31 On the way towards sustainable development in practice » Market – Responsible business The dynamic market around us raises difficulties for our clients as well. Our stakeholders’ expectations are growing, while as more and more emphasis is given to topics such as corporate operations, client treatment, or even employee management. A more and more stringent criterion is that they must get credible and reliable information be held in order to be able to create a complex picture of the companies. Thus, from the aspect of the market, we strive to use our experience to focus the attention to the issues which are important for both the business world and society and to help our clients with obtaining integrated information for themselves and their stakeholders as well. Our goal is to provide our advice so that its contents and method does not only meet the highest professional standards, but takes also the ethical and sustainability aspects into account. • Automotive • Transportation & Logistics • Public Sectors • Pharmaceutical & Healthcare • Financial Services • Industrial Products • Energy, Utilities & Mining • TICE • Retail & Consumer As we have mentioned earlier, our company offers its professional services in three main service areas – assurance, tax and legal services, consulting – and is at our clients’ service in a number of other special fields as well. Besides the three main lines, we help our clients achieve their goals by our industry- specific professional services. On the way towards sustainable development in practice
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On the way towards sustainable development in practice » Market – Responsible business
The dynamic market around us raises difficulties for our clients as well. Our stakeholders’ expectations are growing, while as more and more emphasis is given to topics such as corporate operations, client treatment, or even employee management. A more and more stringent criterion is that they must get credible and reliable information be held in order to be able to create a complex picture of the companies.
Thus, from the aspect of the market, we strive to use our experience to focus the attention to the issues which are important for both the business world and society and to help our clients with obtaining integrated information for themselves and their stakeholders as well. Our goal is to provide our advice so that its contents and method does not only meet the highest professional standards, but takes also the ethical and sustainability aspects into account.
As we have mentioned earlier, our company offers its professional services in three main service areas – assurance, tax and legal services, consulting – and is at our clients’ service in a number of other special fields as well. Besides the three main lines, we help our clients achieve their goals by our industry-specific professional services.
On the way towards sustainable development in practice
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Economic indicators
Our diverse and integrated activity in the market and our relationship with our environment greatly influences our financial results.
Our revenue in the financial year 2012 was HUF 15,124,009 thousand, which is an about 16% increase compared to the results of the year 2011.
Our key economic indicators over the past two years were the following:
0
5 000 000
10 000 000
15 000 000
Financial year 2012 (July 2011 – June 2012)
Financial year 2011(June 2010 – July 2011)
TaxesEmployees’ wages and
benefits
Operating Expenses
IncomeBalance sheet total
Net sales
HU
F 12
437
130
H
UF
14 7
12 5
36
HU
F 3
331
833
H
UF
5 64
6 45
8
HU
F 12
818
294
H
UF
15 1
24 0
09
HU
F 11
213
466
HU
F 13
746
387
HU
F 6
366
061
HU
F 6
985
636
HU
F 7
071
617
HU
F 6
710
743
619 592
Numberofemployees(persons)
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Client Relations
Our clients are one of the most important actors in our economic environment. To ensure that we provide the possibly highest quality service, to build confidence and to perform the personalized ideas at a high level and according to the changes in the economic environment, we strive to develop multi-directional and effective communication channels.
In our business events, professional forums, our activities based on client relationship management and in personal meetings we try to get more and more opportunities for the transfer of knowledge and to learn our clients’ experience.
One of the most important tools to involve the clients into the dialogue is the PwC Client Feedback Program which helps to throw light on the fields to be developed by which we can further improve the level of our client services.
The regular feedback from clients and the reaction to its merits is a critical point of maintaining effective client relationships.
We have specifically targeted discussions with the Hungarian CEOs as well. In 2011, PwC conducted its 15th worldwide Global CEO Survey. This year, the Hungarian CEO Survey has also been completed for the first time in which the chief executives of nearly 70 corporate enterprises shared their thoughts about the challenges and opportunities of the coming years.
