taxes, including penalties and interest. He sued Price Waterhouse, contending that they put him into tax shelters that were later disallowed by the IRS.[39] The lawsuit was settled for an undisclosed amount.[40]

[edit] ChuoAoyama Suspension

From 2000 to 2006, PwC's affiliate of assurance service in Japan was ChuoAoyama Audit Corporation (中央青山監査法人 Chūō-Aoyama Kansa Hōjin?). In May 2006, the Financial Services Agency suspended ChuoAoyama following a suspicious audit of cosmetics company Kanebo in which three of the firm's partners allegedly assisted with accounting fraud and boosted earnings for the company by about $1.9 billion over the course of five years. The accountants involved were reprimanded by the Tokyo District Court but escaped prison time after a judge deemed them to have played a "passive role" in the crime.[41]

Shortly after the suspension of ChuoAoyama (中央青山監査法人), PwC acted quickly to stem any possible client attrition as a result of the scandal. It set up the PricewaterhouseCoopers Aarata, and some of ChuoAoyama's accountants (but most of the international divisions) moved to the new firm. ChuoAoyama resumed operations on September 1 under the Misuzu name. However, by this point the two firms combined had 30% fewer clients than did ChuoAoyama prior to its suspension.[42] Misuzu was dissolved in July, 2007.[43]

[edit] Tyco settlement

In July 2007, PwC agreed to pay $229 million to settle a class-action lawsuit brought by shareholders of Tyco International Ltd. over a multibillion-dollar accounting fraud.[44]

[edit] Satyam case

In January 2009 PwC was criticised,[45][46][47][48][49][50] along with the promoters of Satyam, an Indian IT firm listed on the NASDAQ, in a $1.5 billion fraud.[51] PwC has written a letter to the board of directors of Satyam that its audit may be rendered "inaccurate and unreliable" due to the disclosures made by Satyam's (ex) Chairman.[52] PwC's U.S. arm "was the reviewer for the U.S. filings for Satyam."[53] Consequently, lawsuits have been filed in the U.S. with PwC as a defendant.[54] Two partners of PricewaterhouseCoopers, Srinivas Talluri and Subramani Gopalakrishnan, have been charged by India’s Central Bureau of Investigation in connection with the Satyam scandal. Since the scandal broke out, Subramani Gopalakrishnan retired from the firm after reaching mandatory retirement age; while Talluri remains on suspension from the firm.[55]

[edit] Apparent involvement in controversial court proceedings in Russia

In November 2010 The New York Times reported that PwC had been assisting the Russian Government with prosecutions in relation to alledged tax evasion at Yukos stating "...Then, in 2007, with the prospect of parole on the horizon, the same prosecutors — with what appears to be the complicity of PricewaterhouseCoopers, Yukos’s longtime accounting firm — indicted the two men (Mikhail B. Khodorkovsky and Platon Lebedev), again, bringing a new round of Kafkaesque charges."[56]

[edit] Other punishments and criticisms

India's accounting standards agency ICAI is investigating partners of PwC for professional negligence[46] in the now-defunct Global Trust Bank Ltd. case of 2007. Like Satyam, Global Trust Bank was also based in Hyderabad. This led to Reserve Bank of India banning PwC from auditing any financial company for over a year.[57][58][59] PwC was also associated with the accounting scandal at DSQ Software[60] in India. In July 2006, PwC’s Japanese affiliate Chuo Aoyama was handed a two-month ban.[46] Following the Satyam scandal, the Mumbai-based Small Investor Grievances Association (SIGA) has requested the Indian stock market regulator SEBI to ban PwC permanently and seize its assets in India alleging few more scandals like "Ketan Parekh stock manipulations."[61] The Accountancy and Actuarial Discipline Board, which regulates the profession in the UK, announced an inquiry in July 2009 into PwC's auditing of Cattles, the struggling sub-prime lender that failed to keep track of its bad debts.[62]

[edit] Notable current and former employees

[edit] Business

[edit] Politics and public service

[edit] Other

[edit] Offices

Some Current PwC offices.
Freshwater Place, Melbourne  
Oslo, Norway  
Kasumigaseki Building, Tokyo  
Kingdom Tower, Riyadh  

