KPMG to merge partnerships in global structure overhaul: FT
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The news: KPMG bosses want to merge dozens of national partnerships in efforts to boost growth and prevent audit scandals, according to sources cited by the Financial Times.
The numbers: The plan would see the number of “economic units” across the global accounting firm’s network drop to 32 by 2026, from over 100 two years ago.
The context: The restructuring is an extension of KPMG’s “clustering” strategy launched in 2023, which saw the merging of several units in the Middle East and Africa. Last year KPMG UK also voted to merge with KPMG’s Swiss business.
KPMG, along with other Big Four accounting firms, is comprised of a network of locally-owned partnerships as the structure serves to reflect local auditing rules and protect partners from liability or scandals in other jurisdictions.
However, consulting firms are becoming increasingly dependent on technology investments to operate effectively, and KPMG is concerned that smaller business units are unable to fund these investments alongside the necessary compliance demands required for audit quality.
KPMG executives have said that member firms unable to meet a USD300 million ($475 million) threshold will be considered too small to remain a full member of the network, the FT reports. Additionally, should any mergers go ahead the profit pools for partners are to be split at least in part across the countries involved.
In June last year, KPMG Australia outlined plans to reshape and simplify its consulting division, which impacted around 250 roles and included redundancies.
What they said: “The fewer business units you have, the easier it is to do business globally,” said Gary Wingrove, chief operating officer of KPMG International.
The source: Financial Times