A closing step of the program is that the survey results are collected and our Account Management team develops the action plan to improve the client satisfaction levels. In year 2011, we have introduced the ClientStream CRM system in order to be able to manage our clients and the information related to them deeper and more efficiently.
In the Client Feedback Program, we use a measure called ‘Net Promoter Score’ (NPS), which shows the loyalty of the clients. This measure is a branded joint development of Fred Reichheld (an American business strategist who is famous for his loyalty-based business model and his the loyalty marketing-related researches and publications), the Bain & Company (a global management consulting company) and Satmetrix (a U.S.-based customer satisfaction software services company). A positive NPS (the sum is greater than zero) looks quite good, an NPS over 50% is an excellent result.
On the way towards sustainable development in practice
In the last financial year, 44 responses were received, among which were large companies such as Commerzbank, TEVA, IBM or the Jász-Plasztik. All in all, the Client Satisfaction index was 7.9 on a scale from 1 to 10 (where 1 is the worst and 10 is the best), which, in addition to the previously mentioned “Net Promoter Score”, which was 30 or 23%, is also a good result.
Since 2008, the BIG4 measure their brands in the market by the clients every two years (Brand Health Index, BHI). The survey is not business-based, it measures customer perception and the strengths and weaknesses of the brand. The obtained results are often different from the market-based ones, for example, from the classification by revenue.
The world’s four largest audit companies are also known as BIG4.
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Corporate Governance
PwC Hungary – in accordance with the legal and operational requirements – has its own local management structure. This network and legal structure ensures the flexibility and autonomy which enables being quickly and effectively in line with the local market conditions. We are responsible for coordinating our own management processes in compulsory compliance with PwC-s policies and regulations, including the way in which we provide quality services to our customers.
The PwC group companies covering 29 countries in PwC’s Central and Eastern European group are controlled in a matrix management system. The partners elect CEOs every four years, who later specifies the Management Board which
consists of field CEOs and the operational and business units’ operative managers. The Board is responsible for defining the overall business goals and to ensure compliance with PwC International’s policies.
The cross-border policies and business goals of the different business lines (audit, tax and legal services, consulting) are defined by the business line management group.
The Regional Management Board is supervised by the Regional Council of Partners elected by the partners which approves the basic policies and decisions affecting the partners in close co-operation with the Management Board.
PwC is managed by the Executive Director appointed by the partners.
In the company, a three-member Supervisory Board was elected, its members are: Michael Kubena (CEO, PwC Central and Eastern Europe), Paul Grocott (Partner, PwC Hungary) and Todd Bradshaw. (CMP, PwC Slovakia)
Our company’s auditor is the LIMIT AUDIT Tax and Auditor Limited Liability Company, our highest body is the general assembly, which shall meet at least once a year.
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Quality and risk management
As a PwC International member company, we are required to comply with the general risk and quality standards approved by the organization. These requirements are completed with the local legal regulations.
Our quality control system fully complies with the requirements set by the International Federation of Accountants (IFAC) and also the standards of the Hungarian Chamber of Auditors. Our quality control and risk management system are based on 6 major topics as follows:
1. Leadership responsibility for quality
2. Ethical Requirements
3. Procedures for acceptance and continuance of client relationships and specific engagements
4. Human Resources
5. Engagement Performance
6. Monitoring
1. Leadership responsibility for quality
The management is committed to any measures that are needed for PwC Hungary to continually represent quality, independence, objectivity and ethical conduct. The management regularly informs the partners, whereby special emphasis is given to the “unwavering commitment towards quality.” The same message is also stressed in the regular management information addressed to all staff. In such top-down communication, the importance of considering the quality standards on a daily basis is stressed in all cases.
2. Ethical Requirements
Integrity and objectivity
All group companies, partners and professional employees of PwC International are required to comply with PwC International’s ethical standards. The standards require that the employees act fairly and objectively, with professional competence and care, to adhere to confidentiality requirements and their behavior shall also reflect their professional competence. Our ethic standards are laid down in “PwC’s Code of Conduct“ which fully complies with the Code of Ethics of International Ethics Standards Boards for Accountants (IESBA). The Code is given to all partners and colleagues upon joining PwC Hungary. It is expected that they live in line with the values laid down in the Code during the period they are employed with PwC.
