The FT has reported that ten years after the creation of PricewaterhouseCoopers its new senior partner:
PwC, the professional services group, must become more agile if it wants to maintain and improve on its market-leading position, according to its new head, Ian Powell.
There is a problem with that. Whenever accountancy firms have been agile abuse has not been far behind, and it does not look as though much has changed. As the FT reports:
Mr Powell said limiting auditor liability was the key to helping newcomers develop and for alleviating the risk of a firm collapsing. The profession has long complained about the unlimited liability it carries and the risk that one case could bring down an entire firm.
Let us be clear about what that means though. An auditor without liability is an auditor without risk. Unless an auditor goes to sleep at night thinking they can be sues they do not do their job properly. I know that: I did it for many years.
The auditor who cannot be sued for the loss they cause transfers their risk to society and earns a supernormal profit from the legal privilege they have secured at the expense of society.
This is not agility: this is a licence to get rich at other's expense. It is the age old problem of monopoly: PWC's concern that none of the Big 4 fail is clear indication that they are a member of a cartel, even if they are not a monopolist.
I note with curiosity that Mr Powell says PWC is a conservative organisation. Of course they don't want to change: they are winning from the world as it is. The but it is worse than that. As I show in Tax Havens: Creating Turmoil, they are part of the problem with the world as it is.
In that case let me assure you, there is no market-based solution to this problem. PWC must be regulated if its agility is to be constrained, and for all our sakes that is essential.