Consulting clean-up: Parliament recommends sweeping changes after multiple scandals

Australia Institute

The Australia Institute’s submission to the inquiry identified serious conflict of interest risks in the consulting industry and polling found most Australians support a ban on PwC receiving new government work.

Key details:

  • The inquiry into Structural Challenges in the Audit, Assurance and Consultancy Industry was called after serious problems in the consulting industry came to light.
  • The inquiry report recommends:

    • Continuing the ban on PwC tenders for government work until all ongoing investigations have been completed.
    • Limiting partnerships to no more than 400 partners.
    • Professional standards and regulations for consultants.
    • Applying the Corporations Act to large partnerships.
    • Greater alignment of whistleblower protections and applying those protections to large audit, accounting and consulting firms.
    • “Operational separation” of audit services from other services to the same client.
  • Most of the recommendations, including some of the most important, received multi-party support.

“Australians have rightly lost confidence in consulting firms following multiple scandals, including mismanaged conflicts of interest, leaking of confidential government information and burying information that reflected badly on the illegal Robodebt scheme,” said Bill Browne, Director of the Australia Institute’s Democracy & Accountability Program.

“The Parliamentary Inquiry into the audit and consulting industry has recommended much-needed changes to hold these multinational firms to account, including continuing the ban on PwC tenders for government work and limiting partnerships to no more than 400 partners.

“Consultants present themselves as professionals when it suits them, but are not bound by professional standards or a body that enforces a code of conduct. The proposed consultancy code and compliance body could address this gap.

“Expanded whistleblower protections are a welcome recommendation. Australia depends on whistleblowers to expose both corporate and government wrongdoing, but current protections for whistleblowers are weak and incomplete.

“An ongoing ban on PwC taking government work is likely to be popular among Australians, with Australia Institute polling research last year finding most Australians supported a long-term ban on the consulting firm after it breached public trust.

“By all accounts, the committee was collegiate and diligent, with Liberal parliamentarians Alex Hawke and Paul Scarr graciously recognising the Labor chair Deborah O’Neill’s leadership.”

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