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KPMG is a British multinational professional services network, based in London, United Kingdom.[2] It is one of the Big Four accounting firms, along with Ernst & Young (EY), Deloitte, and PwC. KPMG is a network of firms in 145 countries with 275,288 employees,[1] affiliated with KPMG International Limited, a private English company limited by guarantee.[3]

Key Information

The name "KPMG" stands for "Klynveld Peat Marwick Goerdeler".[4] The initialism was chosen when KMG (Klynveld Main Goerdeler) merged with Peat Marwick in 1987.[5]

KPMG has three lines of services: financial audit, tax, and advisory.[6] Its tax and advisory services are further divided into various service groups. In the 21st century, various parts of the firm's global network of affiliates have been involved in regulatory actions as well as lawsuits.[7][8]

History

[edit]

Early years and mergers

[edit]
KPMG office in Amstelveen, Netherlands
Copyright to https://www.skinde.pt/pt/projetos/fpm41-edificio-de-escritorios-lisboa
KPMG offices at FPM41, Lisbon, Portugal

In 1816, Robert Fletcher started working as an accountant, and in 1839 the firm he worked for changed its name to Robert Fletcher & Co.[9] William Barclay Peat joined the firm in 1870 at 17 and became head of the firm in 1891, renamed William Barclay Peat & Co. by then.[10] In 1877, Thomson McLintock founded Thomson McLintock & Co in Glasgow.[10] In 1897, Marwick Mitchell & Co. was founded by James Marwick and Roger Mitchell in New York City. In 1899, Ferdinand William LaFrentz founded the American Audit Company in New York.[11] In 1923, the American Audit Company was renamed FW LaFrentz & Co.[11]

In about 1913, Frank Wilber Main founded Main & Co. in Pittsburgh.[12] In March 1917, Piet Klijnveld and Jaap Kraayenhof opened an accounting firm called Klynveld Kraayenhof & Co. in Amsterdam.[10]

In 1925, William Barclay Peat & Co. and Marwick Mitchell & Co., merged to form Peat Marwick Mitchell & Co.[13] Peat Marwick Mitchell & Co. was based at No. 11 Ironmonger Lane in London,[14] before moving to Puddle Dock in London in 1976.[15]

In 1963, Main LaFrentz & Co was formed by the merger of Main & Co and FW LaFrentz & Co. In 1969, Thomson McLintock and Main LaFrentz merged to form McLintock Main LaFrentz International,[16] and McLintock Main LaFrentz International absorbed the general practice of Grace, Ryland & Co.[17][a]

In 1979, Klynveld Kraayenhof & Co. (Netherlands), McLintock Main LaFrentz (United Kingdom / United States), and Deutsche Treuhand-Gesellschaft (Germany) formed KMG (Klynveld Main Goerdeler) as a grouping of independent national practices to create a strong European-based international firm.[10] Deutsche Treuhand-Gesellschaft CEO Reinhard Goerdeler became the first CEO of KMG. In the United States, Main Lafrentz & Co. merged with Hurdman and Cranstoun to form Main Hurdman & Cranstoun.[18]

In 1987, KMG and Peat Marwick joined forces in the first mega-merger of large accounting firms and formed a firm called KPMG in the United States and most of the rest of the world and Peat Marwick McLintock in the United Kingdom.[5] From 1984 Peat Marwick was the first, largest, and for some time the only large corporate customer of the Apple Macintosh,[19][20] and the combined company retained the computer.[21]

In the Netherlands, due to the merger between PMI and KMG in 1988, PMI tax advisors joined Meijburg & Co. (The tax advisory agency Meijburg & Co. was founded by Willem Meijburg, Inspector of National Taxes, in 1939). Today, the Netherlands is the only country with two member firms of KPMG International: KPMG Audit (accountants) and Meijburg & Co (tax consultants).[22]

In 1991, the firm was renamed KPMG Peat Marwick, and in 1999, the name was reduced again to KPMG.[23]

In October 1997, KPMG and Ernst & Young announced they would merge.[24][25] However, while the merger to form PwC was granted regulatory approval, the KPMG/Ernst & Young tie-up was later abandoned.[26][27]

Recent history

[edit]
KPMG building in Kamloops, British Columbia, Canada

In 2001, KPMG spun off its United States consulting firm through an initial public offering of KPMG Consulting, which was rebranded BearingPoint.[28] In early 2009, BearingPoint filed for Chapter 11 bankruptcy protection.[29] The UK and Dutch consulting arms were sold to Atos in 2002.[30]

In 2003, KPMG divested itself of its legal arm, Klegal[31] and KPMG sold its Dispute Advisory Services to FTI Consulting.[32]

KPMG's member firms in the United Kingdom, Germany, Switzerland and Liechtenstein merged to form KPMG Europe LLP in October 2007.[33] These member firms were followed by Spain, Belgium, the Netherlands, Luxembourg, CIS (Azerbaijan, Russia, Ukraine, Belarus, Kyrgyzstan, Kazakhstan, Armenia and Georgia), Turkey, Norway, and Saudi Arabia.[34][35] They appointed joint Chairmen, John Griffith-Jones and Ralf Nonnenmacher.[10]

In 2008, KPMG was the preferred employer among the Big Four accounting firms according to CollegeGrad.com.[36] It was also ranked No. 4 on the list of "50 Best Places to Launch a Career" in 2009 according to Bloomberg Businessweek.[37]

In 2020, KPMG International Limited was incorporated in London, England.[3]

In February 2021, Bill Michael resigned as chairman of KPMG UK after criticism of remarks made during an internal meeting. Bina Mehta, a senior partner, was appointed acting chair, while Mary O'Connor, head of clients and markets, became acting senior partner and chief executive, making her the first woman to lead the firm in the UK. Two months later, O'Connor left after being passed over for the permanent role, which went to Jon Holt.[38][39]

In November 2021, KPMG UK was reported as having revised its partnership process to introduce five levels of partnership which required partners to inject capital at levels starting at £150,000 and going up to £500,000. This, along with the £115 million proceeds from the sale of its pensions business earlier in 2021, which it seems was not distributed to the partners, was intended to prepare the balance sheet for a potential large fine (up to £1 billion) arising out of the Carillion lawsuit.[40]

In April 2022, it was announced that KPMG will acquire 50% of the UK-based venture capital advisory specialist Acceleris subject to approval from the Financial Conduct Authority.[41]

In August 2022, KPMG announced plans to downsize its office footprint in New York City in 2025, when it moves its offices in the city from Midtown Manhattan to Two Manhattan West in Hudson Yards.[42]

In May 2024, KPMG partners approved the merger of its UK and Switzerland firms, which are working across audit, legal, tax, and advisory, and generating $4.4 billion annually.[43]

In November 2024, KPMG announced that it would spend $100 million over the next four years to boost its enterprise artificial intelligence services via a partnership with Alphabet's Google Cloud. This is an attempt to leverage Google products in the workplace, develop AI agents and overall make the workforce familiar with the technology.[44]

In February 2025, KPMG US removed from its website the diversity reports it had been publishing since 2020 as part of a broader effort to abandon the firm's DEI targets.[45]

Global structure

[edit]

Each national KPMG firm is an independent legal entity and is a member of KPMG International Limited, a UK Limited Company incorporated in London, United Kingdom. KPMG International changed its legal structure from a Swiss Verein to a co-operative under Swiss law in 2003[46] and to a limited company in 2020.[3]

This structure in which the Limited company provides support services only to the member firms is similar to other professional services networks. The member firms provide the services to the client. The purpose is to limit the liability of each independent member.[47]

KPMG's global chairman is Bill Thomas, former senior partner and CEO of Canadian member firm KPMG LLP.[48]

Some KPMG member firms are registered as multidisciplinary entities that also provide legal services in certain jurisdictions.[49]

In India, where regulations do not permit foreign auditing firms to operate,[50] KPMG is licensed as an investment bank and carries out audits under the name of BSR & Co, an auditing firm KPMG purchased after the 1992 liberalisation of the Indian economy.[51]

During March 2022, in response to the Russian invasion of Ukraine, KPMG announced that their Russian and Belarusian firms would leave the KPMG network.[52]

Services

[edit]
See also: Big Four accounting firms § Revenue comparison

KPMG is organised into the following three service lines that generated $38.4 billion in revenue (the 2024 revenue shares are listed in parentheses):[1]

Tax arrangements relating to tax avoidance and multinational corporations and Luxembourg which were negotiated by KPMG became public in 2014 in the so-called Luxembourg Leaks.[53]

Lawsuits

[edit]

Tax shelter fraud

[edit]
Main article: KPMG tax shelter fraud

In 2003, the IRS issued summonses to KPMG for information about certain tax shelters and their investors.[54] In February 2004, the US Justice Department commenced a criminal inquiry.[54] The United States member firm, KPMG LLP, was accused by the United States Department of Justice of fraud in marketing abusive tax shelters. KPMG fired or forced the retirement of over a dozen who were involved.[55] KPMG LLP admitted criminal wrongdoing in creating fraudulent tax shelters to help wealthy clients avoid $2.5 billion in taxes between 1996 and 2002, and agreed to pay $456 million in penalties to avoid indictment. Under the deferred prosecution agreement, KPMG LLP would not face criminal prosecution if it complied with the terms of its agreement with the government. On 3 January 2007, the criminal conspiracy charges against KPMG were dropped.[56]

Microsoft tax evasion

[edit]

In 2012, KPMG brokered a deal for Microsoft with the government of Puerto Rico to give them a tax rate of nearly 0%, allowing Microsoft to sell its intellectual property to a 85-person local factory. It took years for the IRS to unravel the scheme, a "Rube Goldberg machine that channeled at least $39 billion in profits to Puerto Rico".[57]

HBOS audit role

[edit]

The HBOS accounts were published in February 2008 and six months later HBOS had to be rescued by Lloyds Bank. One reason for undertaking an investigation into the audit was that the audit did not reveal the HBOS Reading branch fraud.[58] HBOS, and subsequently Lloyds Bank, accountant Sally Masterton wrote the Project Lord Turnbull Report which described how the Bank and other organizations reacted to the Reading Branch fraud and was highly critical of the firm.[59] However, the audit was investigated by the FRC which concluded, "there was not a realistic prospect that a tribunal would make an adverse finding against KPMG in respect of the matters within the scope of the investigation", and "The firm's work did not fall significantly short of the standards reasonably to be expected of the audit, the test that a tribunal would apply".[60]

Carillion audit role

[edit]

In January 2018, it was announced that KPMG, auditor of collapsed UK construction firm Carillion, would have its role examined by the Financial Reporting Council (FRC),[61] and it was summoned to give evidence before two House of Commons select committees on 22 February 2018.[62] The final report of the Parliamentary inquiry into Carillion's collapse, published on 16 May 2018,[63] criticised KPMG for its "complicity" in the company's financial reporting practices.[64] In January 2019, KPMG announced it had suspended the partner that led Carillion's audit and three members of his team;[65] in August 2021, an FRC disciplinary panel was scheduled for 10 January 2022 to hear a formal complaint against KPMG and former KPMG partner Peter Meehan regarding the provision of allegedly false and misleading information concerning the 2016 Carillion audit.[66]

The tribunal convened to hear the formal complaint started on 10 January 2022.[67] At the disciplinary hearing, KPMG's UK chief executive Jon Holt said the firm had discovered misconduct by it staff in its own internal investigations, and immediately reported it to the FRC.[68] Following the FRC tribunal, KPMG was fined £14.4m (one of the biggest penalties in UK audit history) for misconduct relating to its audit of Carillion and another firm, and received a "severe reprimand" from the regulator. KPMG were also ordered to pay £3.95m in costs.[69]

The tribunal heard allegations that KPMG staff created false meeting minutes and retroactively edited spreadsheets before sharing them. A further tribunal will consider penalties for individual KPMG staff, including partner Peter Meehan; the FRC recommended that he be banned for 15 years and fined at least £400,000.[70][71] In July 2022, it was announced that he had been fined £250,000 and banned for ten years; three other former KPMG executives also received fines and lengthy bans.[72] A junior member of KPMG staff, Pratik Paw—who, aged 25, had been the most junior member of the Carillion audit team—faced a "life changing" fine of £50,000 and a four-year ban, prompting critics to suggest that accounting firms should enable junior colleagues to challenge their superiors, so that low ranking workers are not blamed for accounting scandals.[73][74] Ultimately, Paw was not fined or suspended but was severely reprimanded.[72]

