PricewaterhouseCoopers Totally Explained

Everything about Pricewaterhousecoopers totally explained

PricewaterhouseCoopers (or PwC) is one of the world's largest professional services firms. It was formed in 1998 from a merger between Price Waterhouse and Coopers & Lybrand, both formed in London.
PricewaterhouseCoopers earned aggregated worldwide revenues of $25 billion for fiscal 2007, and employed over 146,000 people in 150 countries.
PricewaterhouseCoopers is a Big Four auditor, alongside KPMG, Ernst & Young and Deloitte Touche Tohmatsu.

History

The firm was created by the merger of two large firms "Price Waterhouse" and "Coopers & Lybrand". These two firms each had histories dating back to the nineteenth century.

Price Waterhouse

Samuel Lowell Price, an accountant, started his practice in London in 1849. 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. 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.

Coopers & Lybrand

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

Sarbanes-Oxley Act

The 2002 indictment of Enron and WorldCom and the subsequent collapse of Arthur Andersen resulted in calls for stringent U.S. Securities and Exchange Commission rules on auditor independence. One such result was the adoption of the Sarbanes-Oxley Act, which required auditor independence and separation of core audit from general consulting. This forced many of the Big Four to divest their interests in management consulting. However, a major part of the firm's practice is still to provide business advice in addition to its auditing services, notably in taxation and corporate finance.

Structure and Service Lines

The legal structure of a limited liability partnership is very different to that of a company, 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's also an 'umbrella' organisation called PricewaterhouseCoopers International Limited, a UK -based company which provides co-ordination. The current global CEO is Samuel DiPiazza.
PricewaterhouseCoopers has three main service lines:

Audit and Assurance,
Tax, (planning and compliance with local tax laws, transfer pricing)
Advisory and Consulting which covers Performance Improvement, Transactions and M&A and Crisis Management in a range of specialist areas such as accountancy and actuarial advisory. PwC's service lines face the market in each country by broad industry specializations such as:
Consumer and Industrial Products and Service (CIPS),
Financial Services (FS),
Technology, Information, Communications and Entertainment (TICE),
Government & Public Sector (G&PS) These sub-divisions may vary slightly in some territories.

Clientele

Europe and North America account for about 81% of PwC's annual revenue,
PwC audits 40 per cent of companies in the FTSE 100 Index and 45 per cent of the Fortune 1000.
The following are PwC audit clients that are part of the FT Global 500 (2006), grouped by FT industry Aerospace & defence: Raytheon, United Technologies, L-3 Communications Corporation
Automobiles & parts: Toyota Motor, Volkswagen, Peugeot, Robert Bosch GmbH, Ford
Banks: Al Rahji Banking & Investment, Bank of America, Bank of China (Hong Kong), Bank of Ireland, Banco Itau, Banco Popular Español, Barclays, Crédit Agricole, BB&T, BNP Paribas, BradescoSamba Financial, Commerzbank, Dexia, DnB NOR, Firstrand Bank Limited, Fortis, Goldman Sachs, JP Morgan Chase, Lloyds TSB, Macquarie Bank, Riyad Bank, Sanpaolo IMI, Sberbank (Russia), SEB, Standard Bank, Suntrust Banks, Westpac Banking Corporation
Beverages: Anheuser-Busch, Miller, SAB
Chemicals: Albemarle, Bayer, E.I. du Pont de Nemours, Praxair, Shin Etsu Chemical, Rohm & Haas
Electricity: Chubu Electric Power, FirstEnergy, Exelon, Unified Energy System, ATCO
Electronic & electrical equipment: Agilent Technologies, Kyocera, LG Philips LCD, Logitech
Fixed line telecommunications: BellSouth, BT Group, Deutsche Telekom, Etisalat, KPN, Nippon Telegraph and Telephone, PT. Telekomunikasi Indonesia Tbk., Saudi Telecom
Food & drug retailers: Krispy Kreme, Seven & I Holdings Co., Tesco
Food producers: Danone, Kellogg, Unilever
Gas, water & multiutilities: Centrica, E.ON, RWE, National Grid plc
General financial: American Express, Freddie Mac, Franklin Resources, Goldman Sachs, Nikko Cordial, SLM, Moody's
General industrials: 3M, Honeywell International, Hutchison Whampoa
General retailers: eBay, GUS, Marks & Spencer, John Lewis Partnership
Healthcare equipment & services: Baxter International, HealthSouth Corporation, Medco Health Solutions, Medtronic, Zimmer Holdings, Southern Cross Healthcare
Household goods: Reckitt Benckiser
Industrial engineering: Caterpillar, Volvo
Industrial metals: Alcan, Alcoa, Nippon Steel, Nucor, POSCO, Tenaris
Industrial transportation: Burlington Northern Santa Fe Corp., Deutsche Post
Leisure goods: Nintendo
Life insurance: Legal & General, Protective Life Corporation, Prudential Financial
Media: CBS, Thomson, Viacom, Walt Disney, Pearson
Mining: Barrick Gold, Newmont Mining, Rio Tinto
Mobile telecommunications: Alltel, Bharti Tele-Ventures, KDDI, MTN Group, Sonera, Telia, China Unicom, Vodafone
Nonlife insurance: Ace, American International Group, AMB Generali, AXA, Millea Holdings, Progressive Corporation, Swiss Re, Zurich Financial Services
Oil & gas producers: BG, Burlington Resources, Canadian Natural Resources Ltd, Exxon Mobil, Chevron, EnCana Corporation, Eni, Gazprom, Imperial OilSuncor Energy, Marathon Oil, Royal Dutch Shell, Shell Canada, Stuart Petroleum
Oil equipment & services: Schlumberger
Personal goods: Colgate-Palmolive, L'Oreal, Nike, Richemont
Pharmaceuticals & biotechnology: Biogen Idec, Bristol-Myers-Squibb, Genzyme, GlaxoSmithKline, Johnson & Johnson, Merck & Co., Novartis, Novo Nordisk, Sanofi-Aventis, Teva Pharmaceutical Industries, Wyeth
Retail: Abercrombie & Fitch
Software & computer services: IBM, Yahoo!
Sports: Laureus World Sports Awards
Technology hardware & equipment: Cisco Systems, Corning Inc., Dell, EMC Corporation, Ericsson, Hon Hai Precision Industry, Nokia, Qualcomm, Samsung Electronics, STMicroelectronics
Tobacco: Altria, British American Tobacco, Imperial Tobacco, ITC
Travel & leisure: Carnival, Las Vegas Sands, SKYCITY Entertainment Group
Primary Industries: ABB Grain Limited

