WSJ reports today that KPMG is laying off a few hundred people in audit “as it works to make up for lower levels of voluntary turnover.” Meaning attrition is still too low.

The Big Four accounting firm last week notified about 330 people, or nearly 4% of its roughly 9,000-person U.S. audit workforce, that they would be let go in the coming weeks, people familiar with the matter said. The cuts have focused on employees such as associates and managers, and included no partners, the people said.

“The actions reflect our ongoing focus to align the size, shape and skills of our workforce to the market, while addressing continued low levels of attrition,” KPMG said in a statement to WSJ. “We remain focused on investing in our people to grow our business with quality.”

The Americas region is the only segment of KPMG’s global business that shrunk in headcount last year — from 66,892 to 62,781. Revenue results haven’t been released yet — KPMG is last to report of the Big 4, usually around December — so we don’t have a full picture on how their year shook out. All we know is that not enough people are quitting.

The last time KPMG did a serious round of layoffs was last summer. See: Layoff Watch ’23: The KPMG Workforce is Shrinking By About 5% (UPDATED)

Shortage? What shortage?

KPMG to Lay Off 4% of U.S. Audit Workforce to Counter Fewer Voluntary Exits [WSJ]

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This bit though:

83 percent of the 1,345 CEOs surveyed expect a full return to office over the next three years, up from 64 percent in 2023. That number increases to 87 percent for CEOs in the 60-69 age group because boomers are actually the worst.

Male CEOs are more gung ho (the spellcheck wants to correct this to “bunghole” and honestly…) on a full return to office compared to their female counterparts: 84 percent of them expect a full return to office within three years while 78 percent of female CEOs feel the same.

Guess the era of the employees having all the power is gone, or at least that’s what CEOs think. Was nice while it lasted.

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OP says:

I’ve been working here a year in an office in New York and we had a call yesterday that went terribly. I believe the call was supposed to just be a tech training but it devolved into discussion over why this year was the way it was.

The biggest offender was a partner who explained the new PTO change as “now we don’t have to pay people out when they leave which is just good business let’s be real” like… ummmm WHAT?! He basically just admitted they made the policy to screw us over.

After months of rumors, KPMG announced firmwide unlimited PTO earlier this month. It was only a matter of time before some bullshit started coming out.

We all know “unlimited” PTO is a) a scam and b) a good way to avoid having several tens of millions of dollars a year hanging over your head as was stated in the email sent among EY leadership leaked in late 2020 when they made the switch to unlimited PTO. Text from the EY email quoted directly (emphasis ours):

A few key takeaways from the slide deck that support the reason for the change include:

• Provides cost savings of about $36M per year (2019 cost) associated with paying unused vacation at termination.
• Freezes the current vacation lability for the growing number of states with an accruat cap vs. a “use it or lose it approach, which significantly increases cost of paying unused vacation at termination. CA, CO, IL, MA, LA and i have accrual cap 1.5x annual allotment (25% of our people)
• Aligns with One EY, moving personnel to a single vacation policy and away from variances necessitated by varying state laws around treatment of accrued vacation
• Better aligns with culture of trust, flexibility and wellbeing
• Eliminates entitlement mentality and need for carryover of unused time or sense of “loss” by our people
• Positions EY as a “first mover among the big 4, providing a competitive advantage and serving as a differentiator on campus

For your reference, attached are the communication plan and a comprehensive list of questions and answers. Some of the key points above may not be shared with our people (e.g. $36M savings), but as business leaders you to know that this is a significant reason for the change.

Make sure the grunts don’t hear about the cost savings of $36 million that we listed as the first reason for the change! No sir. People know that’s a big reason why a firm would make this switch, you just don’t expect a partner to say that part out loud.

It’s just good business let’s be real!

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Wrote SFC:

The deal comes after KPMG in March moved to extend its lease at its current office at 55 Second St., which it has occupied since 2003, on a short-term basis of less than three years. Its future home is located two blocks south, near Salesforce Park.

“Our planned move not only reaffirms our longstanding commitment to the city of San Francisco but also demonstrates our dedication to investing in both our people and capabilities to deliver the most innovative solutions to our clients,” said KPMG’s Chris Cimino, a managing partner in San Francisco, in a statement. “This new building, including nearly 100,000 square feet of space for our teams, will provide a superior in-office experience and foster collaboration and creativity.”

The new office will be 100,000 square feet at 505 Howard St, pictured here on Google Street View:

Look how much cleaner those curbs are at the new spot. We wouldn’t recommend eating off of them — it’s San Francisco after all — but they sure are surprisingly sparkly for downtown.

A spokesperson told the paper the new, smaller space is “consistent with market trends” and “best suited for our people and our clients.”