The FRC opened a second investigation into how KPMG audited Carillion's accounts.[75] The FRC's first report, which found a number of breaches, was delivered to KPMG in September 2020; the FRC was awaiting a KPMG response before deciding whether to take enforcement action.[76] In March 2021, KPMG was reported to be "inching towards a financial settlement with regulators" over its auditing of Carillion, with the FRC expected to impose a record fine, possibly around £25m, on KPMG for its failings.[77]

In May 2020, the FT reported that the Official Receiver was preparing to sue KPMG for £250m over alleged negligence in its audits of Carillion.[78] In May 2021, the liquidator secured funding for its legal action,[79] with speculation that the likely damages claim could be as much as £2 billion.[80] In February 2022, Sky News reported the Official Receiver's claim would be in the range of £1bn-£1.5bn, with one source suggesting around £1.2bn.[81] The OR's negligence claim focuses on the value of major contracts which were not properly accounted for in audits in 2014, 2015 and 2016, resulting in misstatements in excess of £800m within Carillion's financial reports. KPMG was said to have accepted management explanations for inflated revenue and understated cost positions. The OR had received legal advice that KPMG was answerable to Carillion's creditors for a portion of their losses. KPMG said: "We believe this claim is without merit and we will robustly defend the case. Responsibility for the failure of Carillion lies solely with the company's board and management, who set the strategy and ran the business."[82] The claim, for £1.3 billion (US$1.77 billion), accused KPMG of missing "red flags" during audits of Carillion, in one of the largest claims against an audit firm.[83]

In November 2022, the OR said KPMG had "failed to respond" to Carillion allegations that it had failed to properly audit the accounting of 20 significant construction contracts. KPMG reiterated that Carillion's failure was solely the fault of the company's board and management.[84] In February 2023, The Guardian reported that KPMG had settled the £1.3bn lawsuit brought by Carillion's liquidators;[85] details of the settlement were not made public.[86]

In October 2023, the Financial Reporting Council fined KPMG UK £21 million, saying it had failed to follow "the most basic and fundamental audit concepts" and an "unusually large number of breaches" had been found. For three years before the collapse Carillion was not subject to reliable audits. KPMG UK will also pay legal costs of about £5.3 million. The previous year a £14.4m penalty had been imposed on KPMG UK for providing misleading information to the regulator.[87]

2017 South African corruption scandal

[edit]
See also: Gupta family § Uranium interests, Nhlanhla Nene, Pravin Gordhan and KPMG

In 2017, KPMG was embroiled in related scandals involving the Gupta family.[88] KPMG, whose history in South Africa dated back to 1895, and which had been part of the international organization since its founding in 1979,[89] faced calls for closure, and an uncertain future, as a consequence of the damage done to the South African economy as a result of its activities.[90][91]

KPMG had been working with a Gupta family company in the mining sector, Oakbay Resources and Energy, for 15 years prior to the revelations of corruption and collusion in 2016, at which point KPMG resigned. The full impact and financial profit that KPMG received is yet to be determined;[92] however, at least one large company has terminated its services with KPMG due to its relationship with Oakbay.[93]

In July 2017, after controversial documents were leaked by the amaBhungane Centre for Investigative Journalism, former chief executive of KPMG South Africa and the former partner that was responsible for audits related to the Gupta family, Moses Kgosana, withdrew from becoming the chairman of Alexander Forbes, a financial services firm.[94][95]

In 2015, KPMG issued a controversial report that implicated former Finance Minister Pravin Gordhan in the creation of an illegal intelligence gathering unit of the South African Revenue Service (SARS). This report was seen by elements of the media to be part of a wider Gupta-linked state capture conspiracy, with the aim of forcing Gordhan out of his post.[96] The report was withdrawn by KPMG in September 2017,[97] earning the ire of the Commissioner of SARS, Tom Moyane.[98]

After an internal investigation that found work done for the Gupta family fell "considerably short" of the firm's standards and amid rising political and public backlash, KPMG's senior leadership in South Africa, including its chairman Ahmed Jaffer, CEO Trevor Hoole, COO Steven Louw, and five partners, resigned in September 2017.[99][100]

Save South Africa, a civil-society group, accused KPMG and UK PR firm Bell Pottinger of playing a "central role in facilitating state capture".[101] Numerous South African companies either fired KPMG in the immediate aftermath of the scandal, or were reconsidering their relationships with the firm[102] with the international chairman of KPMG, John Veihmeyer, apologising for the conduct of the South African arm[103] and the firm pledged to donate fees earned from Gupta businesses, as well as the withdrawn SARS report, to anti-corruption activities.[104]

Other cases

[edit]
2003

KPMG agreed to pay $125 million and $75 million to settle lawsuits stemming from the firm's audits of Rite Aid and Oxford Health Plans Inc., respectively.[105]

2004

KPMG agreed to pay $115 million to settle lawsuits stemming from the collapse of software company Lernout & Hauspie Speech Products NV.[106][107]

2005

During August, KPMG LLP admitted to criminal wrongdoing and agreed to pay US$456 million in fines, restitution, and penalties as part of an agreement to defer prosecution of the firm, according to the US Justice Department and the Internal Revenue Service. In addition to the agreement, nine individuals, including six former KPMG partners and the former deputy chairman of the firm, were to be criminally prosecuted. As alleged in a series of charging documents, the fraud relates to the design, marketing, and implementation of fraudulent tax shelters.[108]

2006

American real estate financing firm Fannie Mae sued KPMG for malpractice for approving years of erroneous financial statements.[109]

2007

In February, KPMG Germany was investigated for ignoring questionable payments in the Siemens bribery case.[110] In November 2008, the Siemens Supervisory Board recommended changing auditors from KPMG to Ernst & Young.[111]

In February, KPMG Mauritius was sued by a group of South African pensioners who lost millions when investing in Leaderguard Spot Forex (LSF), a foreign exchange investment scheme backed by KPMG and Denmark-based Saxo Bank. The suit against KPMG was just for the portion lost during their involvement.[112][113]

2008

In March, KPMG was accused of enabling "improper and imprudent practices" at New Century Financial, a failed mortgage company,[114] and KPMG agreed to pay $80 million to settle suits from Xerox shareholders over manipulated earnings reports.[115]

In December, it was announced that two of Tremont Group's Rye Select funds, audited by KPMG, had $2.37 billion invested with the Madoff "Ponzi scheme".[116] Class action suits were filed.[117]

In March 2008, KPMG employees in the UK and South Africa were accused of bribing and recruiting employees of commercial structures to collect trade secrets for a monetary reward.[118][119]

2010

In August, it was reported by the Swedish Financial Supervisory Authority to the Swedish accountancy regulator after HQ Bank was forced into involuntary liquidation after the Financial Supervisory Authority revoked all its licences for breach of banking regulations.[120]

2011

In August, KPMG conducted due diligence work on Hewlett-Packard's $11.1 billion acquisition of the British software company Autonomy. In November 2012 HP announced an $8.8 billion write off due to "serious accounting improprieties" committed by Autonomy management prior to the acquisition.[121][122]

According to an independent panel formed to investigate irregular payments made by Olympus which reported in December, KPMG's affiliate in Japan did not identify fraud at the company.[123]

2013

In April, Scott London, a former KPMG LLP partner in charge of KPMG's US Los Angeles-based Pacific Southwest audit practice, admitted passing on stock tips about clients, including Herbalife, Skechers, and other companies, to his friend Bryan Shaw, a California jewelry-store owner.[124] In return Shaw gave London $70,000 as well as gifts that included a $12,000 Rolex watch and concert tickets.[125][124] On 6 May, Shaw agreed to plead guilty to one count of conspiracy to commit securities fraud. He also agreed to pay around $1.3 million in restitution, and to cooperate with the government as part of a plea deal with federal prosecutors.[126] This scandal led KPMG to resign as auditor for Herbalife and Skechers.[127]

The Office of Counter-Terrorism and Financial Intelligence of the US Department of the Treasury accused KMPG, Ernst & Young and PwC of collaborating with British intelligence services to provide analytical information on financial transactions and reports of British organizations operating in the United States with contract agreements with government agencies.[128]

2015

KPMG was accused by the Canada Revenue Agency of abetting tax evasion schemes: "The CRA alleges that the KPMG tax structure was in reality a 'sham' that intended to deceive the taxman."[129]

2016

The Canada Revenue Agency offered an amnesty to KPMG clients caught using an offshore tax-avoidance scheme on the Isle of Man.[130]

2017

KPMG US terminated five partners in its audit practice, including the head of its audit practice in the US, after an investigation of advanced confidential knowledge of planned audit inspections by its Public Company Accounting Oversight Board (PCAOB).[131][132] This followed criticism about KPMG's failure to uncover illegal sales practices at Wells Fargo or potential corruption at FIFA, the governing international body of football.[132] It was reported in 2017 that KPMG had the highest number of deficiencies, among the Big Four, cited by its regulator in the previous two years.[133] This includes two annual inspections that were compromised as a result of advanced access to inspection information. In March 2019, David Middendorf and Jeffrey Wada, co-defendants in the scandal, were convicted.[134]

The UK accounting regulator, the Financial Regulation Council (FRC), has opened an investigation into KPMG's audit of the financial statements of British aerospace company Rolls-Royce plc for the year ended December 2010.[135]

In August, KPMG US paid a $6.2 million fine to the US Securities and Exchange Commission for inadequacies in its audit of the financial statements of oil and gas company, Miller Energy Resources.[136] It also found KPMG guilty of a long list of violations with regard to its audits, including "lack of competence" and "highly unreasonable conduct."[137]

In November, 91 partners of KPMG Hong Kong faced contempt proceedings in Hong Kong High Court, as China Medical Technologies (CMED) liquidators investigating a $400 million fraud took action against KPMG with regard to its refusal to honor a February 2016 court order to produce Chinese working papers, correspondence, and records to the liquidators.[138][139][140][141][142] The liquidators are asking that 91 defendants be held in contempt of court, which could result in criminal penalties, or weekly fines.[138] KPMG had issued written audit reports for CMED from 2003 to 2008, and was replaced by PwC Zhong Tian in August 2009.[139] "Perhaps locking up 91 KPMG partners over Christmas may spur the firms to find a solution to this problem", said Professor Paul Gillis of Peking University's Guanghua School of Management.[138]

2018

In July, KPMG came under criticism for its role in the bankruptcy of Dubai-based private equity firm Abraaj Group after it was determined that KPMG Lower Gulf Chairman and Chief Executive Vijay Malhotra's son had worked at Abraaj and that an executive named Ashish Dave alternated between stints at KPMG and as Abraaj's chief financial officer, a job he held twice.[143]

Also in July, the Financial Reporting Council (FRC) announced an investigation into KPMG’s work for Conviviality, the British drinks supplier that collapsed into administration during April 2018.[144]

Also in July, KPMG paid HK$650 million (US$84 million) to settle legal claims after failing to identify fraud at a Chinese timber company, China Forestry. The liquidators of China Forestry claimed KPMG was negligent when it failed to detect serious false accounting by some of the company’s top management ahead of its listing in 2009.[145]

In August, Chile's Comision Para El Mercado Financiero (CMF) sanctioned KPMG Auditores Consultores Limitada (KPMG LLP's local affiliate) 3,000 UF (~$114,000), and Joaquín Lira Herreros, its partner, for offences incurred in the audit made to the financial statements of the Aurus Insignia Fondo de Inversión, managed by Aurus Capital S.A. Admnistradora General de Fondos Management (AGF), corresponding to the year 2014.[146]

In November, the Sultanate of Oman's Capital Market Authority (CMA) suspended KPMG from auditing entities regulated by the CMA for a period of one year after discovering major financial and accounting irregularities in the entities' records.[147][148][149]

In December, KPMG South Africa published an open apology for its participation in various scandals in South Africa, including publishing a misleading report that led to the resignation of the South African Finance Minister, involvement with the Gupta family who have been implicated in corruption scandal with former President Jacob Zuma, and acting as the auditor of VBS Mutual Bank that collapsed due to fraud. Its top eight staff resigned during 2017 and its workforce shrank from 3,400 to 2,200.[150]

