Governance and transparency
Why governance and transparency are central to solving problems
Solving important problems sits at the heart of our business, whether that’s working on insolvencies, combating cyber threats or providing assurance on financial statements. Governance and transparency are both essential to helping us find and deliver solutions: our governance procedures guide our work, while transparency is critical to building trust.
On this page of our Annual Report you can find out about the work of our Management Board, our Supervisory Board and the Public Interest Body. You can read feedback from our stakeholders, look into our executive pay, find out how we work with political parties, the role of our client committee, and what our principal risks and tax strategy are.
Meet our Management Board
Our Management Board leads our firm and is made up of our Executive Board and our Clients and Markets Executive.
PwC’s Executive Board is chaired by our Chairman and Senior Partner, Kevin Ellis, and is structured to bring focus to our strategy, operations, talent and technology.
Our Clients and Markets Executive (CME) works with the Executive Board focusing on delivering the very best assurance, consulting, deals and tax services to our clients with an appropriate industry and market emphasis.
Find out more here.
What role does our Supervisory Board play?
The Supervisory Board, chaired by Anne Simpson, provides the Executive Board with guidance on matters of actual or potential concern to partners and represents the interests of all partners. As such, it is a core part of our governance structure. Supervisory Board members hold regular meetings with partners to get their views on the firm’s overall strategy and any other issues that may be of concern. You can find out more about our supervisory board in our transparency report.
Hear from our Public Interest Body
Our Public Interest Body (PIB) for FY18 comprised five Independent Non-Executives and, as of the 30th June 2018, three representatives from our firm. Their role is to enhance confidence in the public interest aspects of our firm’s strategy and decision making. The PIB plays a key part in ensuring public interest is at the heart of our stakeholder management and reputational risk management. The PIB also has a role in ensuring we are considering the way our purpose links to our strategy. You can hear more from them here.
Executive remuneration
We believe being transparent about pay is an important way to build trust within our business, which is why we publish details of our executive pay. Individual profit per partner is based on a number of factors including responsibility, individual performance and overall profitability of the firm. We’ve tracked or average profit per partner in relation to our average UK salary for a number of years, this enables us to ensure we are balancing being fair to our people with rewarding strong performance.
How we work with political parties
Part of building trust in society and solving important problems is to make a constructive contribution to public policy debates. We maintain a strict policy of political neutrality, however, we believe that our insights can support and inform good policy making, strong opposition and better government. Politicians and policy-makers are important stakeholders to business and we believe it is natural that we build relationships with them in areas of joint interest. We also engage with politicians, officials and regulators outside of the UK to reflect the international dimension of our firm’s work.
During FY18 we did not provide any secondment support to any political party.
A statement of our political activities and the principles which guide our work can be found here.
Building trust and being transparent
At PwC we recognise that our reputation is based on quality and trust. Our values are to act with integrity, make a difference, care, work together and reimagine the possible. Our board leads by example, and our people are responsible for bringing these values to life.
We have many stakeholders, including: our people, our clients, our regulators, the communities in which we live and work, and many others. We understand that we need to be trusted to be the market leading firm. Transparency, openness and honesty are at the heart of our work with our stakeholders. Some areas across our firm where transparency is paramount, include audit and cyber governance.
Audits are a valuable part of promoting trust in capital markets - a strong and respected audit profession helps to maintain the UK’s global reputation as a trusted place to do business. We are continually looking to improve audit quality, which is helped by maintaining a constructive relationship with our regulators, primarily the Financial Reporting Council (FRC), and adhere to professional standards and codes of ethics. The profession has been under scrutiny in recent times, and we must be open and ready for change. We want to help create and deliver an audit system fit for the future which brings our purpose to life. You can find out more about how we’re working towards this in our transparency report.
Transparency over our own cyber governance is also critical to our values in establishing trust with society. Warwick Hunt is our Executive Board member responsible for cyber and we have a monthly governance committee with representatives from all lines of the business. Our UK Chief Information Security Officer oversees our cyber operations and resiliency, while our market facing cyber security competencies are used to provide independent review. You can find out more about our cyber practice here.
We have a continuous improvement approach to our policies and procedures, reviewing them regularly in light of internal priorities or changes in the market. Please see our transparency report for further details.
Managing risk
- Our principal risks
- Regulatory change including regulatory threats to business model
- Quality (audit and non-audit)
- People and talent
- Public perception and reputation
- Regulatory compliance
- Instability and uncertainty caused by Brexit negotiations
- Information and Cyber Security
- Criticality of IT to service delivery
- Client assets
- New business models and technology
- Technological change and relevance
- Physical security
- Litigation and regulatory sanction
Our principal risks
Managing risk is a clear strategic priority for the Management Board and senior management of the firm.
We have a clear business strategy. In implementing this strategy it is vital that we also manage the risks associated with it. As a result we have a defined process for assessing, monitoring and controlling risk.
The Management Board takes overall responsibility for establishing systems of internal control and for reviewing and evaluating their effectiveness. The day-to-day responsibility for implementation of these systems and for ongoing monitoring of risk and the effectiveness of controls rests with senior management.
The systems, which have been in place throughout the financial year and up to the date of approval of these financial statements, include the following:
- The Risk Council, which comprises senior management reporting to the Executive Board, is responsible for making sure that the controls are in place to identify, evaluate and manage risk.
- Our lines of service and our internal firm services, which document risks and the responses to them, carry out risk assessments annually and report to the Risk Council on how effectively they have managed risk during the year.
- Periodic reviews of performance and quality are carried out independently by the PwC network.
- Our internal audit team reviews the effectiveness of the financial and operational systems and controls throughout the Group and reports to the Executive Board and the Audit and Risk Committee.
- Our risk and quality functions oversee our professional services risk management systems and report to the Executive Board.
We take client acceptance procedures extremely seriously and we do not automatically take on new client engagements or new work for existing clients. Understanding properly both who we are working with and the nature of the work requested is central to protecting our reputation for quality.
We have procedures to assess the risks associated with new clients. We seek to serve only those clients we are competent to serve, who value our service and who meet appropriate standards of legitimacy and integrity. We also establish up front whether we are able to comply with independence requirements and to address any potential conflicts of interest. In addition, we conduct annual risk reviews of all audit clients.
Internal control assessment
Our internal control systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives or, in the case of financial controls, the risk of material misstatement in our financial statements. Accordingly, they provide reasonable, but not absolute assurance against such failure or material misstatement.
The Executive Board has reviewed the systems of internal control in operation during the year and is satisfied with their effectiveness.
On the tabs on the left, you can explore the risks faced by our business and the steps we’re taking to mitigate them.
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