IRS Examines PwC's Books

by Leroy Baker, Tax-News.com, New York

29 August 2006

It has emerged that 'big four' accounting firm PricewaterhouseCoopers is undergoing an audit by the US Internal Revenue Service concerning certain aspects of its own tax reporting.

It is believed that the audit, which the company says is just a routine inspection, relates to the sale of some of the firm's operations. In 2003, the company sold its global management-consulting practice to IBM for about $3.5 billion. It also sold its actuary practice and corporate valuations businesses, actions which have prompted the IRS to examine its books, according to published reports.

People familiar with the matter have revealed that the IRS is interested in the way in which PwC has shifted income between its international units. The Washington Post also reported that the agency plans to examine the firm's pension arrangements.

It is expected that the audit will focus on the financial years 2001 through 2003.

The company has however, dismissed concerns that the IRS is carrying out the audit because it suspects wrongdoing on the part of PwC.

"PricewaterhouseCoopers is a large organization and like any other large entity, is under constant review by various taxing jurisdictions including the IRS," a spokesman stated.

The spokesman added that the company expects the probe to be concluded "satisfactorily" before the end of the year.

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