2019

KPMG were fined £5 million by the Financial Reporting Council for misconduct shortly after the takeover of the Britannia Building Society by The Co-operative Bank, particularly relating to the valuation of Britannia's commercial loans and other liabilities. The takeover led to the near collapse of The Co-operative Bank.[151]

KPMG was fined $50 million by the U.S. Securities and Exchange Commission for illicit use of PCAOB data and cheating on training exams.[152][153]

In June 2019, KPMG was fined $50 million for altering its past audit work after receiving stolen data from accounting industry watch dog PCAOB. KPMG admitted to its mistakes and as a part of its settlement, it also agreed to hire an independent consultant to review its internal controls.[154]

2020

During April, KPMG UK was fined £455,000 and a senior partner, Nicola Quayle, was fined £29,250 by the Financial Reporting Council for failing to challenge what a client was telling them about certain complex supplier arrangements.[155]

In June, KPMG resigned from the auditor role of British fashion firm Ted Baker plc after the company admitted accounting errors resulting in overstatement of its inventory by up to £58 million.[156]

2021

In February, the liquidators for the South African bank VBS Mutual Bank sued KPMG for 863.5 million rand (~US$59 million) over its audit opinion on the now defunct bank.[157]

In March, KPMG US agreed to pay $10 million to settle a 10-year gender discrimination lawsuit in a New York Federal Court that alleged claims by 450 women that its culture was rife with gender discrimination, sexual harassment, and retaliation.[158]

During May, members of the Canadian Parliament's House of Commons finance committee re-launched a probe into offshore tax evasion by interviewing Lucia Iacovelli, managing partner at KPMG.[159]

KPMG in the UK was sued for more than £6 million (~€6.9 million, ~US$7.8 million) by property company Mount Anvil which claims it was left with an unexpected tax bill after the firm provided it with negligent advice.[160]

In July, the Financial Reporting Council (FRC) criticised KPMG for its "unacceptable" failure to meet required standards in its audits of banks for a third year running. Only 61% of KPMG’s audits sampled by the regulator met industry standards.[161]

The Government of Malaysia and the state sovereign fund, 1MDB, launched a lawsuit seeking over $5.6 billion in damages from KPMG partners for alleged breaches and negligence linked to a corruption scandal at the fund.[162]

South Africa's largest asset manager, the Public Investment Corporation (PIC), sued KPMG for 144 million rand (~U$9.5 million) it lost when the VBS Mutual Bank went bankrupt as a result of fraud. Its claim is centred on the rights issue and a revolving credit facility it participated in at VBS relying on financial statements audited by KPMG and its former senior partner, Sipho Malaba.[163]

In August, a tribunal convened by the FRC fined KPMG £13m and ordered it to pay £2.75m in costs. This was because of its serious misconduct in the sale of bed company Silentnight. The tribunal found that KPMG had helped private equity group H.I.G Capital drive Silentnight into an insolvency process, so that HIG could acquire the company without its £100m pension scheme. KPMG was severely reprimanded by the tribunal, and was ordered to appoint an independent reviewer to check a sample of previous cases for similar failings.[164] The tribunal ruled that KPMG's involvement with Silentnight was "deeply troubling" as it failed to act solely in its client's interests.[165]

In September, PCAOB fined KPMG Australia $450,000 after it confessed to a cheating scandal involving over 1,100 (almost 12%) of its employees.[166]

In November, the British litigation financing firm Augusta Ventures announced that it would bankroll three $152.4-million lawsuits in Canada against the previous auditor (KPMG LLP), authorized legal adviser (Cassels Brock & Blackwell LLP) and monetary adviser (Canaccord Genuity Corp) of Cash Store Financial Services Inc., a Canadian payday lender that filed for creditor safety in 2014. Bill Aziz, the litigation trustee for Cash Store, said, "It’s alleged in these lawsuits that KPMG, Cassels Brock and Canaccord triggered over $100-million in damages to Cash Store and its collectors."[167]

Also in November, KPMG UK was hit with a £15m lawsuit by insurance outsourcer Watchstone—formerly known as Quindell—over allegations it suffered losses because of the audit firm's negligence in 2013.[168]

Also in November, two units of Abraaj that are now in liquidation filed a lawsuit in Dubai against KPMG LLP for damages of US$600 million alleging that KPMG accountants "failed to maintain independence and an appropriate attitude of professional skepticism," and breached their duty of care when auditing the private-equity firm.[169]

2022

In January, the Malaysian government reported that KPMG's local affiliate had agreed to pay a fine of RM 333 million ($111 million) to settle the case filed against it in connection with the 1MDB funds scandal.[170]

A group of investors in Airbus, the Dutch foundation Stichting Investor Loss Compensation (SILC), filed a lawsuit against Airbus, KPMG and EY in the Hague District Court alleging they suffered damages worth at least €300 million (US$340 million) as a result of the company's misleading publications about its involvement in and financial settlements involving corruption, bribery, and other forms of fraud.[171]

The UK accounting regulator, the Financial Reporting Council (FRC), fined KPMG £3 million for audit failings at collapsed alcohol retailer Conviviality.[172]

A settlement agreement between the Financial Reporting Council and a KPMG partner, Stuart Smith, who led the firm’s audit of IT company Regenersis, later renamed as Blancco Technology Group, resulted in a fine of £150,000 after he admitted misleading its inspectors.[173]

During March, the Financial Reporting Council (FRC) fined KPMG UK £1.3 million for serious failings within their audits of British bar chain, Revolution Bars Group.[174]

The US securities regulator, the Securities Exchange Commission, announced an investigation into conflicts of interest at auditors, including KPMG's US branch, KPMG LLP.[175]

During April, the US accounting regulator, PCAOB, fined the former head of KPMG's US audit practice, Scott Marcello, a record US$100,000 for having failed to reasonably supervise senior auditors who engaged in the scheme to improve KPMG’s inspection results.[176]

During May, the Financial Reporting Council confirmed that KPMG would face a £14.4 million (~US$18 million) fine and a severe reprimand over false representations made by KPMG employees to the regulator concerning Carillion. (See 'Carillion audit role' section below).[71]

In May, The Times reported that the FRC was close to finishing its investigation into KPMG UK's audit of the financial statements of Rolls-Royce plc for the year ended December 2010; the investigation was begun in 2017 and the FRC may fine KPMG UK up to £4.5 million (~US$5.6 million) for questionable audit practices.[177]

In August, the PCAOB, which reviews audit procedures of foreign firms that audit US-listed entities, fined KPMG South Korea US$500,000 for failing to have proper procedures in place to prevent its auditors from doctoring work papers. It also fined two of its partners and banned them from working for a PCAOB registered audit firm for three years, as they were found to have improperly altered documents and violated auditing standards during the Big Four firm’s 2018 audit of the Korean business of an unnamed US-listed company.[178]

In September, a lawsuit was filed in the Hong Kong High Court which accused KPMG of "appalling" audit work that allowed a Chinese medical technology company, China Medical Technologies, to commit a US$400 million accounting fraud, and which sought up to US$830 million in damages.[179]

In October, Dubai Emirate's financial regulator, Dubai Financial Services Authority, handed provisional fines of US$2 million to KPMG's UAE affiliate (US$1.5 million) and one of its audit employees, Milind Navalkar (US$0.5 million), for failing to follow international audit standards in the audit of the failed Dubai-based private equity firm The Abraaj Group.[180]

Also, KPMG affiliate KPMG Lower Gulf's CEO, Nader Haffar, quit consequent to a tumultuous year filled with accusations of nepotism, cronyism and partner discontent. This was a month after Nader had sent a letter to clients in the UAE and Oman in which the firm’s 30 partners said that they remained united.[181]

In addition, the PCAOB fined KPMG's Italian, Dutch and Canadian affiliates approximately US$275,000 for concealing the outsourcing of some audit work to unregulated firms in Poland and Romania.[182]

In November, KPMG UK agreed to pay £5 million (US$6 million) in settlement of a lawsuit by a former client, insurance software firm Quindell, relating to deficient audit work for Quindell (now known as Watchstone) relating to its 2013 financial statements.[183]

The Abu Dhabi Accountability Authority (ADAA), which monitors Abu Dhabi government-owned and related entities, removed KPMG’s Lower Gulf affiliate from its list of authorized auditors that can sign off on financial statements.[184]

In December, the PCAOB announced that its inspectors had discovered that hundreds of KPMG employees in the UK and Colombia affiliates cheated on their compliance exams. In addition, inspectors also discovered document alterations to deceive inspectors in KPMG's Colombia affiliate, and blank audit papers signed by an KPMG affiliate audit partner in India. KPMG LLP agreed to pay US$7.7 million in fines. This follows a US$50 million fine in 2019 where KPMG employees were using data stolen from the PCAOB to identify which audits would be reviewed.[185]

2023

In February, KPMG UK confidentially settled the £1.3 billion (US$1.6 billion) lawsuit launched in 2022 by the UK's Official Receiver relating to KPMG's audit of the failed construction firm, Carillion, between 2014 - 2018.[186]

Also in February, a Disciplinary Tribunal, appointed by the UK's Financial Reporting Council and led by Sir Stanley Burnton, concluded that members of the audit teams deliberately misled the FRC’s Audit Quality Review (AQR) teams about KPMG’s audits of Carillion plc and Regenersis plc by altering existing documents and by creating entirely new documents during the course of the inspection. This showed, the Tribunal found, a clear intention to mislead the regulator.[187]

In April, KPMG Lower Gulf was ordered by a Dubai court to pay 850 million United Arab Emirates dirhams (~US$231 million) to a group of investors who claim they lost money because of poor-quality audits of its client, The Abraaj Group.[188]

Also in April, KPMG’s Canadian affiliate was sued for Canadian $1.4 billion (~US$1.1 billion) by PriceWaterhouseCoopers, the Receiver winding down defunct financing firm Bridging Finance Inc., for negligently failing to detect and report on misstatements in its financial statements before the firm’s collapse in 2021.[189]

Also in April, the Financial Reporting Council fined KPMG's UK affiliate £1 million (~US$1.3 million) for failing to meet audit requirements in the case of the 2020 financial statements of its client, the stationery company TheWorks.co.uk plc, particularly its inventory.[190]

The Financial Reporting Council fined KPMG's UK affiliate £875,000 in April (~US$1.1 million) for failing to meet audit requirements in the case of the 2016 financial statements of its client, lighting company Luceco, particularly with regard to inventory cost errors.[191]

During May, the PCAOB released inspection reports regarding KPMG's China affiliate KPMG Huazhen LLP that Holding Foreign Companies Accountable Act (HFCAA) made possible. It concluded that it discovered "deficiencies of such significance that PCAOB staff believe the audit firm failed to obtain sufficient appropriate audit evidence to support its work on the public company’s financial statements or internal control over financial reporting".[192]

During June, the UK accounting regulator Financial Reporting Council imposed a £877,000 (~US$1.1 million) fine on KPMG's UK affiliate for not satisfying relevant requirements regarding its 2017 audit of the financial statements of the logistics company Eddie Stobart Group.[193]

In July, KPMG Nederland announced that over 100 employees of the Dutch affiliate of KPMG were found to have cheated annually on their exams over the past five years and that its director Marc Hogeboom would also step down as boss of the accounting arm.[194]

In August, KPMG Australia was accused by two whistleblowers of submitting inflated invoices and billing the Australian Department of Defence for hours never worked. KPMG has reportedly charged this department A$1.8 billion (~US$1.2 billion) over the past decade.[195]

Also in August, the registration authority of the Abu Dhabi Global Market imposed a AED110,000 (~US$30,000) penalty on KPMG Lower Gulf for “ineffective systems and controls leading to non-compliance with audit requirements”.[196]

During November, the PCAOB imposed a fine of US$80,000 on KPMG affiliates in Brazil and Argentina for failing to communicate adequately with their client's audit committees, and a US$500,000 fine on its Japanese affiliate for quality control violations.[197]

KPMG was criticized for its audits of three regional American banks which collapsed in 2023: Signature Bank, First Republic Bank, and Silicon Valley Bank (SVB).[198][199] The United States Senate’s Permanent Subcommittee on Investigations later released a report which noted the inadequate practices by KPMG, though the firm denies the findings.[200]

