A new frontier

Aug 01, 2015
Feargal O’Rourke’s election as Managing Partner at PwC has brought about a changing of the guard. Now the new management team is in place, the Athlone man is keen to strengthen PwC’s position in the market, writes Stephen Tormey.

Accepting the Democratic nomination in Los Angeles on 15th July 1960, John F. Kennedy said: “We stand today on the edge of a new frontier”. The same could be said of PwC following its first contested election in almost three decades, which culminated in the election of Feargal O’Rourke as Managing Partner and the unveiling of a comparatively young leadership team – most of whom are in their 40s.

O’Rourke, who is a fan of US politics – and politics in general, as you might expect, through his familial ties – formally succeeded Rónán Murphy last month. At 50 years of age, he is now the oldest member of the leadership team in Ireland – a sharp contrast to just 12 years ago when he was one of the youngest partners at the firm’s
top table.

He now describes himself as the oldest person on the team “by some distance” and believes that this is a by-product of the “generational change” at the firm. “There comes a natural time for a change in the cycle and I’ve gone down a generation for the majority of the roles,” he said. “It has brought a great energy to the partnership and it has brought a lot of people into leadership positions who haven’t sat around the table before.” While some might view this as a high-risk strategy, two or three “hardchaws” will bring an element of corporate memory to the table, he added.

From training to tax

O’Rourke began his career in Russell Brennan Keane in Athlone, where he received “the best life training I ever got” while sifting through shoeboxes of invoices during his summer holidays from University College Dublin.

He had “great intentions” of returning to Athlone once his academic endeavours were complete, but a training opportunity at PwC scuppered those plans. Even an approach from the Fianna Fáil Executive failed to lure him away from the big eight firm, as it was then, following a brief discussion with his then-mentor. “I had a very good mentor in here and he said to me, ‘Look, there’s a fair chance you can run the country or there’s a fair chance you can run here, but you can’t do both’,” he said.

Turning his back on politics as a profession, while taking his mentor’s optimism with a pinch of salt, O’Rourke embarked on a path that would ultimately prove his mentor right. He is now at the helm of a firm that will be forced to grapple with “a number of fluxes” in the years ahead, but he is clear on what needs to be done.

“Our challenge in the short- to medium-term is managing mandatory firm rotation, managing the fact that we will be restricted from providing certain other services for public interest entities that we would have done heretofore,” he said. In the medium- to long-term, on the other hand, O’Rourke will investigate areas where a firm like PwC can give assurance as – in his view – the world is changing and PwC needs to change with it. “If you fast-forward 20 years, what the auditor does today will be different,” he said. “I think we will still have the statutory audit for years to come, but it may be more real-time as we go into the future rather than historic.”

The goal, according to O’Rourke, is to develop a broad assurance offering that will allow PwC to capitalise on its position as a non-statutory auditor. Areas under consideration include non-financial assurance and areas such as analytics and cybersecurity, but the list is – and will remain – open-ended.

“There are businesses and business models that didn’t exist when I was coming through the system, or even if you go back to 2000,” he said. “So we’ve got to make sure we’re continuously looking at how business is evolving and how we can provide services to match those businesses.”

While the firm has scope to expand its offering into new areas, O’Rourke has spent much of his career helping foreign businesses establish a base in Ireland or increase their activity in the jurisdiction. He agrees that he will have to sharpen his knowledge of certain aspects of PwC’s business as a result, but isn’t fazed by the prospect. “While I would have been heavily involved in tax, that was as a subject matter expert in the wider sphere of business generally,” he said. “I would always see myself as a business advisor whose speciality happened to be tax and now I’m a business advisor who is chief executive of an organisation that provides tax, assurance and advisory services, so I’m just broadening my areas of expertise.”

High expectations

One area O’Rourke has researched in recent weeks is the proposed EU changes on auditing. As a person who is known for selling Ireland to US companies looking for a gateway into Europe, however, he is troubled by recent soundings from government departments on the issue.

“At the moment, many of our European competitors are going to 10 plus 10. In other words, you can appoint an auditor for 10 years and then you must have a tender, but you can reappoint for another 10,” he said. “We’re hearing some indications that Ireland is only going for one 10 year… but nobody has been able to give me a convincing reason why we would only go for 10.” Deviation from international competitors on this score could put Ireland at a distinct disadvantage, he added.

O’Rourke has been on the front foot historically when it comes to other issues. Once described as the “grand architect” of the double Irish, he said in early 2013 – long before it was on the horizon – that the system had less than two years to go given global changes and, more recently, called for a “sustainable” tax offering that was acceptable to other countries. He has also sought to close “the expectation gap” when it comes to the role and function of an audit. “I’m hoping one thing that comes out of the banking inquiry is a greater understanding of what an audit is about and a greater clarity about what our legislators and regulators might want an audit to be about,” he said. “And I would like to hear from them as to their expectations of an audit. If you watched the banking inquiry over the past couple of weeks, that expectation gap is there at the moment.”

Despite this, O’Rourke doesn’t believe that auditors’ relationships with the authorities are in any way fractious or acrimonious. “I hope discussions will lead to a greater understanding on both sides of what is needed,” he added. “We need to understand what regulators and legislators are looking for, and we then need to respond to that.”

A boon for business

According to O’Rourke, PwC has form when it comes to responding to changing environments and new challenges – not least in the evolving area of tax, where his speciality lies.

With freedom of information and the evolution of in-house tax departments, some might expect firms like PwC to struggle to generate business. The reality, he said, is quite different. He cites tax systems’ increasing complexity, the cross-border nature of business and the demand for greater transparency with revenue authorities “competing for a bigger share of the same pie” as a boon for business.

“The type of work we do and the type of engagement we have is different than it was, but it’s a better and richer engagement,” he said. “You are dealing with more substantive issues at a higher level because the world has got much more complex and cross-border in nature.”

Keeping key clients

Over the course of the next four years, and possibly eight if he is re-elected at the end of his first term, O’Rourke will be busy working as an ambassador for the firm. While this could easily monopolise his time, he is determined to carve out time to prepare for succession and continue an element of ‘business as usual’ activity with key clients.
“I am scaling direct client work back quite a bit, but I have spent 15 years now every quarter going to the west coast of the US,” he said. “I’ll be keeping one or two of those major clients. I will have other partners helping but I will stay involved because, to be honest, if I didn’t have a certain amount of client engagement, I’d go mad.”

Feargal O’Rourke is a Fellow of Chartered Accountants Ireland and Managing Partner of PwC Ireland.