[edit] References

  1. ^ a b c d e f g "Chronology". PricewaterhouseCoopers. http://www.ukmediacentre.pwc.com/Company-history/Chronology-14.aspx. Retrieved 27 September 2010. 
  2. ^ a b "How we are structured". PricewaterhouseCoopers. http://www.pwc.com/extweb/service.nsf/docid/8A601D5FA74A7CEA85257013006558DF. Retrieved 27 September 2010. 
  3. ^ a b Nally named Global Chair of PwC Accountancy Age, 17 March 2009
  4. ^ a b c d "PricewaterhouseCoopers* post FY2009 global revenues of US$26.2 billion". PricewaterhouseCoopers. http://www.pwc.com/gx/en/press-room/2009/global-revenues-2009.jhtml. Retrieved 27 September 2010. 
  5. ^ Deloitte nudges ahead of PwC as largest global firm, Accountancy Age, 5 October 2010. Retrieved 6 October 2010.
  6. ^ "Global Annual Review 2009". PricewaterhouseCoopers. http://www.pwc.com/gx/en/annual-review/index.jhtml. Retrieved 27 September 2010. 
  7. ^ a b "Logo puts case first and last". The Australian. 20 September 2010. http://www.theaustralian.com.au/business/media/logo-puts-case-first-and-last/story-e6frg996-1225926437285. Retrieved 27 September 2010. 
  8. ^ "America's Largest Private Companies". Forbes. 20 September 2010. http://www.forbes.com/lists/2009/21/private-companies-09_Americas-Largest-Private-Companies_Rank.html. Retrieved 27 September 2010. 
  9. ^ a b c d e Accounting for Success: a History of Price Waterhouse in America 1890–1990. Harvard Business School Press. ISBN 9780875843285. 
  10. ^ University of Washington: Accounting firms and organisations
  11. ^ Andersen Affiliates in China to Join Rival Singapore News, 21 March 2002
  12. ^ ICAEW family trees
  13. ^ Price Waterhouse and Coopers & Lybrand to merge Weekly Corporate Growth Report 29 September 1997
  14. ^ Ernst & Young sells consulting unit to Cap Gemini Cnet News, 29 February 2000
  15. ^ Hewlett-Packard drops PWC bid BBC News, 13 November 2000
  16. ^ Monday:
  17. ^ Monday name change for PwC, BBC News, June 10, 2002.
  18. ^ IBM buying PricewaterhouseCoopers' consulting business Technology, 31 July 2002
  19. ^ PricewaterhouseCoopers International Limited
  20. ^ a b PWC Global Review 2007 Page 34
  21. ^ PWC: CIPS
  22. ^ PWC: FS
  23. ^ PWC: TICE
  24. ^ PWC: G&PS
  25. ^ PWC: How managing political risk improves global financial performance
  26. ^ Actuarial & Insurance Management Solutions
  27. ^ Public Sector practice
  28. ^ a b PricewaterhouseCoopers 2008 revenues rose 10% to $28.2 billion
  29. ^ PricewaterhouseCoopers to safeguard Hollywood's biggest secret for 72nd year
  30. ^ KPMG closes FTSE 100 gap on PWC Accountancy Age, 13 December 2007
  31. ^ PWC: Energy, utilities and mining
  32. ^ Logos in the news
  33. ^ Fortune: Best companies to work for
  34. ^ Times Top 100 Graduate Employers
  35. ^ Working Mother
  36. ^ Training Magazine
  37. ^ "Reasons for Selection, 2009 Canada's Top 100 Employers Competition". http://www.eluta.ca/top-employer-pricewaterhousecoopers. 
  38. ^ "Ireland's Best Companies to Work for 2008". http://www.greatplacetowork.ie/best/list-ie.htm. 
  39. ^ "Willie Nelson Hopes for a Hit; So Does the I.R.S". New York Times. September 2, 1991. http://query.nytimes.com/gst/fullpage.html?res=9D0CEFD7113FF931A3575AC0A967958260&sec=&spon=&pagewanted=all. "$32 million bill for delinquent taxes ... pay for the $45 million lawsuit Mr. Nelson filed last year against his former accountants at Price Waterhouse, who he contends put him into ill-advised tax shelters. The Government ruled against many of the tax shelters, and the I.R.S. later disallowed many of the tax benefits that Mr. Nelson claimed." 
  40. ^ "Tax Shelter of Rich and Famous Has Final Date in Court". The New York Times. November 4, 1995. http://query.nytimes.com/gst/fullpage.html?res=9D04E6DF1739F937A35752C1A963958260. 
  41. ^ CPAs in Kanebo fraud avoid prison, The Japan Times (registration required), Aug. 10, 2006.
  42. ^ Rocky road for new accounting firm, The Daily Yomiuri, Sep. 2, 2006.
  43. ^ New Japanese Internal Controls Framework Fraud Magazine, November/December 2007
  44. ^ Pricewaterhouse to pay $225 mln in Tyco settlement
  45. ^ Satyam scandal rattles confidence in accounting Big Four
  46. ^ a b c PwC's fate Hangs in Balance
  47. ^ ICAI to seek explanation from Satyam’s auditor PwC
  48. ^ Satyam auditor says examining chairman's statement
  49. ^ What happens to PWC, The Auditor For Satyam?
  50. ^ Satyam: Auditors' body to pull up PwC ICAI to seek explanation from Satyam’s auditor PwC
  51. ^ Satyam: A Rs 7,000cr Lie
  52. ^ PWC says Satyam audit opinions may be unreliable
  53. ^ Satyam Said to Draw SEC Scrutiny in Accounting Case
  54. ^ Pomerantz Law Firm Charges Satyam's Auditors With Securities Law Violations
  55. ^ Raghavendra Verma, Keith Nuthall (2009-04-08). "PwC partners charged over Satyam". Accountancy Age. http://www.accountancyage.com/accountancyage/news/2240046/styam-partners-charged. Retrieved 2010-03-01. 
  56. ^ New York Times issue of November 6, 2010, business columnist Joe Nocera
  57. ^ RBI lifts ban on PwC
  58. ^ PwC has a chequered past with taxmen
  59. ^ Regulator may blacklist Price Waterhouse
  60. ^ Third mess-up by PwC after GTB, DSQ Soft
  61. ^ Investor group wants Sebi to supersede Satyam board
  62. ^ Regulator probes PwC over Cattles audit
  63. ^ "Timeline: The Bernardo/Homolka case". cbc.ca. Canadian Broadcasting Corporation. http://www.cbc.ca/canada/story/2010/06/16/f-bernardo-homolka-timeline.html. Retrieved February 17, 2009. 

[edit] Further reading

[edit] External links

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Coordinates: 51°30′28.74″N 0°07′28.79″W / 51.5079833°N 0.1246639°W / 51.5079833; -0.1246639

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