2024

In late December 2023 an organisation named Collectif Porteurs H2O, that represents 9,000 individual investors in funds managed by French asset manager, H2O, sued its auditor, KPMG's French affiliate, as being jointly liable, along with H2O, its former parent Natixis, and its custodian CACEIS, for the losses of almost €700 million ($764 million) due to investments in illiquid assets tied to German financier Lars Windhorst. The UK financial regulator, Financial Conduct Authority, in August made H2O compensate investors to the extent of €250 million ($273 million) and forced H2O to relinquish its UK license. H2O was separately fined €75 million ($82 million) in 2022 by the French regulator, Autorité des Marchés Financiers (France).[201]

During February, KPMG's South African affiliate is supposed to have entered into a confidential out-of-court settlement of 500 million Rand (~$27 million) with the liquidators of bankrupt South African bank VBS Mutual Bank in response to their lawsuit against KPMG filed in February 2021 for 863.5 million Rand (~$59 million).[202]

In March, KPMG's UK affiliate was fined £1.46 million ($1.9 million) by the Financial Reporting Council for 'basic failings' in its audit of the 2018 financial statements of advertising agency M&C Saatchi plc. FRC indicated that KPMG would have been fined £2.25 million ($2.8 million) had it not admitted to the breaches.[203]

Also in March, the Public Company Accounting Oversight Board sanctioned three partners of KPMG China affiliate KPMG Huazhen LLP for violations of audit standards, and fined it $150,000.[204]

In April, the PCAOB fined KPMG's Netherlands affiliate, KPMG Accountants N.V, US$25 million for violations of its rules and quality control standards relating to the firm’s internal training program and monitoring of its system of quality control. The PCAOB found that widespread improper answer sharing occurred at the firm over a five-year period and that the firm made multiple misrepresentations to the PCAOB about its knowledge of the misconduct.[205]

KPMG has been criticized over its audit for the distressed New York Community Bank (NYCB) in light of its passing audits for three regional banks that failed in 2023.[206]

During August, the National Financial Reporting Authority (NFRA), an independent regulatory body in India that oversees the accounting and auditing of companies, fined KPMG's Indian affiliate, BSR & Associates LLP, 10 crore rupees (~$1.2 million) for lapses in auditing the 2018-19 financial statements of the coffee chain Coffee Day Enterprises and barred two of its partners from audit work for up to ten years. This followed an earlier 2.15 crore rupee (~$0.3 million) fine for similar lapses with a related entity, Coffee Day Global.[207]

2025

During January, the Financial Reporting Council announced that it has opened an investigation into the 2022 audit of the gambling company Entain, which was conducted by KPMG's UK affiliate.[208]

During March, the PCAOB announced nine settled disciplinary orders sanctioning nine firms from KPMG’s global network (Switzerland, Korea, Australia, Canada, Brazil, Italy, Israel, Mexico and UK) for violations of PCAOB rules and standards, including quality control standards. Each firm consented to a PCAOB order that censures the firm and imposes civil money penalties totaling US$3.375 million.[209]

During June, the Financial Reporting Council, announced a fine of £0.69 million (US$0.8 million) on KPMG's UK affiliate as a result of an investigation into auditor independence during the financial audit of UK manufacturing firm Carr’s Group, where KPMG was found to be relying on another firm’s work.[210]

Cultural issues

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Controversies around KPMG Lower Gulf first emerged in July 2022, when staff at the UAE division accused the multinational firm of neglecting multiple complaints filed against the Emirati CEO Nader Haffar.[211] The controversy resurfaced in September 2022, when the global bosses were urged to suspend Haffar, citing "nepotism, cronyism and a culture of fear" under his leadership. In an email sent to KPMG International’s top executives, ten capital partners at the firm’s UAE branch asked them to address the "massive crisis" in the local company. They also raised concerns over the falling profits, affecting their pay. The average profits per partner fell, and they were not paid bonuses for 2021 due to "cash flow issues".[212]

In October 2022, the Financial Times published a report in which dozens of employees said that unethical employment practices at KPMG Saudi Arabia were commonplace and had left expatriate staff fearing for their personal safety and struggling with their mental health. Several former employees witnessed colleagues being fired abruptly for no reason, and put this down to hostility towards westerners from the largely Arab leadership team at KPMG Saudi Arabia. Racial tensions within the firm were also a problem, with xenophobic language being used towards certain nationalities. The FT viewed copies of three whistleblowing reports sent to KPMG International since 2018, alleging issues in the Saudi Arabia practice, including wrongful terminations, failure to pay staff and concerns about personal safety in the region.[213]

Sponsorship

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KPMG Europe headquarters in the Squaire building over Frankfurt Airport long-distance station

The Swedish member firm was the main sponsor for Swedish biathlete Magdalena Forsberg, six-time world champion and two-time Olympic medalist. Forsberg was working as a tax consultant at the KPMG Sundsvall office parallel to her athletic career.[214]

In February 2008, Phil Mickelson, ranked one of the best golfers in the world, signed a three-year global sponsorship deal with KPMG. As part of the agreement, Mickelson was to wear the KPMG logo on his headwear during all golf related appearances.[215] The sponsorship lasted until 22 February 2022, when the two parties mutually split following comments in which Mickelson called Saudi Arabia "scary" but said he would overlook the country's human rights controversies in the best interest of the PGA Tour.[216]

The Canadian member firm sponsored skier Alexandre Bilodeau, who won the first gold medal for Canada on home soil in the 2010 Vancouver Olympics. Bilodeau's father is a tax partner in the Montreal office.[217][218]

In 2014, KPMG and McLaren Technology Group formed a ten-year strategic alliance to apply McLaren Applied Technologies' predictive analytics and technology to KPMG's audit and advisory services. KPMG's logo was also placed at the engine air intake of the McLaren F1 team's cars.[219][220] KPMG terminated the partnership in 2017 and McLaren signed a similar partnership with competitor Deloitte.[221][222]

Since 2016, KPMG has been a strategic sponsor of Brain Bar, a Budapest-based, annually held festival on the future.[223]

Awards

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KPMG ranked in the top two overall in Consultancy Rankings 2009 by OpRisk & Compliance, in recognition of KPMG's experience in risk management.[224]

In 2011, the company was ranked second on the World's Best Outsourcing Advisors, in recognition of the firm's depth of experience, global reach and holistic approach.[225] That same year, the company was inducted into Working Mother Hall of Fame after being honored for 15 years as one of Working Mother magazine's 100 Best Companies for Working Mothers.[226] KPMG was ranked number 13 in Consulting Magazine's Best Firms to Work for in 2016.[227]

In 2017, KPMG was ranked 29th on the Fortune list of 100 best companies to work for.[228] That same year, KPMG, along with PwC, Deloitte, and PA Consulting Group, were ranked among the UK's 25 top companies to work for.[229]

See also

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Notes

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References

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Revisions and contributorsEdit on WikipediaRead on Wikipedia

KPMG

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KPMG is a global network of independent member firms offering audit, tax, and advisory services, constituting one of the Big Four professional services organizations alongside Deloitte, EY, and PwC. Formed in 1987 through the merger of Peat Marwick International and Klynveld Main Goerdeler, the firm derives its name from the surnames of its founding partners: Piet Klynveld, William Peat, James Marwick, and William Goerdeler. The KPMG network operates in 143 countries and territories, employing approximately 275,000 professionals who deliver services to a diverse clientele including multinational corporations, governments, and public sector entities. Its audit practice focuses on financial statement assurance, while tax services encompass compliance, planning, and controversy resolution, and advisory offerings include risk consulting, deal advisory, and technology-driven solutions. KPMG has achieved notable scale as the fastest-growing among the Big Four in recent fiscal years, reflecting expansion in high-demand areas like sustainability reporting and digital transformation. Despite its prominence, KPMG has encountered significant controversies related to audit quality and independence, including regulatory sanctions for enabling accounting manipulations, such as the 2003 SEC case involving Xerox Corporation where the firm overlooked revenue inflation tactics to mask a $3 billion earnings shortfall. Other instances of enforcement actions highlight recurring challenges in upholding rigorous standards amid complex client engagements, underscoring tensions between commercial pressures and professional obligations in the accounting sector.

History

Origins and Early Firms

The origins of what became KPMG lie in several independent accounting practices established in Europe and North America during the late 19th and early 20th centuries, which grew through organic expansion and initial mergers before coalescing into larger networks. In London, Sir William Barclay Peat founded W.B. Peat & Company in 1891, building on his earlier experience in auditing since the 1870s; the firm emphasized financial reporting and gained prominence by auditing major British companies, later merging with Marwick, Mitchell & Co. in 1911 to form Marwick, Mitchell, Peat & Co., which reorganized as Peat, Marwick, Mitchell & Co. in 1925 after further integrations. In the United States, James Marwick, a Scottish immigrant, partnered with Roger Mitchell to establish Marwick, Mitchell & Co. in New York City on December 1, 1897, focusing on auditing services for emerging industrial enterprises; the firm expanded westward across the U.S. and contributed to early regulatory efforts, including assisting in the 1913 audit that informed the Federal Reserve System's structure. This U.S. practice merged with Peat's firm in 1911, laying the groundwork for Peat Marwick International (PMI), a global network that operated independently until 1987. On the European continent, Piet Klynveld founded Klynveld Kraayenhof & Co. in Amsterdam in 1917, initially as a small auditing firm serving Dutch commerce, which partnered with Meijburg & Co. for tax expertise and grew into a multinational practice by the mid-20th century. Complementing this, Deutsche Treuhand-Gesellschaft (DTG), established in Berlin in 1890 as one of Germany's earliest auditing firms, provided a strong base in Central Europe; Reinhard Goerdeler joined DTG in 1953 and later drove its international alignment. These firms, along with U.S.-based Main LaFrentz (formed from mergers including F.W. LaFrentz & Co. around 1899 and Main & Co. circa 1913), merged into Klynveld Main Goerdeler (KMG) in 1979, creating a counterweight to Anglo-American dominance in accounting networks.

Key Mergers and Formation of KPMG

In 1979, Klynveld Main Goerdeler (KMG) was established through the merger of three prominent European accounting networks: the Dutch firm Klynveld Kraayenhof & Co., the UK and US-based McLintock Main Lafrentz, and the German Deutsche Treuhand-Gesellschaft. This consolidation aimed to build a robust, Europe-centered international practice comprising independent firms across nine countries, enhancing competitive scale against dominant Anglo-American networks. The defining merger occurred on January 1, 1987, when KMG combined with Peat Marwick International (PMI), creating KPMG as the world's largest accounting firm at the time with combined revenues exceeding $4 billion and operations in over 80 countries. Announced in September 1986, this "mega-merger" represented the first major consolidation among the era's Big Eight accounting firms, driven by pressures for global standardization, client demands for integrated services, and regulatory changes favoring larger entities. The resulting entity adopted the KPMG name from the initials of Klynveld, Peat, Marwick, and Goerdeler, while establishing a shared values charter emphasizing integrity to align disparate cultures. This union immediately positioned KPMG ahead of rivals like Arthur Andersen and Price Waterhouse in global footprint and fee income.

Post-Merger Expansion and Challenges

Following the 1987 merger of Peat Marwick International and Klynveld Main Goerdeler, which generated combined global revenues of $2.7 billion and positioned KPMG as the world's largest accounting firm, the network prioritized operational unification across its independent member firms. This included rebranding efforts, such as renaming the U.S. arm KPMG Peat Marwick in 1989, and expanding service lines beyond traditional audit into consulting and advisory to capitalize on globalization. By the mid-1990s, the firm had established a common values charter to align practices worldwide, supporting methodical growth into key financial centers and major cities. In the 1990s, KPMG accelerated expansion into emerging economies, including Russia, India, and Myanmar, while strengthening its consulting division through acquisitions like Softline Consulting & Integrators, Inc. in 1999. Revenues surged to a record $12.2 billion by 1999, driven by 32% growth in consulting to $3.5 billion, and the firm launched a $60 million global branding campaign in 1998 under the tagline "It's time for clarity" to foster a more centralized identity. These initiatives helped KPMG maintain its status among the Big Four, with operations spanning over 100 countries by decade's end. The period also brought significant challenges, including integration strains from the merger's scale and external economic pressures. In the late 1980s, a U.S. savings and loan crisis eroded the client base, prompting regulatory scrutiny from the Office of Thrift Supervision. By 1991, KPMG responded with aggressive cost reductions, laying off 265 partners—one in seven—with $52 million in severance expenses. Further consolidation efforts faltered, as proposed mergers with Ernst & Young and Arthur Andersen in Canada collapsed between 1997 and 1999 due to antitrust concerns and internal disagreements. Despite these hurdles, the network's decentralized structure of independent firms allowed resilience, though it complicated uniform global standards.