PwC Japan

The member firm and a network firm provide auditing services in Japan.
   From 2000 to 2006, PwC's affiliate in Japan was . 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.
   Shortly after the suspension of ChuoAoyama, PwC acted quickly to stem any possible client attrition as a result of the scandal. It set up the PricewaterhouseCoopers Aarata, and many of ChuoAoyama's accountants moved to the new firm, including most of the international divisions. 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.
   Global CEO Sam DiPiazza subsequently reported that "despite a significant programme of reform Misuzu had announced that it was closing for business on 31 July 2007".

Staff

Because PwC's only product is the output of its employees, the firm has a competitive recruiting program. PricewaterhouseCoopers was recently included in Fortune magazine's "100 Best Companies to Work For" list, coming in at number 58 in 2007. In the UK PwC has been voted number one in the Times Top 100 Graduate Employers for 4 consecutive years. PricewaterhouseCoopers is one of the top 10 companies for working mothers. In 2007, PwC's Canadian practice was named one of Canada's Top 100 Employers, as published in Maclean's magazine, one of only a handful of professional services firms to receive this honor. PwC 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.

Consulting activities

Though the firm's core business is audit, it 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 such as SAP R/3 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.
   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.
   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". 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." These plans were soon revised, however. In October 2002, PricewaterhouseCoopers sold the consultancy business to IBM for approximately $3.9 billion in cash and stock.
   PwC also 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.
   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.
   PwC serves the U.S. Federal Government through their Washington Federal Practice (WFP). PwC has over 2000 professionals based in the Washington Metro Corridor.

Dell, Inc. litigation

On January 31, 2007 PwC was named as a co-defendant in a class action lawsuit filed against Dell, the world's number two PC manufacturer. Taken on behalf of shareholders, the lawsuit alleges that Dell, and its auditors, failed to disclose information about Dell's financial condition.

Notable current and former employees

Business

Frank Brown, former leader of the Advisory service line and current dean of INSEAD

Barbara Cassani, former CEO of Go Fly and former chairman of the London 2012 Olympic committee.

Cynthia Cooper, internal auditor, WorldCom accounting scandal whistle blower

Robert Dart, Prominent Canadian businessman and philanthropist

David Gill, Chairman of Manchester United F.C.

Jonathan Howell, Director of Finance for the London Stock Exchange

Margaret Jackson, Chairman of Qantas (2000–present)

Mark King, CEO of Affiliated Computer Services

Phil Knight, CEO and Co-founder of Nike

Chris Lucas, Finance Director of Barclays Bank

Dennis Powell, CFO of Cisco Systems, INC.

James Schiro, CEO of Zurich Financial Services

James M. Schneider, CFO of Dell

Frederick Henderson, CFO of General Motors

Peter Smith, Chairman of Savills estate agents

Henry Staunton, Finance Director of ITV plc (2003–present)

John Surma, Chairman and CEO of U.S. Steel (2004–present)

Eugene Tenenbaum, managing director of Millhouse Capital UK Ltd

Min Zhu, co-founder of WebEx

Richard Meddings, Group Finance Director, Standard Chartered plc

Gianluca Meardi, Partner in Reply and founder of xPrice.biz international PwC Alumni community

J. Michael Schlotman, CFO of The Kroger Co.

Politics and public service

Steven Ciobo, member of the Australian House of Representatives (2001–present)

Justine Greening, Conservative Member of Parliament of the United Kingdom (2005–present)

David Heathcoat-Amory, Conservative Member of Parliament of the United Kingdom (1983–present)

Mark Hoban, Conservative Member of Parliament of the United Kingdom (2001–present)

John Liu, member of the New York City Council (2001–present)

Jeffrey Lucy, chairman of the Australian Securities and Investments Commission (2004–07)

Robert McNamara, United States Secretary of Defense (1961–68); President of the World Bank (1968–81)

Morten Andreas Meyer, Norwegian Minister of Modernisation (2001–05)

Francis Plowden, laymember of the Judicial Appointments Commission

John Stuttard, Lord Mayor of the City of London (2006)

Paul Szabo, Member of the Canadian House of Commons (1993–present)

Stephen Williams, Liberal Democrat Member of Parliament of the United Kingdom(2005–present)

Other

Peadar Andrews, Gaelic footballer

Keith Bradshaw, cricketer

Teddy Flack, Australian athlete

Geoffrey Lehmann, Australian poet

Marisha Pessl, writer

Prannoy Roy, Indian journalist

Enrique Sarasola, Spanish industrialist

Thomas M. Sullivan, talk show host

Wayan Vota, OLPC independent voiceFurther Information

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