PricewaterhouseCoopers

From Wikipedia, the free encyclopedia

Jump to: navigation, search
PricewaterhouseCoopers
Type Limited Liability Partnership
Founded 1849, London (in 1998, firm took on current name)
Headquarters New York, New York, U.S. [1]
Key people Sam DiPiazza, CEO
Industry Professional Services
Products Accounting
Audit
Consulting
Financial advisory
Tax
Revenue $25.2 Billion USD (2007) [2]
Employees 146,000
Website www.pwc.com
A former PwC office building (Southwark Towers) in London, England.
A former PwC office building (Southwark Towers) in London, England.
The PW logo before the 1998 merger
The PW logo before the 1998 merger
The C&L logo before the merger
The C&L logo before the merger

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.[3]

PricewaterhouseCoopers earned aggregated worldwide revenues of $25 billion[4] for fiscal 2007, and employed over 146,000 people[5] in 150 countries.[5]

In the United States, where it is the third largest privately owned organization, it operates as PricewaterhouseCoopers LLP.[6]

PricewaterhouseCoopers is a Big Four auditor, alongside KPMG, Ernst & Young and Deloitte Touche Tohmatsu.

Contents

[edit] 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.

[edit] Price Waterhouse

Samuel Lowell Price, an accountant, started his practice in London in 1849.[7] 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.[7] (The '& Co' and comma were 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 under demolition) 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,[7] and the American firm itself soon expanded rapidly. The original British firm opened an office in Liverpool in 1904[7] 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.[7]

In a further effort to take advantage of economies of scale, PW and Arthur Andersen had discussed a merger in 1989[8] 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.

[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.[9]

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.[3] 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.[3] In 1990 in certain countries including the UK Coopers & Lybrand merged with Deloitte Haskins & Sells.[3]

[edit] Merger

In 1998 Price Waterhouse and Coopers & Lybrand merged to form PricewaterhouseCoopers in an attempt to gain a scale that would put the new firm in a different league.[10]

[edit] 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.[11] 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.[12]

[edit] Structure and Service Lines

PricewaterhouseCoopers offices at Darling Park Tower 2 in Sydney, Australia.
PricewaterhouseCoopers offices at Darling Park Tower 2 in Sydney, Australia.

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 is also an 'umbrella' organisation called PricewaterhouseCoopers International Limited, a UK -based company which provides co-ordination. The current global CEO is Samuel DiPiazza.[13]

PricewaterhouseCoopers has three main service lines:[14]

  • Audit and Assurance,
  • Tax, (international 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),[15]
  • Financial Services (FS),[16]
  • Technology, Information, Communications and Entertainment (TICE),[17]
  • Infrastructure, Government and Utilities (IG&U)[18]

These sub-divisions may vary slightly in some territories.

[edit] Clientele

PricewaterhouseCoopers new Melbourne offices at Freshwater Place.
PricewaterhouseCoopers new Melbourne offices at Freshwater Place.

Europe and North America account for about 81% of PwC's annual revenue,[4] with Europe alone accounting for 45%.[4] The firm's dominant practice is auditing which accounts for over 50% of PwC's revenue.[14]

As of March 2005, PricewaterhouseCoopers' audit clients included four of the 10 largest public companies in the United States (ExxonMobil, Ford Motor Company, ChevronTexaco and IBM). PwC also audits four of the 10 largest companies in the United Kingdom (GlaxoSmithKline, Royal Dutch Shell, Barclays and Lloyds TSB).

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.[19]

PwC audits 40 per cent of companies in the FTSE 100 Index[20] and 45 per cent of the Fortune 1000.[21]

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, Banco Bradesco, 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, GrameenPhone - Bangladesh
Food & drug retailers: Krispy Kreme, Seven & I Holdings Co., Tesco
Food producers: Danone, Kellogg's, Kraft Foods, Unilever
Gas, water & multiutilities: Centrica, E.ON, RWE, National Grid plc
General financial: American Express, Freddie Mac, Franklin Resources, Goldman Sachs, Nikko Cordial, SLM
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, Standard Life
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 Limited, Exxon Mobil, Chevron, EnCana Corporation, Eni, Gazprom, Imperial Oil, Suncor Energy, Marathon Oil, Royal Dutch Shell, Shell Canada, Stuart Petroleum
Oil equipment & services: Schlumberger
Personal goods: Colgate-Palmolive, L'Oreal, Nike, Richemont
Pharmaceuticals & biotechnology: Bayer, 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

[edit] PwC Japan's Assurance (Audit) Service

The Kasumigaseki Building in Kasumigaseki, Tokyo houses PwC Japan Tax Services and PwC HRS. Assurance and advisory services are in Marunouchi, Tokyo.
The Kasumigaseki Building in Kasumigaseki, Tokyo houses PwC Japan Tax Services and PwC HRS. Assurance and advisory services are in Marunouchi, Tokyo.

