PricewaterhouseCoopers (PwC), one of the Big Four accounting firms, has decided to wind down operations in over a dozen countries deemed risky or unprofitable.
This strategic move comes as the firm aims to prevent scandals that have recently tarnished its reputation.
The Financial Times reported on PwC’s decision to address rising challenges. This move underscores the firm’s efforts to mitigate risks and safeguard its global standing.
PwC Scaling Back Operations: Countries Affected
PwC has parted ways with member firms in countries such as Zimbabwe, Malawi, and Fiji, among others.
The firm also severed ties with 10 member firms in Sub-Saharan Francophone Africa following a strategic review.
Local leaders in these regions revealed a significant loss of over a third of their business in recent years.
This decline was attributed to pressure from PwC’s global executives to avoid working with risky clients.
Scandals and Penalties
PwC’s decision to scale back operations follows a series of high-profile scandals and penalties:
- China: PwC’s China unit faced a record fine of 441 million yuan ($62 million) and a six-month suspension for audit failures related to property developer Evergrande’s $78 billion fraud. The firm was accused of “turning a blind eye” to and “condoning” fraudulent practices during its 14-year audit of Evergrande.
- United Kingdom: The UK’s Financial Reporting Council levied a penalty of £4.5 million ($5.96 million) on PwC. This was due to shortcomings in its audit of Wyelands Bank in 2019.
- Australia: A political uproar ensued after a PwC tax partner misused confidential government information, leading to leadership changes within the firm.
- Saudi Arabia: PwC was barred from working with Saudi Arabia’s sovereign wealth fund for a year, prompting efforts to rebuild relations with the oil-rich kingdom.
Strategic Review and Challenges
PwC’s global executives conducted a strategic review to identify regions where operations posed significant risks or lacked profitability.
The firm faced mounting differences with local partners, leading to negotiations for exits.
This decision reflects PwC’s commitment to safeguarding its reputation and avoiding repeats of past scandals.
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