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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	$28.2 Billion USD (2008) ²
Employees	155,693³
Website	www.pwc.com

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.⁴

PricewaterhouseCoopers earned aggregated worldwide revenues of $28 billion⁵ for fiscal 2008, and employed over 146,000 people⁶ in 150 countries.⁶

History

The firm was created by the merger of two large firms Price Waterhouse and Coopers & Lybrand in 1998. 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 1849.⁸ 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.⁸ (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 1890,⁸ and the American firm itself soon expanded rapidly. The original British firm opened an office in Liverpool in 1904⁸ 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.⁸

In a further effort to take advantage of economies of scale, PW and Arthur Andersen had discussed a merger in 1989⁹ 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.¹⁰

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.⁴ 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.⁴ In 1990 in certain countries including the UK Coopers & Lybrand merged with Deloitte Haskins & Sells to become Coopers & Lybrand Deloitte,⁴ in 1992 renamed Coopers & Lybrand.¹¹

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.¹²

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.¹³ 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.¹⁴

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 is also an 'umbrella' organisation called PricewaterhouseCoopers International Limited, a UK -based company which provides co-ordination. The current global CEO is Samuel DiPiazza.¹⁵

PwC's service lines face the market in each country by broad industry specializations such as:

Clientele

Europe and North America account for about 81% of PwC's annual revenue,⁵ with Europe alone accounting for 45%.⁵ The firm's dominant practice is auditing which accounts for over 50% of PwC's revenue.¹⁶

The following are PwC audit clients that are part of the FT Global 500 (2006), grouped by FT industry

PwC Japan's Assurance (Audit) Service

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.²⁴

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.²⁵

Staff

Because PricewaterhouseCoopers'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 2007.²⁶ In the UK the company has been voted number one in the Times Top 100 Graduate Employers for 5 consecutive years.²⁷ PricewaterhouseCoopers is one of the top 10 companies for working mothers.²⁸ In 2008, for the third consecutive year, PricewaterhouseCoopers's Canadian practice was named one of Canada's Top 100 Employers, as published in Maclean's magazine.²⁹ PricewaterhouseCoopers 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.³⁰

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.³¹

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 2000.³²

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."³³ 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.³⁴

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.³⁵

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.³⁶

PwC serves the U.S. Federal Government through their Washington Federal Practice (WFP). PwC has over 2000 professionals based in the Washington Metro Corridor.³⁷

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.³⁸

Notable current and former employees

Business

Politics and public service

Other

References

^ Hoovers
^ Facts & figures
^ PWC People
^ ^a ^b ^c ^d PWC History and milestones
^ ^a ^b ^c PricewaterCoopers 2008 revenues rose 10% to $28.2 billion
^ ^a ^b PWC Global Annual Review 2007 Page 39
^ Forbes - The Largest Private Companies
^ ^a ^b ^c ^d ^e Accounting for Success: a History of Price Waterhouse in America 1890-1990. Harvard Business School Press. ISBN 9780875843285.
^ University of Washington: Acounting firms and organisations
^ A History of Coopers Brothers 1854-1954.
^ ICAEW family trees
^ Price Waterhouse and Coopers & Lybrand to merge Weekly Corporate Growth Report 29 September 1997
^ The lessons of Andersen's fall Business Week 1 July 2002
^ PWC: Corporate Finance
^ PWC Global Review 2007 Page 1
^ ^a ^b PWC Global Review 2007 Page 34
^ PWC: CIPS
^ PWC: FS
^ PWC: TICE
^ PWC: G&PS
^ PricewaterhouseCoopers to safeguard Hollywood's biggest secret for 72nd year
^ KPMG closes FTSE 100 gap on PWC Accountancy Age, 13 December 2007
^ PWC: Energy, utilities and mining
^ CPAs in Kanebo fraud avoid prison, The Japan Times (registration required), Aug. 10, 2006.
^ Rocky road for new accounting firm, The Daily Yomiuri, Sep. 2, 2006.
^ Fortune: Best companies to work for
^ Times Top 100 Graduate Employers
^ Working Mother
^ Yerma, Richard (2008-10-01). "The Top 100". Maclean's. Retrieved on 2008-10-30.
^ "Ireland's Best Companies to Work for 2008".
^ Ernst & Young sells consulting unit to Cap Gemini Cnet News, 29 February 2000
^ Hewlett-Packard drops PWC bid BBC News, 13 November 2000
^ Monday name change for PwC, BBC News, June 10, 2002.
^ IBM buying PricewaterhouseCoopers' consulting business Technology, 31 July 2002
^ PWC: How managing political risk improves global financial performance
^ Actuarial & Insurance Management Solutions
^ Washington Federal Practice
^ United States District Court Writ filed 31 January 2007
^ OLPC News

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