Recommendations have been made to address PwC’s “disregard” for truth and ethical standards. 

A Senate inquiry into PwC Australia's misuse of confidential government information has called for heightened scrutiny and stricter regulations for private consultancy firms. 

The report (PDF) from the Finance and Public Administration References Committee’s inquiry into ‘Management and assurance of integrity by consulting services’ recommends greater transparency and oversight to safeguard public funds and integrity in governmental consulting services.

Its twelve recommendations are aimed at enhancing parliamentary oversight of consultancy contracts and the regulatory frameworks for large partnerships, particularly those exceeding 100 partners, like PwC. 

It advocates for closer examination of consultancy contracts valued over $2 million and proposes that those above $15 million require parliamentary approval.

The Federal Government has become hugely reliant on consultancy services, with a significant increase in government outsourcing over the past decade.

“A rapid increase in government expenditure on outsourcing public work to consultants over the last decade has hollowed out the public service,” the report states.

The inquiry was initiated following allegations that PwC Australia used its advisory role to gather confidential information, aiding its international clients in tax avoidance. 

The scandal raised concerns about conflicts of interest within the professional services sector, particularly among the Big Four firms: PwC, Deloitte, EY, and KPMG.

The final report has condemned PwC for its lack of transparency, accusing the firm of hiding behind legal professional privilege. 

It calls on PwC to be “open and honest” with the Australian Parliament and the public by promptly publishing detailed information about the involvement of its partners and personnel in the breach of confidential government information.

It says the Department of Finance should update the Contract Management Guide to require that Australian Government contracts include a clause stating that service providers have a duty to act in the public interest when delivering work for the government.

The Department of Finance is called on in the report to improve the training of officials responsible for procurement to ensure that the Australian Public Service (APS) is equipped to secure value for money when engaging consultants.

The department was also told to amend its Supplier Code of Conduct to include requirements for service providers to act in the public interest and to incorporate elements from the professional standard APES 110 that align with public sector values. 

Additionally, it says the Department of Finance should review and clarify its guidance on conflicts of interest, providing consistent definitions and emphasising the active management of conflicts as part of APS project management, and develop a central register for conflicts of interest breaches to be used by government entities.

The committee’s report says the government should commission the Australian Law Reform Commission, or another appropriate body, to review the legislative frameworks and structures of partnerships in Australia, focusing on those with more than 100 partners, to ensure appropriate regulatory governance and oversight.

Organisations that operate professional standards as self-regulatory regimes are called on to report annually on their standards to the Joint Standing Committee on Corporations and Financial Services and appear before the committee to provide oversight.

Additionally, the Senate committee says legislation should be enacted to establish a Joint Standing Committee to review and approve consultancy and services contracts, with provisions and thresholds similar to those in the Public Works Act 1969, adjusted to suit the requirements of overseeing significant government spending.

The Senators also said their colleagues should pass an order requiring the Minister for Finance to publish biannual statements on government expenditure on consultancy contracts valued at $2 million or more, including details such as dollar value, subject matter, duration, contracting agency, service provider, expected deliverables, changes or extensions, and any matters of probity or conflict of interest.