Recent Developments (2000s–Present)

In 2017, KPMG's South African operations faced severe backlash over its auditing of entities linked to the Gupta family, accused of influencing government decisions under President Jacob Zuma in a scheme known as "state capture." The firm admitted ethical lapses and failure to apply professional skepticism in a self-commissioned review of work for Gupta-owned Oakbay Investments, leading to the resignation of CEO Trevor Hoole, chairman Ahmed Jafree, and other senior executives. KPMG donated 40 million rand (approximately $3 million) in fees from Gupta-related clients to anti-corruption and education initiatives, while terminating the relationship and overhauling its governance. In the United States, the Securities and Exchange Commission fined KPMG $50 million in 2019 for systemic misconduct, including partners and national managing partners directing subordinates to cheat on over 1,000 internal training exams and improperly accessing confidential Public Company Accounting Oversight Board inspection data to prepare for reviews. The SEC described the actions as "unprecedented in scope and magnitude," resulting in enhanced remediation measures and personnel dismissals. KPMG's role in high-profile audit failures continued into the 2020s. For the UK construction firm Carillion, which entered liquidation in January 2018 owing £7 billion, the Financial Reporting Council imposed a record £21 million fine on KPMG in October 2023 for "textbook failures" in audits from 2014 to 2017, citing insufficient evidence gathering on revenue recognition, contract risks, and provisions despite red flags like aggressive accounting. The regulator noted KPMG's work lacked professional skepticism, contributing to undetected overstatements. In the Wirecard AG scandal, which culminated in the German fintech's June 2020 insolvency amid missing €1.9 billion in reported Asian cash, KPMG's April 2020 special audit of third-party acquirer operations could not confirm the balances or related profits, triggering a share plunge of over 25% and executive probes. While the report exposed verification gaps, Wirecard's former accounting chief later admitted in 2022 to forging documents under pressure from KPMG auditors to substantiate transactions during the review. Separately, in April 2024, KPMG's Netherlands unit agreed to a €25 million penalty—the largest ever—for its own exam cheating scandal and misleading regulators about internal probes. Regulatory pressures persisted into 2025, with the PCAOB censuring and fining nine KPMG network firms a total of $3.375 million in March for violations including inaccurate audit performer disclosures and quality control deficiencies. In the UK, KPMG absorbed the majority of accounting enforcement actions since 2020, including three of the four largest fines by the Financial Reporting Council. Amid these, the firm pursued operational enhancements, such as launching AI-driven services like KPMG Velocity in 2025 to boost corporate functions.

Organizational Structure

Global Network and Independence

KPMG operates as a global network of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee that coordinates strategy, standards, and governance without providing client services. These member firms deliver audit, tax, and advisory services across 142 countries and territories, employing more than 275,000 partners and staff. The network structure enables localized operations while leveraging shared resources, methodologies, and brand identity to serve multinational clients. Each member firm constitutes a separate legal entity, generally owned and managed by local partners, and assumes sole responsibility for its own professional obligations, liabilities, and regulatory compliance. KPMG International Limited holds no authority to bind or obligate any member firm to third parties, nor do member firms extend such authority to the coordinating entity or each other, thereby insulating the network from individual firm failures, such as financial losses or legal judgments. This formal independence supports risk compartmentalization, as evidenced in instances where sanctions against one firm, like fines for audit deficiencies, do not directly propagate to others. Despite structural separation, member firms must conform to centralized global policies on quality control, ethics, and independence requirements to uphold professional standards and brand uniformity. Regulatory frameworks, including those from the U.S. Public Company Accounting Oversight Board, treat KPMG member firms as an interconnected global network for oversight purposes, mandating coordinated inspections and enforcement to address potential cross-border risks in audit practices. This dual emphasis on autonomy and affiliation balances operational flexibility with accountability, though it has drawn scrutiny in high-profile cases where network-wide methodological consistency was implicated in systemic audit lapses.

Leadership and Governance Model

KPMG operates as a of independent member firms affiliated with KPMG International, a private English that coordinates strategy, policies, and quality standards but does not provide to clients. Each member firm is a , locally owned and managed, bearing sole responsibility for its liabilities and operations within its jurisdiction. This structure, akin to a Swiss verein model, enables shared branding and resources while preserving firm independence and limiting cross-border liability exposure. The Global Board serves as the principal governance and oversight body, with responsibilities including approving long-term strategy, protecting the KPMG brand, setting global policies, and managing organizational affairs through specialized committees. The Global Council provides additional oversight on strategic direction and governance matters. Member firms must comply with these policies and standards, with KPMG International empowered to enforce adherence or terminate affiliations for non-compliance. Executive leadership is headed by the Global Chairman and CEO, Bill Thomas, who assumed the role on October 1, 2017, and leads efforts to align the network's 275,000+ professionals across 145 countries. The Global Management Team, operating under the Board, focuses on strategy execution, functional alignment, and sector-specific initiatives, including key roles such as Global Head of Audit (Scott Flynn) and Global Head of Advisory (Rob Fisher). This model emphasizes coordination over centralized control, allowing local leadership—such as the U.S. Chair and CEO (Tim Walsh, elected March 2025)—to adapt to regional regulations while upholding uniform global ethics and quality protocols.

Regional Operations and Member Firms

KPMG operates through a network of independent member firms affiliated with KPMG International Limited, a UK-based cooperative entity incorporated in England and Wales, which coordinates global strategy without direct control over local operations. These member firms function as separate legal entities, each locally owned, managed, and liable for its own obligations, ensuring compliance with national regulations while adhering to shared KPMG methodologies and quality standards. As of 2024, the network spans 145 countries and territories with approximately 275,000 partners and employees. The structure divides operations into three regions: the Americas, Asia Pacific (ASPAC), and Europe, the Middle East, and Africa (EMA), each governed by a Regional Board comprising senior leaders from member firms to align regional activities with global objectives. This framework, established through a 1999 restructuring that consolidated operations into broader geographic units, enables localized service delivery in audit, tax, and advisory while facilitating cross-border collaboration. In 2024, employee distribution showed over half of the workforce in EMA, followed by the Americas and ASPAC, reflecting varying market sizes and regulatory environments across regions.
  • Americas: Encompassing North, Central, and South America, this region includes major hubs in the United States, Canada, Mexico, and Brazil, where member firms focus on serving multinational corporations amid diverse economic conditions, such as U.S. GAAP compliance and Latin American tax reforms.
  • Asia Pacific (ASPAC): Covering East Asia, Southeast Asia, Australia, and the Pacific, operations emphasize growth markets like China, India, and Japan, with member firms adapting to rapid digital transformation and varying regulatory landscapes, including ASEAN integration efforts.
  • Europe, the Middle East, and Africa (EMA): The largest by employee count, this region spans the EU, UK, Middle East oil economies, and African emerging markets, where firms navigate complex post-Brexit trade, GDPR enforcement, and geopolitical risks in areas like the Gulf Cooperation Council states.
In March 2025, KPMG initiated a global revamp to reduce the number of standalone country units by merging smaller member firms into larger regional entities, aiming to enhance efficiency, integrate operations, and accelerate growth amid competitive pressures in the professional services sector. This shift builds on the network's emphasis on independence, as member firms retain autonomy in client engagements and local hiring, but it introduces tighter regional coordination for resource sharing and talent mobility.

Services

Audit and Assurance Services

KPMG's audit and assurance services encompass audits, which verify the accuracy and completeness of financial reporting for investors and capital markets, as well as broader assurance on internal controls, compliance, and non-financial disclosures. These services are delivered through a network of professionals applying standards such as (ISA) and local equivalents, with an emphasis on and evidence-based conclusions to mitigate material misstatement risks. The firm integrates advanced technologies, including data analytics and AI-driven tools, into its audit processes to enhance efficiency and detect anomalies, transforming traditional audits into more predictive and real-time engagements. Additionally, KPMG utilizes the Audit Capability Hub (ACH) within its Global Delivery Center, primarily located in India (e.g., Bengaluru, Kolkata), as a centralized unit providing specialized support for audit engagements. This includes services for private audits, common procedures such as cash and fixed assets verification, data analytics, and end-to-end audit processes aligned with KPMG methodologies, including the US audit approach, to improve quality and efficiency for global teams. KPMG also provides specialized assurance on environmental, social, and governance (ESG) metrics, verifying sustainability reports and disclosures amid increasing regulatory demands, such as those under the EU's Corporate Sustainability Reporting Directive. Other assurance offerings include technology audits assessing IT systems and cybersecurity postures, attestation of prospective financial information for prospectuses or mergers, and reviews of internal processes for operational efficiency. In September 2025, KPMG expanded its AI Trust services with dedicated AI assurance capabilities, evaluating risks in AI applications for sectors like financial services, including bias detection and ethical compliance. As one of the Big Four firms, KPMG audits thousands of public and private entities globally, contributing to its fiscal year 2024 aggregated revenues of $38.4 billion, where audit services remain a foundational revenue driver alongside tax and advisory. The services prioritize independence and quality, with internal quality controls aligned to International Standards on Quality Management (ISQM 1), though outcomes depend on firm-wide execution and regulatory oversight.

Tax Advisory and Compliance

KPMG's tax advisory services focus on strategic planning and optimization for multinational corporations, including international tax structuring, transfer pricing, and mergers and acquisitions tax implications. These offerings leverage industry-specific expertise, such as financial services tax for banking and insurance entities facing regulatory complexities like Basel III capital requirements, and deal advisory integrating tax considerations into transactions to minimize liabilities while ensuring defensibility against audits. The firm employs advanced technologies, including AI-driven analytics for predictive tax scenario modeling and real-time compliance monitoring, to address evolving global tax landscapes influenced by reforms like the OECD's Pillar Two global minimum tax implemented starting in 2023. Compliance services emphasize accurate reporting, provision preparation, and process automation to handle statutory requirements across jurisdictions. KPMG's global compliance management includes payroll, bookkeeping, and indirect tax filings—such as VAT/GST and sales/use taxes—supported by data management tools to reduce errors and penalties. For employment and mobility, services cover payroll tax withholding and expatriate compliance amid shifting regulations, like U.S. state-level nexus expansions post-Wayfair decision in 2018. The firm's "Tax Reimagined" initiative integrates digital transformation to streamline tax functions, enabling clients to shift from reactive compliance to proactive advisory amid increasing scrutiny from authorities like the IRS and EU tax bodies. In fiscal year 2024, ending September 30, KPMG's tax and legal services generated $8.7 billion in global revenue, a 10% increase from the prior year, underscoring the practice's scale within the firm's $38.4 billion total revenue. This growth reflects demand for navigating post-pandemic fiscal policies and digital economy taxes, though the advisory arm has historically invited regulatory risks; for instance, in 2005, KPMG agreed to a $456 million deferred prosecution with the U.S. Department of Justice for issuing fraudulent opinion letters promoting abusive shelters like BLIPS, OPIS, and FLIP, which generated $11 billion in artificial losses to evade over $2.5 billion in taxes. Subsequent convictions of firm partners in 2008 for tax evasion highlighted internal lapses in vetting aggressive strategies, prompting enhanced compliance protocols to prioritize substance over form in client engagements.

