KPMG partners suffer £50k pay cut over audit failures
Catherine Burnet: ‘crucial role’
Big Four accountant KPMG has cut the pay package of every partner by £50,000 as it responds to regulatory demands over audit failures.
It will stop providing consulting and tax advice to all the large listed companies that it audits, after claims that the practice compromised its independence.
The firm’s bottom line has also been hit by £45 million of investment to improve its audit quality in the year to September 30.
KPMG UK suffered a series of multimillion pound fines for its part in the collapse of various firms and together with its rising cost base it has instigated a shakeup codenamed Project Zebra.
It has reported a 14% fall in profits although revenues increased by 3% from £2.34bn to £2.4bn.
The firm’s deal advisory practice, which grew by 3% net sales while KPMG’s audit practice posted growth of 10%. Continued geopolitical uncertainty and widespread regulatory change saw KPMG’s tax, pensions and legal practice grow by 3%.
Bill Michael, chairman and senior partner at KPMG in the UK, commented: “We are creating a business that stands ready for the fundamental changes we expect to see over the next few years, both from the reforms necessary to rebuild trust in our sector and as we pivot our business to meet the changing nature of the work we are doing for our clients.”
“We have undertaken a comprehensive overhaul of our audit practice, reappraising every aspect of what it does and how it interacts with the rest of the business. Central to that has been investing heavily in our capability and capacity to deliver the audit of the future.”
Catherine Burnet, KPMG’s senior partner in Scotland, said: “As Scotland’s largest professional services firm by headcount, KPMG continues to play a crucial role in the country’s economy. The previous twelve months have been challenging for the industry as a whole, with growing economic and political uncertainty, and ongoing reviews into the future role of audit.