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AAP
AAP
Politics
Kat Wong

Consulting firms' problems fuelled by pursuit of growth

The PwC tax leaks scandal prompted the inquiry into consulting, audit and accounting firms. (Dan Himbrechts/AAP PHOTOS)

When Erin Twyford tried to leave her office job at 5pm, her co-workers were appalled.

"They said, 'you can't be seen as the first person to leave'," she said.

"I saw real worry on their face, like I might be reprimanded because I'm leaving at an appropriate time."

She was an audit intern at consulting giant Deloitte when the long hours and high-pressure environment had already begun to weigh on her, and it was then she knew she did not want to be an accountant.

"You're supposed to be the workhorse for several years because there's this big shiny trophy at the end of making partner where hopefully things calm down - at least that's the story that you're told," she told a Senate committee on management and integrity within consulting services.

"I did not want to live under that culture, but that was the culture they sort of indoctrinated in me."

Dr Twyford has since moved into academia and says this work culture is emblematic of issues that run rife in the professional services industry. 

The sector's constant need for growth means companies like the big four consultancies, Deloitte, PwC, EY and KPMG, incentivise young, poorly paid employees to sacrifice upwards of 70 hours a week working in what has been described as a "modern-day sweatshop".

Consulting firms stock
A Senate inquiry has been told the big four consulting firms have a constant need for growth.

According to Associate Professor James Hazelton, this aggressive" pursuit of growth is one of the drivers of PwC's tax leak controversy, where the firm leaked secret government information to clients on how to dodge taxes.

"The breakdown of trust at PwC and in the broader assurance profession and the consulting industry is not the result of particular rogue bad apples, but rather is symptomatic of a structural problem with the industry," he told the Senate committee.

"There is a fundamental tension between acting in the public interest and acting from the profit mode."

When many of these corporations perform both auditing and consulting functions, there is a conflict of interest that can threaten a firm's integrity.

Most opportunities for growth and revenue come from their consulting branches while auditing has comparatively less value.

"(This) puts firms who perform audit and advisory to the same organisations in a really compromised position because they're providing audit opinions on transactions they have put in place," Associate Professor Hazelton said.

"It puts them in a difficult decision to say 'that was a bad thing' when they're the ones who recommended it in the first place.

"That in itself compromises independence." 

The expert panel giving evidence on Friday, recommended separating a company's audit and consulting functions however, they have agreed it was an almost impossible task because the audit branches provided a veneer of legitimacy to other departments.

"(Audit) is viewed historically and contemporarily as a (profession) that maintains high ethics and professional standards," Dr Twyford said.

"(But) consultants are not a profession - they think they are, but they're not.

"(Audit) confers them a level of legitimacy. It's almost like a veil." 

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