The regional Head of Ethics is responsible for the supervision of ethical issues, and in addition, each country has its own Head of Ethics. This position is always filled up by a partner. The Head of Ethics directs handling of ethical issues locally and is responsible for our compliance with the relevant ethical standards. Employees may also forward their ethical issues to the local Head of Ethics in an anonymous form as well. The Head of Ethics shall investigate all complaints or notifications, and shall ensure that the appropriate steps are taken.
On PwC’s website (www.pwc.com) it is possible even for external parties to report to the Head of Ethics any breaches of ethical conduct by PwC’s employees or partners.
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To identify its clients, PwC Hungary introduced a process based on PwC International’s own decision support system (Acceptance and Continuance – A&C) to keep and accept clients.
The system works so that a team made up of mandate and industry professionals and the risk management professionals consider jointly whether the risks related to an existing or potential client are manageable or not, and if we want to contact the given costumer and its management at all.
We refuse to undertake the work, to give an offer or keeping the client in all cases when we judge that the associated risks are not manageable.
In the process, we consider (among others) the following aspects: • The reputation of the company and its
management• The effectiveness of its Board• The background and experience of the client’s
financial reporting personnel• Any incentives or inclinations for management to
manipulate reported results• Any significant transactions structured to achieve
revenue recognition• Any unusually aggressive or creative accounting• Any transactions that are complex, unusual or
difficult to evaluate• Any estimates that involve uncertainty or
subjective judgments• Any transactions with related parties that are not
part of the consolidated group• Any indications that the company might be in
financial difficulty• The expertise necessary to carry out a particular
engagementThe main topics of our Code of Conduct include the major behavioral norms and expectations with regard to the environment and the society. For additional detailed information, please visit: http://www.pwc.com/gx/en/ethics-business-conduct/code-of-conduct.jhtml
ThemaintopicsofourCodeofConduct
Respecting others
Corporate citizenship
Protecting PwC’s reputation
Professional behavior
Independence
Implementation of and compliance with PwC’s global policies and related requirements on independence and compliance is mandatory also for PwC Hungary. If necessary, these may be completed with more stringent local professional and regulatory requirements. PwC Hungary is closely monitoring the financial interests of its customers and the compliance with the regulatory, professional and PwC International’s independence requirements affecting the business and service relations with them.
3. Procedures for acceptance and continuance of client relationships and specific engagements
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Compensation and promotion
Performance assessment
Supervision and direction
Professionel Development
4. Human Resources
The dynamic branch of industry we operate in requires us to continuously place great efforts in searching for talents and professional expertise on the labor market. Our human resource management involves specific actions on how to attract
and keep our workforce, improve their professional skills and personality, and evaluate and reward their work.
In general, the human resource management procedure is as follows:
Recruitment and hiring
1. 2. 3. 4. 5.
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1. During recruitment and hiring selection is carried out on the basis of unified regional policies, both for new entrants to the labor market and experienced employees. Within the process we also examine 10 basic competences during pre-filtering and personal interviews, articulated also in regional agreement. In case of new graduates our presence in the institution is structured to attract youth with the most favorable skills during recruitment.
2. Training and development is a continuous process at PwC, which starts from the hiring of the employee. Our employees participate in various official in-house and external professional courses, and also receive continuous professional training. These courses are equally about more general basic competences and compliance with professional and independence requirements.
3. Each leader responsible for an assignment shall ensure that all team-members involved in the given assignment is in possession of the actual professional skills and expertise required. During the assignment they hold full responsibility for determining the amount of guidance, supervision and control less experienced employees assigned for the task in order to provide our clients with a high-quality service.