Consulting and Risk Advisory

KPMG maintains strategic alliances with leading technology companies to deliver innovative joint solutions in areas such as AI, cloud computing, data management, cybersecurity, and business transformation. Key partners include Microsoft for data and AI in the cloud, Google Cloud for AI, multi-cloud, and security, Oracle for cloud applications and AI, SAP for business applications, Salesforce for CRM and Agentforce AI, ServiceNow for enterprise AI and workflows including the joint KPMG Velocity platform, Workday for finance, HCM, and AI, Coupa for spend management, Databricks for data intelligence, and others such as IBM, Red Hat, Snowflake, and Anaplan. KPMG's consulting services focus on business transformation, leveraging industry expertise, proprietary solutions, and technology to address operational challenges and drive performance improvements. These offerings include end-to-end transformation programs, technology implementation, and managed services designed to optimize processes and foster innovation. For instance, KPMG Powered Enterprise provides cloud-based platforms to enhance enterprise agility and data-driven decision-making. KPMG's cloud consulting services, particularly in cloud ERP implementations, are rated 4.6 out of 5 on Gartner Peer Insights based on 20 reviews. Reviewers highlight strengths in reliable delivery, ownership of work, agile yet structured implementation approaches, deep industry expertise, flexibility, and responsiveness. Minor criticisms include challenges with time zone coordination, initial planning shortcomings, and underestimating complexity in unique environments, though overall satisfaction emphasizes accountability and solutions delivered on time and within budget. KPMG has been recognized as a Leader in the 2024 Gartner Magic Quadrant for Cloud ERP Services, which evaluates providers for cloud-based ERP transformation including strategy, implementation, and modernization aspects. Additionally, KPMG was named a Strong Performer in The Forrester Wave: Digital Transformation Services, Q3 2025, related to broader transformation services including cloud elements. In supply chain management, KPMG provides AI-enabled planning and insights to improve forecasting, mitigate disruptions, optimize costs, and enhance resilience, utilizing discriminative, prescriptive, and generative AI algorithms. The Intelligent Supply Chain service integrates AI and machine learning for real-time visibility, predictive analytics, and operational efficiency. KPMG anticipates 2026 trends including AI scaling beyond proofs-of-value toward embedded platforms, connected intelligence across enterprise functions, and agentic AI in procurement for autonomous tasks. The firm's risk advisory practice emphasizes enterprise-wide risk management, regulatory compliance, and resilience against emerging threats such as cyber vulnerabilities and third-party exposures. Services encompass risk identification, assessment, monitoring, and mitigation strategies, including board-level advisory on governance and internal controls. KPMG professionals apply technical capabilities to help clients navigate compliance landscapes, with specialized areas like technology risk analysis and contract compliance reviews. KPMG's Financial Risk Advisory services are highly regarded, ranking 1st for First Choice in Financial Risk in Source Global Research's Perceptions of Risk Firms 2023 report and 1st for Authority in Risk in the 2024 edition, among other top positions in risk categories. The firm offers comprehensive, innovative services in financial services risk and regulatory compliance, supported by technology-driven solutions and positive client feedback, establishing it as a leading authority in risk consulting. In 2022, KPMG's risk consulting was recognized as "Risk Management Consultant of the Year" at the Asia Risk Awards for its contributions in the region. Historically, KPMG formalized its consulting operations in the United States and Canada through the incorporation of KPMG Consulting, LLC in January 2000, integrating prior advisory efforts into a structured business unit focused on results-oriented engagements. This division supports broader advisory goals by combining risk insights with consulting to enable sustainable value creation amid volatile market conditions.

Other Specialized Offerings

KPMG offers forensic services focused on investigating fraud, corruption, misconduct, and financial crime, including the use of advanced data analytics to detect anomalies and support litigation. These services encompass integrity due diligence, background checks, whistleblower program management, and the design of internal controls to mitigate risks of non-compliance. Forensic technology tools enable clients to analyze large datasets for evidence of waste, misappropriation, or regulatory violations, often tailored to sector-specific needs like banking or environmental due diligence. In deal advisory, KPMG supports transactions such as mergers, acquisitions, divestitures, and joint ventures by providing valuation, due diligence, and structuring advice to minimize risks and maximize value. Capital advisory services assist in raising and deploying funds, while strategy teams help optimize deal outcomes through data-driven insights and sector expertise. KPMG's ESG and sustainability offerings include assurance on greenhouse gas emissions reporting, strategy development for decarbonization, and implementation of frameworks aligned with standards like GRI and SASB. These services extend to materiality assessments, climate risk modeling, and tax-related sustainability planning, aiming to integrate environmental, social, and governance factors into business operations.

Financial Performance

Revenue Growth and Profitability

KPMG's global aggregated revenues, reported by its independent member firms, reached US$38.4 billion for the fiscal year ended September 30, 2024 (FY24), reflecting a 5.1% increase in local currency terms and 5.4% growth in US dollars from the prior year. This marked the fourth consecutive year of expansion, building on FY23 revenues of US$36 billion, which had risen approximately 4% from FY22's US$34.6 billion. The growth trajectory demonstrates resilience amid economic headwinds, with contributions from all service lines, including a 10% rise in tax and legal services revenues to US$8.7 billion. Revenue expansion has been uneven across functions, with audit and tax services outperforming advisory, the latter slowing to 7% growth in FY23 after a 19% surge the previous year. Globally, KPMG achieved the highest growth rate among Big Four peers in FY24 at 5.4%, surpassing rivals despite sector-wide pressures like regulatory scrutiny and talent competition. Regional variations exist, such as a 19.1% increase in Middle East, South Asia, and Central Asia revenues, contrasted by a modest decline in Australian operations for FY25. Profitability data for the KPMG network is not consolidated globally due to its structure of independent firms, but member firm reports indicate sustained margins typical of professional services, often in the 15-20% range for net profits. Revenue growth has supported ongoing investments in technology, talent acquisition, and ESG initiatives without disclosed erosion of overall profitability. For instance, the firm's ability to distribute profits to partners while expanding headcount underscores operational efficiency, though exact global aggregates remain opaque.
Fiscal YearGlobal Revenue (US$ billion)Annual Growth (US$)
FY22 (ended Sep 2022)34.6-
FY23 (ended Sep 2023)36.04.0%
FY24 (ended Sep 2024)38.45.4%
KPMG's global aggregated revenues for fiscal year 2024, ending September 30, reached US$38.4 billion, marking a 5.1% increase in local currencies and 5.4% in US dollars from US$36.4 billion in the prior year. This growth was distributed across service lines, with Advisory generating US$16.3 billion (up 2.4% in USD), Audit US$13.4 billion (up 6.4%), and Tax & Legal Services US$8.7 billion (up 9.9%). Regionally, Europe, Middle East, and Africa contributed US$17.2 billion (up 9.4% in USD), Americas US$15.2 billion (up 4.0%), and Asia Pacific US$6.0 billion (down 1.6%). Headcount stood at 275,288 professionals, a 1% rise from FY23, reflecting modest expansion amid investments of US$1.7 billion in talent and capabilities. Historical trends show steady recovery and expansion following a pandemic-induced dip. Revenues declined 1% to US$29.22 billion in FY20 before rebounding with double-digit growth in FY21. Subsequent years sustained mid- to high-single-digit increases, driven by demand for advisory services in technology, ESG compliance, and regulatory assurance, though moderated by economic headwinds like inflation and geopolitical tensions. The firm's multi-disciplinary approach has supported diversification, with non-audit services comprising over 60% of FY24 revenue.
Fiscal YearRevenue (US$ billion)USD Growth (%)
202029.22-1
202132.13+10
202235.00+9
202336.40+4
202438.40+5.4
Profitability details remain limited in public disclosures, as KPMG operates as a network of partnerships without consolidated profit reporting; however, sustained revenue growth and controlled headcount expansion indicate operational efficiency.

Market Share Among Big Four

KPMG consistently ranks as the smallest of the Big Four accounting firms by global revenue, a key metric for assessing relative market share in audit, tax, and advisory services. In fiscal year 2024 (ended September 30), KPMG generated $38.4 billion in revenue, compared to Deloitte's $67.2 billion, PwC's $55.4 billion, and EY's $51.2 billion, positioning KPMG with approximately 18% of the group's combined $212 billion total. This revenue-based share reflects KPMG's focus on steady growth in consulting and tax segments, though it trails competitors in scale and diversification.
FirmFiscal Year 2024 Revenue (USD billions)Share of Big Four Total
Deloitte67.232%
PwC55.426%
EY51.224%
KPMG38.418%
In the audit and assurance submarket, where the Big Four dominate over 90% of U.S. public company engagements, KPMG's share among peers is similarly modest, with Deloitte leading at around $21 billion in assurance revenue alone. KPMG achieved the highest year-over-year revenue growth at 5.1% in 2024, driven by demand in risk advisory and deals services, potentially narrowing the gap amid economic pressures affecting larger rivals like EY's stalled network split. However, persistent challenges in winning mega-clients and regulatory scrutiny on past audit issues have constrained KPMG's ability to overtake EY or expand beyond its fourth-place position. Market share dynamics are influenced by factors such as client retention rates, geographic expansion, and service mix, with KPMG emphasizing mid-market clients over the Fortune 500-heavy portfolios of Deloitte and PwC.

Controversies and Regulatory Scrutiny

Major Audit Failures and Client Collapses

KPMG has encountered substantial criticism and regulatory penalties for audit shortcomings linked to the insolvency of prominent clients, including lapses in professional skepticism and inadequate challenge to management representations that obscured underlying financial weaknesses. In the United Kingdom, the collapse of construction and services firm Carillion in January 2018 exemplified such issues, while in the United States, the rapid failures of three regional banks in 2023—Silicon Valley Bank, Signature Bank, and First Republic Bank—intensified scrutiny of KPMG's banking sector audits, given the firm's role as auditor to a large share of U.S. banks. These cases highlight recurring themes of delayed recognition of risks, such as overreliance on contract valuations and exposure to interest rate fluctuations, though KPMG has maintained that sudden market events beyond historical financial statement purview contributed to the outcomes. Carillion entered compulsory liquidation on January 15, 2018, leaving £7 billion in liabilities and affecting 30,000 suppliers and subcontractors. KPMG audited Carillion's financial statements for the years ended December 31, 2014, 2015, and 2016, issuing unqualified opinions despite deteriorating profitability and mounting debts. The UK's Financial Reporting Council (FRC) imposed a record £21 million fine on KPMG on October 12, 2023, for "exceptional" and "seriously deficient" audit work, particularly in the 2016 audit, which the regulator labeled a "textbook failure" due to insufficient evidence gathering on revenue recognition from long-term contracts and failure to apply adequate skepticism toward management's assertions. The FRC found KPMG did not consistently challenge optimistic provisioning or impairment assessments, contributing to misleadingly stable reported earnings. Two former KPMG partners, Michael Aument and David Doyle, received sanctions including fines and audit practice bans for their roles. KPMG's UK head, Jon Holt, acknowledged the audits as "very bad," admitting some staff "simply didn't do their job properly." In the U.S., KPMG audited Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank, all of which failed amid the March-May 2023 banking turmoil triggered by rising interest rates eroding unrealized bond portfolio values. SVB received an unqualified audit opinion from KPMG on February 24, 2023, just 14 days before its March 10 collapse, following which the FDIC seized assets totaling $209 billion. Signature Bank's clean audit came 11 days prior to its March 12 failure, with $110 billion in assets taken over by regulators. First Republic, audited by KPMG through its 2022 fiscal year, was seized on May 1, 2023, after $100 billion in deposits fled, marking the second-largest U.S. bank failure. Critics, including U.S. senators, questioned KPMG's oversight of liquidity risks and whistleblower alerts on fraud at Signature, but as of October 2025, no formal audit failure findings or fines have been levied by the Public Company Accounting Oversight Board (PCAOB), with KPMG defending its work as compliant with standards focused on historical data rather than prospective stress scenarios. These collapses shook KPMG's dominance in U.S. bank audits, where it covers about 20% of assets. Beyond these, KPMG faced repercussions in the 1MDB scandal, where the Malaysian sovereign wealth fund incurred $4.5 billion in losses from embezzlement uncovered in 2015. KPMG's Malaysian affiliate audited 1MDB's 2013 statements but resigned over insufficient documentation, later settling government claims for 333 million ringgit ($80 million) in September 2021 to resolve fiduciary duty allegations tied to overlooked irregularities in bond issuances and related-party transactions. In Australia, KPMG disclosed that eight listed audit clients collapsed between 2010 and 2019, with audit deficiencies identified in financial statements of two, prompting internal reviews but no major regulatory penalties specified for those instances.

