PwC Indigenous Consulting rebrands to Yamagigu Consulting after Deloitte buys minority stake
Deloitte has purchased a minority stake in PwC’s Indigenous consulting arm, which will see it renamed to an Aboriginal word meaning ‘our purpose is to go with you’.
TPB chair speaks on new code rules, shuts down ‘scaremongering’
Practitioners can expect the controversial changes to be interpreted "pragmatically" with guidance to be rolled out in coming months, Peter de Cure tells Accountants Daily.
TPB chairman Peter de Cure has called for an end to the “unhelpful scaremongering” in the tax community over the government’s changes to the code of conduct and says the legislative instrument is consistent with existing obligations.
As practitioners and professional bodies speculate over the broad wording of provisions while awaiting guidance from authorities, de Cure told Accountants Daily the board’s approach would be “pragmatic and practical”.
“I'd really like to assure people that the legislative instrument and the requirements in there are consistent with the existing code and will be implemented in a pragmatic and practical fashion,” he said.
“I think some of the scaremongering that's been going on around with the potential interpretations of the legislative instrument is just genuinely unhelpful.”
After Assistant Treasurer Stephen Jones’ determination to the code of conduct was registered on 1 July, and the TPB’s statement notifying agents of the changes was released 10 days later, practitioners and professional bodies criticised the lack of notice and coordination between the two agencies.
“From 1 August 2024 tax practitioners will need to comply with eight additional obligations that will supplement the existing obligations under the code,” the TPB’s statement said.
"Tax practitioners should familiarise themselves with these new requirements and review their practices to ensure they are compliant."
In response, the Institute of Financial Professionals (IFPA) sent out an email to members on Friday criticising the “bland” and “belated” statement that demonstrated “no appreciation of the challenges facing smaller practices”.
Professional bodies also said the instrument created uncertainties and inconsistencies in practice with existing client confidentiality principles and weakened the code’s “principles-based approach” with “prescriptive” obligations. The 1 August start date was also deemed “unrealistic and unachievable”.
But de Cure said the instrument provided clarity and that concerns over apparent inconsistencies created were moot because the legislative instrument would override existing obligations.
“There is allegedly a concern that the instrument breaches code obligations in relation to confidentiality,” he said, referring to concerns over section 15 requiring agents to report clients to the ATO if they identify errors in returns or statements and their client does not consent to an amendment.
“That’s clearly not correct, because the instrument imposes a legal obligation on the practitioner to make the disclosure. The instrument has the force of law.”
“All this instrument is doing is saying that if a tax practitioner is aware that a statement made on behalf of the client is false and or misleading, and they can’t get their client to correct that statement, then they have a positive obligation to disclose. That doesn’t make you an auditor.”
He defended the need for the “robust regulation”, arguing it benefitted the majority of practitioners who maintained high professional standards.
"The robust regulation of the profession works in the favour of the vast majority of practitioners, the people that are doing the right thing and behaving with appropriate professional standards," he said.
The TPB chairman also dismissed interpretations that claimed section 45 of the instrument could infringe on practitioners’ privacy. The section forces practitioners to disclose “any” matter that could influence clients’ decision to engage them.
While CA ANZ speculated that this could entail “matters of a private nature like health, religion, sexual orientation, political persuasion or even sporting affiliations", de Cure said the TPB would not take such a broad approach.
“This is about issues in relation to engaging a person to be a tax practitioner. And that clearly doesn't include anything to do with their personal religious beliefs, their political beliefs," he said.
He said the legislative instrument would also be compatible with human rights, including the right to privacy, political communication and freedom of personal beliefs.
But the issue of mental health “could possibly be relevant” as a matter for disclosure, he said, and would be determined during the consultation process with professional bodies.
As the instrument’s 1 August start date looms, the TPB would also be running an awareness campaign with webinars while working on releasing guidance prioritising the “most contentious items”.
However, de Cure conceded guidance would “take a while” and would only be available after obligations came into effect next month.
“We’ll be rolling it out over the next couple of months, as fast as we can,” he said, adding that enforcement would not begin immediately.
“I don't see the implementation of this as something where we start looking for problems on 1 August. But with practitioners brought to our attention because of other problems, we will probably look at how well they're managing around the items that are required by the code.”
KPMG axes legal division, dozens of jobs to go
KPMG Australia will disband its in-house legal division in the second major restructure of the firm’s operation in just over a month.
The decision will cost dozens of jobs and marks the end of the big four consultancies’ ambitious attempt, launched at the peak of their influence, to take on established major law firms in traditional commercial practice areas. KPMG Law’s Tax Controversy & Disputes practice will be incorporated into the firm’s tax division, but the big four firm will no longer operate its own distinct commercial law practice.
According to the latest edition of The Australian Financial Review Law Partnership Survey, 24 partners were members of the firm’s legal division. Ben Travers, head of the firm’s tax and legal division, said KPMG would now “look to further develop alliances with law firms that offer complementary services to ours, rather than invest in our own commercial law businesses”.
The decision to pursue alliance relationships with established firms represents a stark reversal from just five years ago, when the major consultancies poached senior lawyers from top-tier firms, with a brief to steal market share from established companies. Despite big ambitions – PwC declared it wanted to be a top 20 law firm by the end of 2023 – consultancies’ legal offerings have failed to achieve their goals, and drawn scrutiny over legal professional privilege practices. The legal divisions’ failure to launch has made them a target for cost-cutting, as firms retreat to core offerings in a depressed consulting market.
Mr Travers said KPMG’s new strategy “is focused on playing to our strengths and prioritising investment into areas which align with KPMG’s growth strategy and markets”.
Second restructure
The dissolution of KPMG’s legal division comes one month after the firm announced it would overhaul its consulting business as part of an $80 million cost-cutting exercise likely to result in the loss of about 200 jobs.
The legal restructure is separate to the firm’s plan to reshape itself as a tech-focused consultancy, and job losses will be in addition to those already announced.
In a further sign of the firm’s retreat to core services, the tax controversy practice area will be the only department salvaged from the law firm.
The tax lawyers will be redeployed in the firm’s larger tax division, and KPMG says it will look to grow its offering in the still-profitable practice area.
“We have an ambition to be Australia’s leading firm in tax controversy and disputes,” Mr Travers said. “We believe focusing on [this area], and extending alliance relationships, will enable clients to better leverage broader capabilities to solve their issues.”
Maxim Shanahan is a professional services reporter at the Australian Financial Review. Email Maxim at max.shanahan@nine.com.au
Just when you thought consulting giant PwC could not sink any lower, a new scandal emerges.
This time it relates to the firm’s advice to clients on foreign investment proposals. According to one source, it was advice that might “mislead or subvert” foreign investment review board processes.
Australia has foreign investment reviewprocesses to examine whether investments are in the national interest. They consider factors such as national security, competition, impacts on tax revenue
Consulting firms wedded to unscrupulous behaviour By Stephen Bartos
Aussie bureaucrats team up with OECD to explore how to lift public trust
