A tenth of its UK partners before Christmas – that is how many jobs will be slashed as KPMG looks to complete its latest overhaul on the back of a series of controversies, suggest reports.
According to a Financial Times report this morning, the firm will cut around 65 of its 635 partners on the back of a review into individual performance. The report cities two people “familiar with the matter” and comes on the back of Bill Michael, the company’s chairman, telling partners at a roadshow that a harsher approach would be taken towards managing performance.
In a further Reuters report, it was highlighted that the move was being made on the back of an investigation by the Financial Reporting Council into its audit of collapsed firm Carillion, as well as motor vehicles insurer Equity Syndicate Management Ltd (ESML). In May this year, KPMG was hit with a £6 million fine on top of a reprimand for misconduct while KPMG partner Mark Taylor and former partner Anthony Hulse were severely reprimanded and fined £100,000 each in relation to ESML.
“The findings of misconduct and sanctions follow FRC investigations in relation to the preparation and audit of Lloyd’s Syndicate 218 (Equity Red Star) Report and Accounts for the years ended December 31, 2007, 2008, and 2009 and the provision of actuarial advice to Equity Syndicate Management Limited in relation to ESML’s reserving for Lloyd’s Syndicate 218 between 2007 and 2009, matters referred to the FRC in 2012,” noted the regulator at the time - ESML had reported a deterioration of an estimated £311 million in respect of net ultimate claims for the 2009 and prior years of account.
“The misconduct of KPMG and Mr Taylor arose from KPMG’s 2008 and 2009 audits of the financial statements of Syndicate 218. The findings against Mr Hulse relate only to the 2009 audit. Mr Taylor was an associate partner and the responsible individual for the audit of Syndicate 218 and Mr Hulse was the audit engagement partner for the ultimate UK parent undertaking of the corporate member of the syndicate.”
Now cuts are expected to be made across the KPMG business with the audit practice reportedly the least likely to see departures, according to the Financial Times.