Tax Shelter and Evasion Allegations

In the early 2000s, KPMG faced significant scrutiny from U.S. authorities for promoting abusive tax shelters to high-net-worth individuals, which the Department of Justice described as fraudulent schemes designed to generate artificial tax losses exceeding $11 billion. These included strategies such as BLIPS (Bond Linked Issue Plus Strategy) and OPIS (Offshore Portfolio Investment Strategy), which involved circular transactions with offshore entities and loans to create illusory losses that clients used to offset legitimate income on their tax returns. On August 29, 2005, KPMG entered a deferred prosecution agreement with the DOJ, admitting criminal wrongdoing by certain partners in marketing unregistered and fraudulent shelters, and agreed to pay $456 million in fines, restitution, and penalties to resolve the charges without full indictment of the firm. The U.S. case led to indictments of several KPMG partners and outside promoters; for instance, in 2005, nine individuals faced conspiracy charges related to tax shelter fraud. By 2008, a federal trial resulted in convictions for three defendants on tax evasion charges tied to the shelters, with prosecutors highlighting KPMG's use of opinion letters from complicit law firms to lend false legitimacy to the schemes. As part of reforms, KPMG committed to enhanced compliance measures, though critics argued the deferred prosecution shielded the firm from broader accountability while individual partners bore the brunt of penalties. In Canada, the Canada Revenue Agency (CRA) in 2015 accused KPMG of orchestrating an offshore "sham" involving trusts on the Isle of Man to enable wealthy clients to evade taxes on income and assets, collecting approximately $300,000 in fees from one prominent family between 2002 and 2008. The scheme allegedly used complex structures to defer or avoid reporting Canadian-source income, deceiving tax authorities about beneficial ownership. Internal CRA disputes arose over a 2016 confidential settlement allowing affected clients to repatriate funds and pay back taxes without gross negligence penalties or interest, which some officials viewed as overly lenient and damaging to enforcement credibility. KPMG denied wrongdoing but cooperated with investigations, amid broader concerns over aggressive tax planning by Big Four firms.

Internal Misconduct and Ethical Lapses

In 2018, the U.S. Securities and Exchange Commission (SEC) and Department of Justice charged several KPMG executives with participating in a scheme to obtain and use stolen confidential information from the Public Company Accounting Oversight Board (PCAOB) to improperly alter past audit work and evade regulatory inspections. The plot involved KPMG partners recruiting former PCAOB employees to leak details on upcoming inspections, allowing the firm to remediate deficiencies in client audits before detection; five KPMG officials and two ex-PCAOB staff were implicated, with convictions including prison sentences for key figures like former KPMG Executive Director David Middendorf. In June 2019, KPMG settled SEC charges by paying a $50 million penalty, admitting to improper use of the data and failures in ethics controls, while undertaking an independent review of its integrity practices. Compounding the PCAOB theft, SEC investigations revealed that KPMG auditors engaged in widespread cheating on internal training exams designed to test professional standards and ethics knowledge. Methods included sharing answers via messaging, manipulating exam software URLs to access prior tests, and subordinates receiving aids from superiors; the misconduct affected numerous certified public accountants and was described by the SEC as "simply unacceptable" ethical failures embedded in firm culture. This contributed to the $50 million fine, with KPMG required to enhance oversight of learning programs and report progress to regulators. Similar exam irregularities surfaced in California, where state authorities noted admissions by KPMG CPAs of cheating on continuing professional education credits as part of broader SEC discipline. In April 2024, the PCAOB imposed a record $25 million fine on KPMG Netherlands for systemic exam cheating involving hundreds of professionals and subsequent misleading of investigators. The violations included failures in quality control standards, with inadequate processes for monitoring internal assessments; a firm leader was permanently barred from PCAOB-registered firms. These lapses echoed patterns in the U.S. case, highlighting recurring deficiencies in ethical training and supervision across KPMG's global network.

Responses, Settlements, and Reforms

In response to audit deficiencies identified in the Carillion collapse, the UK's Financial Reporting Council (FRC) imposed a record £21 million fine on KPMG in October 2023, reduced from £26.5 million due to early settlement, for failing to obtain sufficient evidence that Carillion's financial statements presented a true and fair view from 2014 to 2016. KPMG's UK CEO, James Stewart, described the auditing as "very bad" and acknowledged a loss of objectivity in challenging management assertions amid indicators of financial distress. The firm admitted the lapses constituted serious misconduct and paid an additional £3.95 million in investigation costs related to related audits, including Regenersis, where it had provided misleading information to regulators in 2022, resulting in a separate £14.4 million penalty. For its role in the 1MDB scandal, KPMG agreed in September 2021 to a 333 million ringgit ($80 million) settlement with Malaysian authorities to resolve claims of breaching fiduciary duties in auditing the state fund's 2014 financial statements, which understated liabilities by billions due to unreported offshore transactions. The firm had previously invalidated its own audits in 2018 upon discovering irregularities, leading to resignation from the engagement. KPMG faced U.S. Securities and Exchange Commission (SEC) charges in June 2019 for improperly accessing stolen Public Company Accounting Oversight Board (PCAOB) inspection data to alter past audit work, resulting in a $50 million penalty after admitting wrongdoing and describing the misconduct as "astonishing." This followed internal ethics breaches affecting over 1,000 audits, prompting California regulators to impose a $1.3 million fine in 2020 for similar cheating on state-licensed audits. In another case, the SEC settled with KPMG for $6.2 million in August 2017 over audit failures at Miller Energy Resources, where the firm overlooked fabricated $400 million in assets. Following these incidents, KPMG implemented enhanced quality control measures, including dedicated audit quality functions to analyze root causes of deficiencies and expanded training on professional skepticism, as outlined in its 2022 U.S. transparency report. In South Africa, after the 2017 Gupta-linked state capture scandals involving improper audits, the firm vowed structural reforms, including leadership overhauls and client terminations, though it lost multiple engagements amid credibility erosion. A September 2025 U.S. Senate report criticized KPMG's audits of failed banks like Silicon Valley Bank for dismissing red flags on unrealized losses, but no settlement has been reached, with the firm defending adherence to PCAOB standards while committing to further risk assessment improvements. These actions reflect ongoing efforts to address systemic issues in audit independence and evidence gathering, though critics argue Big Four reforms often prioritize compliance over proactive skepticism.

Corporate Culture and Operations

Workforce Management and Training Practices

KPMG maintains a global workforce of approximately 265,000 professionals across its member firms, with significant concentrations in audit, tax, and advisory services. In the United States, the firm employs around 36,000 individuals, including partners, operating from over 90 offices. Workforce management practices emphasize structured career progression and performance-based evaluations, though the firm has experienced periodic staff reductions to align with demand fluctuations and low voluntary turnover rates; for instance, in October 2025, KPMG cut 195 positions from its U.S. audit division, representing over 2% of that segment, amid historically low attrition that reduced natural workforce churn. Similarly, in November 2024, approximately 330 U.S. audit roles were eliminated, equivalent to less than 4% of the audit staff, as the firm adjusted to post-pandemic hiring dynamics and stabilized client volumes. These actions reflect a management approach prioritizing operational efficiency over expansive headcount growth, contrasting with the high turnover historically prevalent in Big Four firms due to demanding workloads. Employee retention efforts include competitive compensation—for Principal roles, Glassdoor estimates average total pay of approximately $254,000 per year, with a range of $192,000–$344,000 and some reports up to around $443,000, while other sources like Reddit discussions note higher figures potentially exceeding $800,000 for partner/principal levels in the US—mentorship programs, and flexible work arrangements, yet internal surveys indicate a retention rating of C+ based on employee feedback, underscoring challenges in sustaining long-term engagement amid intense professional demands. To address turnover costs, which can range from 25% to 200% of an employee's salary, KPMG invests in resilience-building initiatives, such as connection-focused strategies where 57% of U.S. workers prioritize interpersonal relationships over salary for retention, according to firm research. Training practices form a core component of KPMG's talent development, featuring the KPMG Learning Academy, an on-demand online platform delivering finance and accounting courses to enhance technical skills. The firm has gamified portions of its training to boost engagement, resulting in improved client attraction, retention, and revenue from participating employees as reported in 2023 evaluations. Additional offerings include immersive workshops, tailored mentoring, and the KPMG Executive Education program, which has delivered over 1,000 sessions on emerging accounting and finance topics since its inception. For early-career professionals, initiatives like CPA training and mentorship programs support certification attainment, while the KPMG Business School provides leadership and functional skill-building across global offices. These programs aim to foster adaptability in a rapidly evolving regulatory environment, with study support for external qualifications and mobility opportunities to broaden expertise.

Diversity, Equity, and Inclusion Efforts

KPMG US initiated the Accelerate 2025 program in June 2020, described by CEO Paul Knopp as an "audacious five-year strategy" to accelerate diversity and equity by increasing representation of underrepresented groups in hiring, promotions, and leadership. The program set a target of achieving 50% of new partners and managing directors from underrepresented demographics, alongside annual transparency reports detailing progress on metrics such as workforce composition and inclusion efforts. In 2022, KPMG reported that 48.5% of its new hires were from underrepresented racial groups, aligning with early recruitment goals under the initiative. The firm framed DEI as foundational to its strategy, emphasizing talent development, equitable access to opportunities, and cultural initiatives to foster inclusion. However, by February 2025, KPMG US discontinued Accelerate 2025 and removed associated transparency reports from its website, citing evolving legal and regulatory pressures following the 2024 U.S. presidential election. Knopp communicated to employees that the firm would shift focus to merit-based practices while maintaining commitments to , without disclosing specific achievement data on the program's targets. In contrast, KPMG's international affiliates have sustained select DEI objectives. For instance, KPMG UK committed to raising ethnic minority representation among partners to 20% by 2030 and increasing Black heritage professionals at senior levels. These efforts include targeted recruitment, training programs, and reporting on ethnicity and gender breakdowns, though empirical evidence linking such initiatives to improved firm performance or sustained retention remains limited in public disclosures. Globally, KPMG has published frameworks like "The Five Stages of DEI" to advise clients on progression from awareness to sustainable integration, but internal application in the U.S. appears curtailed amid broader industry retreats from quota-driven approaches.

Innovation and Technology Adoption

KPMG has integrated (AI) and digital technologies into its core operations and client services, emphasizing generative AI (GenAI) capabilities to enhance efficiency and strategic decision-making. In 2023, the firm established an AI and Digital Innovation Group, which facilitated the rollout of GenAI tools to all employees, aiming to accelerate workflows and reduce manual tasks. This internal adoption included the deployment of AVA, a GenAI tool designed to improve productivity while maintaining within KPMG's environment. By October 2025, KPMG expanded this with firmwide adoption of Gemini Enterprise, leveraging it to automate processes, boost employee productivity, and expedite client deliverables. KPMG maintains strategic alliances with leading technology companies to co-develop and deliver joint solutions in areas such as artificial intelligence, cloud computing, data analytics, cybersecurity, business applications, and operational transformation. Key partners include Microsoft (data and AI, cloud, cybersecurity), Google Cloud (AI, multi-cloud, security), ServiceNow (enterprise AI, workflows via KPMG Velocity), Oracle (cloud applications, AI transformations), Salesforce (CRM, Agentforce AI), SAP (business applications), IBM (AI, hybrid cloud), Workday (finance, HCM), and others like Databricks, Snowflake, and Coupa. These partnerships enable innovative offerings for clients, including AI-driven solutions, global business services, and digital transformations. The firm committed $2 billion to GenAI initiatives starting in 2023, focusing on trustworthy AI applications despite acknowledged risks such as data privacy and ethical concerns raised by 92% of surveyed business leaders. In June 2025, KPMG announced a $100 million in its Google Cloud practice to customize AI services for industries like and compliance, targeting $1 billion in revenue from AI-driven offerings. Partnerships with technology providers, including for AI agents and Azure AI Foundry, have enabled KPMG to embed GenAI across business functions, such as analytics and ESG data processing, as well as AI-powered supply chain management solutions. The Intelligent Supply Chain service leverages AI, machine learning, and related technologies for real-time visibility, predictive analytics, and operational efficiency, incorporating discriminative, prescriptive, and generative AI algorithms to improve forecasting, mitigate disruptions, optimize costs, and enhance resilience. KPMG anticipates that by 2026, AI in supply chains will scale beyond proofs-of-value, with trends toward embedded AI platforms, connected intelligence across enterprise functions, and agentic AI enabling autonomous tasks in procurement. In blockchain and digital assets, KPMG developed Chain Fusion®, a patented suite of accelerators to facilitate cryptoasset integration and regulatory compliance for clients. The firm positions blockchain as a complement to AI for risk mitigation, including intellectual property protection and cybersecurity in supply chain applications. KPMG's 2025 CEO Outlook survey indicated that 75% of global CEOs plan to allocate at least 20% of budgets to AI, reflecting the firm's alignment with enterprise trends in agentic AI adoption. Beyond AI and blockchain, KPMG has launched specialized tools like an AI-powered platform for R&D tax claims in April 2025, streamlining incentive processing through data analysis and automation. Alliances with vendors such as Informatica, Snowflake, and Microsoft support data modernization efforts, as demonstrated in case studies where clients achieved enterprise-wide AI integration. These initiatives underscore KPMG's strategy of combining human oversight with technology to address adoption barriers, including cultural shifts and skill gaps identified in internal surveys. KPMG's "Future of Work" initiative encompasses research reports and insights examining how AI, technology, and post-pandemic shifts are transforming the workforce. A February 2024 report, drawing from a survey of over 4,000 employees in Australia, Canada, Germany, the UK, and the US, found that 66% anticipate technology enhancing productivity over the next three years, while 37% expect it to automate up to 30% of their roles; nearly 40% reported productivity benefits offset by wellbeing drawbacks. The report outlines four pillars for organizational preparation—embracing AI, shaping the workforce, learning in the flow of work, and empowering middle managers—advocating upskilling, continuous learning, and mitigation of employee concerns in an AI-driven environment.

