What do I know..13 hours ago
PwC, deliberate or not, made a number of decisions that have systematically destroyed audit quality.

In c. 2013 they implemented “Project Accelerate” which shifted audit responsibilities down a grade on launch (I.e. traditionally 2nd year responsibilities were delegated to first year graduates, first year grads to interns etc).

At the same time they mandated each audit budget was cut by 20% year on year for 3+ years due to internal investments in technology. Meeting this requirement was written into Senior Managers performance reviews.

Finally they went nearly a decade post 2007 without giving a significant payrise , often citing significant investment in technology as a reason they couldn’t afford it (yep, that same investment which means you have to work longer hours to meet a reduced budget). Graduates in the North start on c. £21k a year and London £28k when the figures in 2006 were £20k and £27k respectively. At the same time they massively scaled back investment in training and payed time of work to pass the ACA (C. 40% cut between 2011-2014) forcing staff to regularly use their holiday in the first two years simply to pass the exams and stay employed.

The net result was an over worked and under payed work force. With advisory departments growing rapidly and pay significantly behind industry, all talented staff left. To increase retention of the stragglers they often over promoted, shifting the cost of the pay rise onto clients. This often resulted in poor quality middle management.

It was common for auditors to charge less than 75% of their time to artificially improve engagement profitability. It also wasn’t uncommon for staff to “fudge” work papers so they could leave before 10pm for the first time that week..

It’s no coincidence that audit failures began increasing in 2013 when these changes began. The amazing thing is that the FRC and public are only scratching the surface - in my time there I personally found a mistake that saw us restate 3 years of previously audited accounts (literally due to previous senior associates rolling forward work papers without questioning them) but it was quietly pushed under the carpet because it was a private company. I also know of many more from my friends...

Beyond looking at individual audit failures the FRC should consider negligence across the entire firm for the systemic failures noted above - however don’t worry partner profits are record highs so it all worked out for the partners (and dodgy audit clients)



Musing12 hours ago
This is completely in line with my experience of working there from 2012.

People always talk about the fall in audit quality being due to a pressure to cross sell consulting work. It baffles me that they never talk about measures such as these that directly impact audit quality.



Time's tide will smother you10 hours ago
@What do I know.. all too true. Was on 19k oop north in 2008 working for PwC and got by living in a shared house paying 275quid a month incl bills!

- Car travel to clients within 10 miles of the office was not refunded by PwC

- Our teams of 4 had to share a single dial-up connectivity card that we stuck in the side of the laptop to 'save money'!

- We were encouraged to buy a brand new car on hire purchase as the partners got a % from the car companies for promoting internally.

- We were encouraged to get an AmEx card and do all our spending on it as the partners collected the air miles for all the personal spending we ran up!


JR2111 hours ago
@What do I know..  I think also the move to being limited liability also has had an incremental effect.  When the partners were in the position of potentially losing their homes and wealth for a bad audit, the entire partnership was much more cautious and took less risk.  Now that this is no longer the case they can be more cavalier in their approach.

As their business model is largely dependent on selling chargeable hours to clients, any work where the hours work can be inflated to earn more fees is sold in that way, whilst with any fixed price work (like audit) the staff are squeezed.  Really quite a reprehensible business model.