PwC unlikely to split its audit, advisory ops

PwC believes in keeping the audit and advisory business under one roof as they need multiple competencies and capabilities at scale to deliver quality services, said Bob Moritz, the global chairman, PricewaterhouseCoopers International. Even as rival EY has kick-started a process to split the firm, Moritz, who is in India to celebrate the Indian firm’s 150 year celebrations, said both service lines help the firm create a sustainable business model that can withstand economic pressures. In a chat with ET’s Vinod Mahanta, Moritz talks about the India opportunity, the choppy global economy, the EY split and why he wants to target EY talent. Edited excerpts:

Are global companies looking to invest more in India given that the Indian economy has been better off compared to other major economies in the West and even Asia?

I think they’re looking at the situation differently and they’re looking at India differently. There is a subtle nuance, which is very important. Organisations are rethinking the work that they do and the supply chains that they have.There is bias they may have towards friend-shoring or in-shoring or on-shoring now and they might pull away from China, which historically has fuelled the world for the most part in the last decade or two. CEOs not only have to think about affordability, security, and resiliency as they redesign and re-engineer their companies and supply chains, but they also have to take into account their ESG objectives. India has to leverage its technology prowess, its quality of workforce, the digital IQ to make things more effective, efficient and cleaner in terms of supply chain. If that happens, making the right economic decisions becomes easier for global companies.

The global economy is facing multiple crises ranging from war to inflation. What kind of signals are you getting from your meetings with CEOs around the world?
You get a totally different story, depending on what part of the world you’re in. In Europe, the story still is unfortunately dominated by the war, inflation, energy and a half-empty mindset, in terms of, what happens next. If you go to North America, I put the US, Canada and Mexico in the mix. You get a different story, one that is still very tight on labour, as a result is pushing the boundaries with regards to inflationary pressure, wage pressure and the like. But you still have consumer confidence. Businesses are seeing a monetary policy program in place that’s tightening things up pretty quickly. But if you come to this part of the world there’s a much different story which is that the underlying mega trends-like demographics, rise of middle class etc-are still prevailing and still creating tremendous opportunity. There’s a big opportunity for this part of the world to be a solution to the world, relevant to supply chain and ESG.

EY has decided to split the audit and advisory arms to do away with conflict of interest issues. Why does PwC want to keep audit and advisory under one roof?

To deliver on the PwC strategy that’s built around trust and delivering sustained outcomes, we need multiple competencies and capabilities at scale. And we also need a sustainable business model that’s going to withstand economic pressures. As a large organisation, we will be investing heavily in technology, infrastructure and training that will help us manage the conflict of interest and scope of service issues.Now let me also give an outside-in stakeholder perspective. In the short term, how do you deliver quality when you’ve got that much uncertainty with your people? Partners are thinking, which side do I go with? How do I do this? In the next couple of years, the economy is slowing down. It’s more likely you will have bankruptcies, audit failures, more risk of fraud, misrepresentation of ESG progress and a whole lot of issues. Auditors will have to do a good job on those while dealing with this distraction.