As far as we know, most of KPMG is operating a roughly 3-day in office hybrid model. The 1,000 people working at KPMG San Francisco will be building neighbors with Intuit, who will be taking possession of about 36,500 square feet in January 2025.

Terms of the lease weren’t disclosed.

Bonus Google reviews of KPMG San Francisco since we happened to be on Google Maps anyway:

KPMG is downsizing its San Francisco office. Here’s where the accounting giant is moving [San Francisco Chronicle]

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Rumors have been swirling for weeks like so many unflushable logs that KPMG was about to announce unlimited PTO, something their competitors at EY did four years ago.

As seen on r/KPMG:

You all were right. They just announced unlimited PTO
byu/Active_Ease_2367 inKPMG

EY’s switch to unlimited PTO was immediately shat upon, and rightfully so, after a leaked senior management email made the rounds. The email mentioned a cost savings of $36 million per year “associated with paying unused vacation at termination” as a primary motivator for the change. “Eliminates entitlement mentality and need for for carryover of unused time or sense of ‘loss’ by our people,” the email said.

It appears at first glance KPMG didn’t want to make the same mistake (though they’ll still be saving money on vacation that no longer accrues, to be clear). This is what KPMG said in their announcement, according to a commenter:

All PTO balances remaining at the end of FY24 (after the annual carryover limit is applied, where applicable) will remain with you and will be paid out to you when you leave the firm, based on your pay rate when you leave.

Elsewhere in the Paid Time Off Policy it says:

Regular Exempt Employees who have accrued, unused vacation as of September 30, 2024, under the firm’s previous Personal Time Off Program shall have all unused accrued vacation as of that date “frozen” (after the annual carryover limit is applied) and paid out at the time of separation, or paid out or used at such other time and circumstances as the firm determines in its sole discretion, at the employee’s then pay rate.

Wonder how many lawyers it took to write that.

Related read: The smoke and mirrors of unlimited paid time off

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Because she doesn’t start until October, her KPMG profile is still live:

Helluva resume there. Harvard Law School, working for President Biden back when he was just Senator Biden, US Department of Housing and Urban Development, Special Assistant to Obama for Justice and Regulatory Policy at the White House…and KPMG.

Vanguard couldn’t be more excited. “Tonya is an accomplished lawyer and trusted business leader who brings extensive experience in the public and private sectors,” said Vanguard Chief Executive Officer Salim Ramji. “She has spent her career championing access and transparency for individuals across a range of issues and amid increasingly complex legal and regulatory landscapes. We are pleased to add her counsel, business acumen, and policy expertise to further our mission of giving individual investors the best chance for investment success.”

For her part, Tonya is “thrilled” herself. “I’m thrilled to join Vanguard, a firm with a rich history of helping everyday investors get a fair shake,” she said. “For nearly 50 years, Vanguard has helped families save for their education and retire better with a strong ethos of integrity and commitment to client success. I welcome the chance to work with Vanguard’s talented and purpose-driven management and legal teams to help propel the next 50 years of the firm’s impact on helping investors reach their goals.”

Vanguard Announces Tonya T. Robinson as General Counsel [Vanguard]

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Partners at KPMG Saudi Levant and KPMG Lower Gulf have voted overwhelmingly in favor of a proposed integration of their businesses. The integration will result in the establishment of a new limited liability partnership and, once implemented and necessary regulatory approvals obtained, will see a collective KPMG business comprising over 5,000 employees operating across Saudi Arabia, Jordan, Lebanon, Iraq, the United Arab Emirates and Oman.

OK, whatever. But then there’s this bit:

The proposed integration is consistent with KPMG’s Global Collective Strategy, which includes the clustering of member firms across the network. Greater integration brings a number of benefits to clients, people and the communities in which KPMG operates. Importantly, it underpins KPMG’s commitment to greater consistency and quality albeit continuing to service clients through separate legal entities that have operated in the respective markets.

In May, KPMG UK and KPMG Switzerland announced they were hooking up to form a $4.4 billion firm. So that’s two KPMG hookups in twice as many months.

To rehash what KPMG UK CEO Jon Holt said at the time of the UK/Swiss nuptials: “This marks a historic moment for both firms. We will be stronger as one combined firm and together we will have the scale to significantly enhance our ability to deliver great outcomes for our clients both internationally and within our domestic markets. Merging brings huge benefits for our clients, our people, and our partnership and means we can now grow faster, be more profitable and invest together to create new services in a sustainable way.”

Financial Times had spilled the beans about the UK/Switzerland mashup some months before it was voted on and “overwhelmingly” endorsed by the two firms’ partners. In their December 2023 piece, they said KPMG executives were hoping to “boost growth and profits at the smallest of accounting’s Big Four.”