Economic and Societal Impact

Role in Global Capital Markets

KPMG contributes to global capital markets primarily through its audit and assurance services, which verify the accuracy of financial reporting for public companies and multinational corporations, thereby supporting investor trust and efficient capital allocation. The firm has provided such services for over 150 years, emphasizing their role in maintaining market integrity and public confidence in economic systems. As part of the Big Four accounting firms, KPMG participates in auditing nearly 50% of U.S. SEC registrants collectively as of 2024, with the largest firms dominating the market for public company audits. Beyond auditing, KPMG advises on capital market transactions, including initial public offerings (IPOs), mergers and acquisitions (M&A), and debt issuances, offering due diligence, risk assessment, and compliance support throughout the transaction lifecycle. In fiscal year 2024, the firm's global revenues reached $38.4 billion, with assurance services forming a core segment that underpins these activities. KPMG's equity capital markets teams assist clients in equity raisings across global exchanges, navigating regulatory requirements and market conditions to enable capital flows. The firm also extends its influence to sustainability and ESG reporting assurance, which aids investors in evaluating non-financial risks and opportunities, with surveyed companies reporting benefits like enhanced market share and profitability from such practices. This multifaceted involvement positions KPMG as a key intermediary in channeling capital toward productive uses, though its effectiveness depends on the quality of execution amid competitive pressures from peers like Deloitte, EY, and PwC.

Contributions to Regulatory Compliance

KPMG offers advisory services to support clients in navigating regulatory requirements, including internal audit, risk consulting, and technology-enabled solutions for compliance monitoring and transformation. These services encompass areas such as financial reporting controls under the Sarbanes-Oxley Act (SOX), anti-money laundering (AML), anti-bribery and anti-corruption (ABAC), and data protection regulations like the General Data Protection Regulation (GDPR). The firm emphasizes integration of automation and analytics to enhance efficiency, with managed services handling non-core functions like transaction monitoring and controls testing to mitigate compliance risks. In SOX compliance, KPMG assists with the design, implementation, and testing of internal controls required under Section 404, including segregation of duties and application security. For instance, in 2020, KPMG collaborated with Jacobs Engineering Group on an Oracle Cloud transformation, configuring the system to align with SOX standards, updating control matrices, and testing key reports to address gaps in security and processes, enabling a compliant system launch with improved reporting accuracy. Similarly, for ABAC programs, KPMG developed a centralized, cloud-based compliance framework for a global industrial manufacturer, assessing over 150 entities across five countries, remediating 40 high-risk areas, and standardizing policies with a "Speak Up" reporting mechanism to foster regulatory trust. KPMG provides specialized AML and sanctions compliance solutions, leveraging domain expertise, data analytics, and training to digitize processes like customer due diligence and transaction monitoring. The firm is noted for its proven methodologies in this space, supporting clients in meeting evolving financial crime regulations. For GDPR, services include privacy assessments, data protection officer support, and implementation of compliance measures; in 2019, KPMG launched a suite of enterprise privacy applications to automate handling of data subject rights requests and breach notifications, aiding organizations in fulfilling EU data protection obligations. Additionally, tools like the KPMG Regulatory Horizon platform track regulatory changes and provide insights for proactive management across jurisdictions.

Criticisms of Industry Concentration

The Big Four accounting firms—Deloitte, EY, KPMG, and PwC—collectively dominate the global audit market for large public companies, auditing approximately 88% of U.S. large accelerated filers as of 2022, with KPMG holding a significant portion alongside its peers. This high concentration, characterized by an oligopolistic structure, stems from historical mergers that reduced the number of major firms from eight in the 1980s to four today, creating substantial barriers to entry for smaller competitors due to the scale, expertise, and regulatory requirements needed for multinational audits. Critics argue that this dominance fosters limited price competition, resulting in elevated audit fees; for instance, companies audited by Big Four firms, including KPMG, pay significantly higher fees reflective of their market power, as evidenced by empirical studies showing a premium over non-Big Four auditors. A primary criticism is the diminished incentives for quality-based competition within this oligopoly, where firms prioritize client retention over rigorous scrutiny, potentially leading to complacency and audit failures. The structure has been described as the "world's weakest oligopoly" due to tacit collusion on pricing and standards rather than aggressive rivalry, exacerbating risks during high-profile scandals that implicate the entire group, such as those involving KPMG's past audit lapses. Regulators, including the U.S. Public Company Accounting Oversight Board (PCAOB), have highlighted potential implications like reduced innovation and conflicts of interest, where the firms' dual roles in auditing and consulting amplify systemic vulnerabilities in capital markets. Further concerns involve "too big to fail" dynamics, where the interconnected dominance of firms like KPMG poses economy-wide risks; simulations suggest that the collapse of one Big Four firm could spike audit fees due to immediate capacity constraints and erode investor confidence, with limited alternative providers unable to absorb the workload. This concentration also hinders regulatory enforcement, as authorities may hesitate to impose severe penalties fearing market disruption, effectively granting the firms a regulatory hall pass despite recurrent misconduct. In jurisdictions like the UK, ongoing reviews by bodies such as the Financial Reporting Council underscore persistent dominance by the Big Four, limiting economic growth through restricted access to competitive, high-quality audits for non-dominant players.

Public Engagement

Sponsorships and Philanthropy

KPMG maintains philanthropy programs through country-specific foundations that prioritize education, mental health, and community development. The KPMG U.S. Foundation, established to support nonprofits in operational communities, distributed over $21 million in fiscal year 2024 to initiatives enhancing education, mental health access, and local vitality. This includes a $6 million grant commitment announced on September 30, 2025, aimed at equipping nonprofits with AI-driven strategies for greater impact. The foundation also operates a Mental Health Matching Gift Program, providing dollar-for-dollar matches on employee, partner, and retiree donations to vetted mental health organizations, alongside an Employee Relief Fund for disaster-affected staff. In Canada, the KPMG Foundation facilitates education grants to universities and post-secondary institutions for targeted programs, while mobilizing employee volunteerism for broader community projects. Internationally, efforts extend to direct donations, such as providing laptops to universities in Papua New Guinea as part of ongoing educational support. Employee matching gift programs apply to accredited U.S. higher education institutions and select nonprofits, amplifying individual contributions. KPMG's sponsorships emphasize sports and professional events for brand visibility and networking. Since 2015, it has served as title sponsor of the KPMG Women's PGA Championship, a major LPGA Tour event held annually at rotating courses, marking its 11th year in 2025. The firm sponsors LPGA players including Stacy Lewis and Leona Maguire as brand ambassadors, and expanded into tennis with a 2025 deal for Jessica Pegula. Additional commitments include the Lentemarathon running event in Amstelveen, Netherlands, and the U.S. Marine Corps Marathon. These align with KPMG's sports industry advisory services, supporting client engagement through event activations.

Industry Awards and Recognitions

KPMG member firms have received numerous industry awards for excellence in audit, tax, advisory, and technology services. In 2025, KPMG was named the ServiceNow Worldwide Transformation Partner of the Year, recognizing its global commitment to client transformation initiatives using the ServiceNow platform. The firm also earned multiple Microsoft Partner of the Year honors in 2024, highlighting innovations in customer solutions implementation. In tax and advisory categories, KPMG in India was awarded the Indirect Tax Advisory Firm of the Year 2025 by International Tax Review. KPMG Sweden secured Tax Advisory Firm of the Year and Impact Deal of the Year at the ITR EMEA Tax Awards 2025. Globally, KPMG was positioned as a Leader in the Verdantix Green Quadrant for Climate Change Consulting in 2023, praised for its market leadership in sustainability advisory. Technology and implementation recognitions include KPMG's designation as a Leader in the IDC MarketScape for Asia/Pacific Microsoft Business Applications Services 2023-2024, with strong scores in business transformation delivery. The firm also received the 2024-2025 Microsoft Business Applications Inner Circle Award for outstanding sales and innovation achievements. In risk consulting, KPMG's network was honored with ACQ Global Awards for Anti-Money Laundering advisory in multiple categories, including Overall AML Advisory of the Year. Workplace-related industry accolades include KPMG LLP's inclusion in the Fortune 100 Best Companies to Work For in 2025, based on employee satisfaction metrics. Several KPMG entities, such as in Belgium, achieved Top Employer certification for 2025 from the Top Employers Institute, evaluating HR best practices. These recognitions often stem from self-reported data and third-party audits, though their correlation with objective performance outcomes varies.

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  194. https://assets.kpmg.com/content/dam/kpmgsites/ch/pdf/compliance-standards-data-privacy.pdf.coredownload.inline.pdf
  195. https://iapp.org/news/a/privacy-apps-aim-to-tackle-range-of-compliance-requirements
  196. https://assets.kpmg.com/content/dam/kpmgsites/xx/pdf/2024/11/global-perspectives-may25-edition.pdf.coredownload.inline.pdf
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  207. https://www.frc.org.uk/news-and-events/news/2024/12/audit-market-competition-update-sets-out-frcs-evolving-approach/
  208. https://kpmg.com/us/en/careers-and-culture/corporate-responsibility.html
  209. https://kpmg.com/us/en/media/news/ai-impact-grant-2025.html
  210. https://www.globalgiving.org/kpmgfoundation-mentalhealth/
  211. https://kpmg.com/ca/en/home/about/the-kpmg-foundation.html
  212. https://kpmg.com/pg/en/home/about/corporate-citizenship.html
  213. https://doublethedonation.com/sponsorships/kpmg-us
  214. https://kpmg.com/us/en/sports-sponsorships.html
  215. https://kpmg.com/us/en/sports-sponsorships/news/jessica-pegula-kpmg-announcement.html
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  217. https://kpmg.com/us/en/industries/sports.html
  218. https://kpmg.com/xx/en/media/press-releases/2025/03/kpmg-recognized-as-the-2025-servicenow-worldwide-transformation-partner-of-the-year.html
  219. https://kpmg.com/xx/en/what-we-do/alliances/kpmg-earns-2024-microsoft-partner-of-the-year-recognitions.html
  220. https://kpmg.com/in/en/about/awards.html
  221. https://kpmg.com/se/en/insights/2025/KPMG-celebrates-major-wins-at-ITR-EMEA-Tax-Awards-2025.html
  222. https://kpmg.com/my/en/home/services/advisory/awards-and-industry-accolades.html
  223. https://kpmg.com/xx/en/about/industry-analyst-accolades.html
  224. https://kpmg.com/xx/en/what-we-do/alliances/microsoft/kpmg-achieves-the-2024-2025-microsoft-business-applications-inner-circle-award.html
  225. https://kpmg.com/il/en/home/services/advisory/risk-consulting/our-award-success.html
  226. https://www.greatplacetowork.com/best-workplaces/100-best/2025
  227. https://kpmg.com/be/en/home/insights/2025/01/car-kpmg-achieves-top-employer-certification-for-2025.html
  228. https://kpmg.com/sg/en/about/awards-and-rankings/people-awards.html
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