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Big four consulting firm EY has sought to distance itself from the "deeply disturbing and disappointing" behaviour revealed at its competitor PwC, telling a parliamentary inquiry it has never breached government confidentiality.
Key points:
- EY's CEO David Larocca says breaking up the firm would not prevent conflicts of interest
- Mr Larocca would not be drawn on whether his $2.8 million salary was justifiable
- The big four firms are fighting calls to be broken up in the wake of the PwC scandal
EY Oceania CEO David Larocca also disclosed that he earned $2.8 million last financial year and that the average partner income at the firm was close to $1 million.
"It's not my role to judge what my income should be, I believe it is a fair reflection of what I do," Mr Larocca told the committee.
The firm was rebuked by senators for refusing to disclose more details about the earnings of its partners and its partnership agreement, which had been requested by the committee.
Greens senator Barbara Pocock said EY should be forthcoming about remuneration across the firm given it made around $700 million from government dealings during the last financial year.
"You distinguish yourself from PwC and you're telling us that you're different and better, but for me, it's deeds, not words, that people are looking for," Senator Pocock said.
"This is a critical piece of the way you work; this is your modus operandi, and we have a right to know."
Mr Larocca argued revealing the information to the committee would be anti-competitive and that EY operated "in an intensively competitive partner market".
"I'm not comfortable with our competitors having the information you're asking us to disclose," he said.
'We don't breach confidentiality', EY insists
EY Oceania risk management and independence leader Leigh Walker told the committee the firm had "no breaches of government confidentiality".
The parliamentary committee has been examining the culture and conduct at the big four consulting firms after it was revealed that a partner at PwC sought to use confidential Commonwealth information to make money and help clients dodge new tax laws.
Mr Larocca told the inquiry EY "takes its ethical obligations extremely seriously" while taking aim at the practices exposed at PwC.
"At EY, we don't deliberately breach confidentiality," he said.
"We don't market tax minimisation schemes, we don't use blanket legal professional privilege claims to frustrate regulators and our business model is not built on condoning, rewarding or covering up this kind of behaviour."
Mr Larocca argued against forcing the big four firms to break up their auditing and consulting arms as advocated by former chair of the competition watchdog Professor Alan Fels.
"Regulation is something that we would welcome … having one [overarching] regulator, we are absolutely open to that," he said.
"I would challenge that breaking firms up in whatever way solves conflicts of interests — it won't."
Culture review triggered after death due later this month
Following the death of an employee at EY's Sydney office in September last year, the firm commissioned the organisation of former sex discrimination commissioner Elizabeth Broderick to conduct a review into workplace culture.
The review is due to be completed later this month and Mr Larroca has committed to hand over the findings to the committee and release them publicly.
"Our focus first and foremost, when we receive the finalised report, will be to communicate the findings of the review to our own people, those who have given us the gift of their story.
"No matter how uncomfortable that task may be, we will then immediately release it publicly, including to this committee.
"This would ensure there is no self-censorship, that we hear about the things that can make us a better organisation and hold us accountable for improving," he said.
Mr Larocca said the employee's death "saddened and shocked me, it saddened and shocked all of us at EY".
"At the time of our colleague's passing, we were also emerging from COVID, a period of extreme anxiety and uncertainty for all our people," he said.
"The review will enable us to hear about how we can become an organisation that is more inclusive, one that creates a greater sense of belonging, one that embraces and learns more from the diversity of our staff and our partners."