The member firm PricewaterhouseCoopers Aarata (あらた監査法人 PricewaterhouseCoopers Aarata?) and a network firm Misuzu Audit Corporation (the former ChuoAoyama PricewaterhouseCoopers) (みすず監査法人 Misuzu Kansa Hōjin?) provided auditing services in Japan. Misuzu dissolved in July, 2007.

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.[22]

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 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.[23]

[edit] 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.[24] In the UK PwC has been voted number one in the Times Top 100 Graduate Employers for 4 consecutive years.[25] PricewaterhouseCoopers is one of the top 10 companies for working mothers.[26] 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.[27] 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.[28]

[edit] 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.[29]

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.[30]

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."[31] 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.[32]

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.[33]

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.[34]

PwC serves the U.S. Federal Government through their Washington Federal Practice (WFP). PwC has over 2000 professionals based in the Washington Metro Corridor.[35]

[edit] 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.[36]

[edit] Notable current and former employees

[edit] Business

[edit] Politics and public service

[edit] Other

[edit] References

  1. ^ Hoovers
  2. ^ Facts & figures
  3. ^ a b c d PWC History and milestones
  4. ^ a b c PWC Global Annual Review 2007 Page 35
  5. ^ a b PWC Global Annual Review 2007 Page 39
  6. ^ Forbes - The Largest Private Companies
  7. ^ a b c d e Accounting for Success: a History of Price Waterhouse in America 1890-1990. Harvard Business School Press. ISBN 9780875843285. 
  8. ^ University of Washington: Acounting firms and organisations
  9. ^ A History of Coopers Brothers 1854-1954. 
  10. ^ Price Waterhouse and Coopers & Lybrand to merge Weekly Corporate Growth Report 29 September 1997
  11. ^ The lessons of Andersen's fall Business Week 1 July 2002
  12. ^ PWC: Corporate Finance
  13. ^ PWC Global Review 2007 Page 1
  14. ^ a b PWC Global Review 2007 Page 34
  15. ^ PWC: CIPS
  16. ^ PWC: FS
  17. ^ PWC: TICE
  18. ^ PWC: G&PS
  19. ^ PricewaterhouseCoopers to safeguard Hollywood's biggest secret for 72nd year
  20. ^ KPMG closes FTSE 100 gap on PWC Accountancy Age, 13 December 2007
  21. ^ PWC: Energy, utilities and mining
  22. ^ CPAs in Kanebo fraud avoid prison, The Japan Times (registration required), Aug. 10, 2006.
  23. ^ Rocky road for new accounting firm, The Daily Yomiuri, Sep. 2, 2006.
  24. ^ Fortune: Best companies to work for
  25. ^ Times Top 100 Graduate Employers
  26. ^ Working Mother
  27. ^ "Reasons for Selection, 2007 Canada's Top 100 Employers".
  28. ^ "Ireland's Best Companies to Work for 2008".
  29. ^ Ernst & Young sells consulting unit to Cap Gemini Cnet News, 29 February 2000
  30. ^ Hewlett-Packard drops PWC bid BBC News, 13 November 2000
  31. ^ Monday name change for PwC, BBC News, June 10, 2002.
  32. ^ IBM buying PricewaterhouseCoopers' consulting business Technology, 31 July 2002
  33. ^ PWC: How managing political risk improves global financial performance
  34. ^ Actuarial & Insurance Management Solutions
  35. ^ Washington Federal Practice
  36. ^ United States District Court Writ filed 31 January 2007
  37. ^ OLPC News

[edit] External links

v • d • e
Big Four auditors
Deloitte Touche Tohmatsu · Ernst & Young · KPMG · PricewaterhouseCoopers
Retrieved from "http://en.wikipedia.org/wiki/PricewaterhouseCoopers"
Personal tools