4. The performance of partners and employees is assessed each year, during which the employees, both superiors and subordinates are involved in the assessment procedure. This is an evaluation procedure in which we examine the performance of the individual as compared to the corporate values and aims they specified for themselves in their career plan earlier. Our employees are only promoted when they are really prepared and suitable for filling a higher position.
5. The basis of the remuneration of our partners is that they can only have a share from our profit, and shall individually finance their own pension and other allowances, such as, for example, their healthcare services. The remuneration of the partners is determined by the Regional Management Board after having evaluated the contribution of each and every partner to the annual performance, and following the annual audit of the local PwC companies of the global PwC network. The fees determined by the Regional Management Board are reviewed and approved by the Regional Partner Council.
The remuneration and promotion of other employees (non-partners) are determined in accordance with the annual performance assessment, which takes into consideration, among others, expertise (technical, risk-management, independence, ethical), experience and leadership skills.
Each entrants have the following trainings aiming at independence and caution in their personal training and development schedule, which shall also be renewed each year: data protection, overview of risk management and compliance program, overview of the independence program, anti-money-laundering attitude, ethical and managerial approach, anti-bribery and anti-competition behaviour, online manners and information security.
The remuneration of each partners depends on three result-dependant elements:• Responsibility Income, reflecting the partner’s sustained contribution and
responsibilities;• Performance Income-reflecting how a partner and the teams he works with
perform in a given year and• Equity Unit income which represents a partners share in the profits after
the allocation of the first two elements.The performance-related remuneration is determined after evaluating the fulfilment of individual performance objectives established by taking into consideration the position filled by the partner. These objectives involve realisation of the quality requirements and strict compliance with independence and integrity rules.
Compensation and promotion
Performance assessment
Supervision and direction
Professionel Development
Recruitment and hiring
1. 2. 3. 4. 5.
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5. Engagement Performance
During execution of the assignment the policies ensuring independence, integrity and objectivity are observed. Such methods and procedures are used in the services offered to our customers that ensure uniform and consistent approach.
6. Monitoring
Within the framework of PwC’s global program a quality assessment program is also employed after fulfilling the assignments. This includes monitoring the partner’s work and each elements of our quality control system to ensure appropriate operation of QA checks and to ascertain compliance with the relevant professional norms, and our own policies and procedures.
To receive more information on our qaulity and risk management procedures, please, read our annual Transparency report on the following link: http://www.pwc.com/hu/hu/pressroom/index.jhtml
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We seek open and honest discourse in our communication with all stakeholder and social group, which is also based on ethics, objectivity and transparency.
All PwC affiliates have an employee on their marketing- and communications departments who examine the principles and rules related to the brand and name determined by the PwC Global Brand team, and make them observed by our employees. In practice it means that the employee in charge overviews and approves all external communication material in order to ensure that materials complying with global consistency, image and client expectations are made.
We are continuously in touch with the local media, cultivate a good relationship with them, since we believe in sharing our professional experience with the representatives of the media – and as such, with the wider public as well. Our Media Policy includes, among others, the PR-personnel in charge, the statement policy in force at our company, our main communicational principles, crisis communication management regulations, practical elements of media conduct, and the process of media monitoring. Our policy is reviewed annually, and updated if necessary.
The database of our client data is also the responsibility of the marketing and communications department. So far there were no claims for abuse of personal client information, loss or unauthorized use of client data.
Some of our statement ptinciples: • We do not make pejorative remarks,
no unethical declarations on our competitors.
• We do not comment on court trials or unpassed laws.
• We do not make statements on our clients, unless they authorise us to do so.
For years we have been sponsoring the Quality Journalism Foundation together with several other enterprises, who award the Quality Journalism Award each month to an applicant selected by an independent jury. As a further co-operation with the Quality Journalism Foundation we award the Eörsi János award to an economic journalist every qaurter. For further information on the award pleas, click on the following link: http://www.pwc.com/hu/hu/pressroom/eorsi-janos-dij.jhtml
Responsible marketing & communications
On the way towards sustainable development in practice
