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PricewaterhouseCoopers

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Category:	Companies and coworkers
Created:	Jun 26, 2004
Type:	Public
Members:	894
Owner:	Hendri
Language:	English
Country:	United States of America

PricewaterhouseCoopers (or PwC) is the world's largest professional services firm. It was formed in 1998 from a merger between Price Waterhouse and Coopers & Lybrand. PwC is the largest of the Big Four accounting firms, the other three being Deloitte Touche Tohmatsu, Ernst & Young and KPMG.

PricewaterhouseCoopers earned aggregated worldwide revenues of $22 billion for fiscal 2006, and employed over 140,000 people in 149 countries.

In the United States, where it is the third largest privately owned organization, it operates as PricewaterhouseCoopers LLP.

The firm was created by the merger of two large firms Price Waterhouse and Coopers & Lybrand. These two firms each had histories dating back to the nineteenth century.

Samuel Lowell Price, an accountant, started his practice in London in 1849. In 1865 Price went into partnership with William Holyland and Edwin Waterhouse. Holyland left shortly after to work alone in accountancy; and the firm was known from 1874 as Price, Waterhouse & Co. (The '& Co' and comma were dropped from the name much later.) The original partnership agreement, signed by Price, Holyland and Waterhouse can be found in Southwark Towers, one of PwC's offices in London. By the late nineteenth century, Price Waterhouse had gained significant recognition as an accounting firm. As a result of trade between the United Kingdom and the United States of America, Price Waterhouse opened an office in New York in 1890, and the American firm itself soon expanded rapidly. The original British firm also opened more offices in the main countries in the British Empire, each time establishing a separate partnership in each country that gave each partner a strong incentive to expand their local practices. The worldwide practice of PW was therefore a federation of collaborating firms that had grown organically rather than being the result of an international merger.

In 1854 William Cooper established his own practice in London, which became Cooper Brothers seven years later when his three brothers joined. In the USA in 1898 Robert H. Montgomery, William M. Lybrand, Adam A. Ross Jr. and his brother T. Edward Ross formed Lybrand, Ross Brothers and Montgomery. Coopers & Lybrand is the result of a merger in 1957 between Cooper Brothers & Co; Lybrand, Ross Bros & Montgomery and a Canadian firm McDonald, Currie and Co. In 1990 Coopers & Lybrand merged with Deloitte Haskins & Sells in the United Kingdom, but most other parts of Deloittes merged with Touche Ross to form Deloitte Touche Tohmatsu.

In addition to setting up an office in the major capital cities of the world, the PW or Coopers firm in each country often assimilated local accounting practices. This provided even more offices in the regions of each country and so resulted in 'critical mass', allowing the rapidly increasing number of international corporations to be fully serviced wherever they traded. Growth was also spurred by increasing audit requirements, especially after the Great Depression in the 1920s and 1930s, and by the increasing complexity of taxation.

In a further effort to take advantage of economies of scale, PW and Arthur Andersen had discussed a merger in 1989 but the negotiations failed mainly because of conflicts of interest such as Andersen's strong commercial links with IBM and PW's audit of IBM. In 1998 Price Waterhouse and Coopers & Lybrand merged to form PricewaterhouseCoopers in an attempt to gain a scale that would put the new firm in a different league. The following year merger discussions between PwC and Grant Thornton failed. Because of the reduced number of major firms, it is unlikely that further mergers would be allowed by competition authorities.

The 2002 indictment of Enron and WorldCom and the subsequent collapse of Arthur Andersen resulted in stringent U.S. Securities and Exchange Commission rules on auditor independence. One such result was the adoption of the Sarbanes-Oxley Act, which required auditor independence and separation of core audit from general consulting. This forced many of the Big Four to divest their interests in management consulting. However, a major part of the firm's practice is still to provide business advice in addition to its auditing services, notably in taxation and corporate finance.

The legal structure of a limited liability partnership is very different to that of a company, and as such the global firm is in fact a collection of member firms, that are run autonomously in their respective jurisdictions. The senior partners of member firms sit on a global board of partners and there is also an 'umbrella' organisation called PricewaterhouseCoopers International Limited, a UK -based company which provides co-ordination. The current global CEO is Samuel DiPiazza, a 52 year old partner of the former Coopers & Lybrand.