The CAANZ was questioned about the effectiveness of the fine it imposed on the consulting giant.
A major accounting body has been probed for its disciplinary actions against PricewaterhouseCoopers (PwC) in response to the consulting giant’s taxation scandal in 2023.
In early 2023, PwC made headlines when it was reported that its former tax partner, Peter John Collins, had leaked confidential Treasury information to a number of clients to boost private sector business for the firm.
The scandal resulted in PwC selling its entire government advisory service to private equity investor Allegro Funds for just one dollar, with hundreds of staff being let go.
The firm was also fined $50,000 (US$31,400) and given review and reporting requirements by the Chartered Accountants Australia and New Zealand (CAANZ) for breaching the accounting body’s by-laws.
Meanwhile, Collins was deregistered as a tax agent and banned from becoming a registered tax practitioner for two years by the Tax Practitioners Board.
The Australian Securities and Investments Commission also banned him from providing financial services for eight years.
CAANZ Probed for $50,000 Fine
At a recent parliamentary inquiry hearing, Labor Senator Deborah O’Neill, who is the chair of the Joint Committee on Corporations and Financial Services, questioned the CAANZ about the effectiveness of the fine it imposed on PwC.
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“How is this fine proportionate or meaningful?” she asked.
In response, CAANZ General Manager Kristen Wydell said it was the maximum fine the accounting body could impose under its by-laws at the time.
She also noted that the CAANZ had changed its by-laws to raise the maximum fine from $50,000 to $250,000 following the PwC scandal.
However, O’Neill was not satisfied with the answer.
“Do you think it’s effective? Do you think it’s deterring? Or do you think a column from [journalist] David Ross … has more impact than your entity?” the senator asked.
“That’s all we were able to do,” Wydell said.
O’Neill then pointed out that fines were rarely used by the CAANZ in circumstances where a non-financial sanction alone was inadequate.
“Is it a policy of CAANZ not to fine entities?” she inquired.
Wydell said it was not a policy but a professional practice.
“The people who make the decision as to the sanctions are the Professional Conduct Committee, the Disciplinary Tribunal and the Appeals Council, which are independent of the CAANZ,” she said.
“Our sanctions set out what the by-laws are, and they can select from those by-laws what they apply as a professional disciplinary program.
“It’s the professional sanctions that are probably of more concern than the fine.”
Concerns About Response Against PwC Partner
Greens Senator Barbara Pocock raised concerns about the CAANZ’s “inadequate” response against Collins.
In 2022, Collins applied for a resignation from the CAANZ, which was approved by the accounting body in December 2022 on the basis that there were no flags on his record.
After the scandal broke, the CAANZ was unable to take any disciplinary action against Collins as he was no longer a member.
“What has changed that can rectify those responses which we have judged inadequate?” Pocock questioned.
Wydell said the CAANZ had made a number of amendments to its by-laws.
“We amended our by-laws to require to give us the power to take conduct action against a former member. So we can take that action now,” she said.
“We have also included in our training and member communication materials additional information about maintaining client confidentiality more generally when you are conducting your work as a member of the CAANZ.”
Other changes, according to Wydell, were creating a new ability for the CAANZ to take professional conduct action against a firm and increasing members’ awareness of their responsibilities to self-report or self-disclose where they’re subject to an investigation.
