PricewaterhouseCoopers will spin off its management and IT
consulting unit via an initial public offering (IPO) in August, the
latest planned move by a Big Five accounting firm to shed
consulting services that might compromise the integrity of its core
audit business.
PwC Consulting, as the unit is currently known, left no doubt in
its IPO registration with the US Securities and Exchange Commission
(SEC) that the issue of auditor independence was a big motivator
for the move to become separate from PricewaterhouseCoopers.
"The primary purpose of this offering is to ensure that we will no
longer be subject to the rules and regulations governing the
independence of auditors from their clients and to eliminate any
perceived conflicts of interest," reads the IPO registration.
"Because of our affiliation with the auditing practice of the
PricewaterhouseCoopers network of firms, audit clients of
PricewaterhouseCoopers firms are increasingly limiting or denying
us opportunities to provide our services for them," the filing
reads.
PwC Consulting also stated in the filing that its base will be
Hamilton, Bermuda, and that it expects to have about 32,000
employees and offices in 52 countries. The registration was filed
under the name PwCC Ltd., which will be the new name for the
company.
The issue of auditor independence has been in the spotlight since
the collapse late last year of energy trader Enron, whose
accounting practices have come under investigation. Enron's former
auditor, Arthur Andersen LLP, sold non-audit consulting services to
the energy company. This practice, critics charge, created a
potential conflict of interest in which the accounting firm may
have compromised its auditing work in order to protect its
lucrative non-audit contracts with Enron.
In reaction to the controversy, fellow Big Five firm Deloitte
Touche Tohmatsu in February announced its intention to separate its
audit and consulting businesses. Arthur Andersen, which is
struggling to survive the Enron debacle, announced in March that it
would get rid of its consulting units to concentrate on being
purely an accounting firm.
PricewaterhouseCoopers, based in New York, announced in January its
intention to seek this IPO for PwC Consulting.
PricewaterhouseCoopers tried to sell PwC Consulting to
Hewlett-Packard in 2000 but the deal never materialised.