And Jon Holt said in a statement to FT: “Bringing together our two firms would give us more collective power to invest, build new services for our clients and provide our people with significant global career opportunities. Together, we would grow faster, be more profitable and do so in a sustainable way.”

Is this KPMG’s big picture global plan?

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“These artificial intelligence capabilities enhance our overall transformation to deliver a better audit experience for our people and the companies we audit,” he added. “Our AI capabilities will further strengthen our engagement teams to more effectively engage Audit committees and management committees.”

And now, the press release talking points:

KPMG Clara with AI is connected to our broader transformation efforts to enhance audit quality through our Trusted AI framework. For example, new generative AI capabilities will help teams:

• Refine risk assessments: AI assistants can review documents to help engagement teams identify risk factors. For instance, within KPMG Clara, engagement teams can leverage AI to help review meeting minutes and flag possible accounting and fraud risks.
• Develop substantive testing procedures: Our AI assistant has direct access to our audit methodology, enabling auditors to design appropriate substantive testing procedures to respond to risks quicker.
• Enhance audit documentation: By working with our AI assistant, team members can quickly summarize, question and consider improvements to engagement-specific audit documentation within KPMG Clara.

And:

KPMG today also unveiled AI and generative AI capabilities that will be deployed in the workflow in the coming months. These include:

• A growing prompt library that will, over time, include AI-powered agents to assist Audit teams in driving audit quality;
• Automated quality scoring to generate AI assessments and deliver feedback to Audit teams on actions for quality improvement;
• Use of AI and machine-learning to automate the review of financial statements, augmenting engagement teams’ assessment that all required disclosures have been made to the capital markets; and
• Assurance capabilities integrated into the workflow for teams delivering assurance over disclosures, such as emissions disclosures. 

“All of our auditors are trained on how to effectively use AI with a human-in-the-loop mindset to maintain quality, accuracy and professional skepticism,” said Thomas Mackenzie, KPMG U.S. and Global Audit Chief Technology Officer.

We trust this development will help KPMG push its deficiency rate below 25% for the first time since 2011.

KPMG Announces AI Integration into Global Smart Audit Platform, KPMG Clara [KPMG

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CPA Journal has published an intriguing deep dive into Big 4 revenue, specifically how the firms started making more money in advisory than audit or tax in the last 10+ years. You should go read it if this is at all interesting to you but we’re just going to focus on two charts because the Going Concern audience, and its editorial team, have the attention span of squirrels that got into a case of Red Bull.

Covered in the article are several events over this 23-year period that put upward or downward pressure on Big 4 revenue, things like the collapse of Arthur Andersen dumping all those clients on other firms, Sarbanes Oxley, the 2008 financial crisis, and PCAOB paper-pushing.

Writes The CPJ:

Over this period, audit revenue declined while advisory service revenue increased. Overall, the revenues of the Big Four have increased from $28 billion (2000) to $79 billion (2022); this represents a 183% increase over 23 years. The increase in overall revenue was interrupted by a decrease in total revenues from 2004 to 2006, during which time the firms (except for Deloitte) sold off their advisory service practices. The 2008 financial crisis contributed to the leveling off of revenues from 2009 to 2010. Contributions to revenue from advisory services were the lowest (14%) in 2005, while assurance and tax services were 62% and 24%, respectively. This sharply contrasts with 2022, when advisory service revenues were 51%, and assurance and tax service revenues were 27% and 22%, respectively.

And now, Exhibit 2.

Exhibit 2 shows that Big Four advisory service revenues grew from $11 billion (2000) to $40 billion (2022); this represents a 274% increase over 23 years. Revenue from advisory services was temporarily constrained by the enactment of SOX, which prohibited auditors from providing advisory service to assurance clients. In response, the Big Four sold off their advisory service practices one by one, except for Deloitte, which did not do so due to market conditions. Deloitte’s failure to divest may have provided an example of how advisory services may be sold to non-audit clients without violating SOX. Therefore, as the non-compete agreements with their former advisory arms expired, the other three firms began to replicate the success of the Deloitte business model. Advisory service revenue doubled from 2010 to 2015 and has continued to increase rapidly since then, leading to a concern about the impact of advisory services on public accounting firms (Alyssa Schukar, “Big Four Accounting Firms Come Under Regulator’s Scrutiny,” Wall Street Journal, March 15, 2022). Since 2014, total advisory revenues have exceeded total assurance revenues for the Big Four by 50% or more and growing. Deloitte is the clear leader in advisory revenue, followed by PwC, EY, and KPMG.

Here’s a link to that WSJ article should you care to peruse it.

During the period analyzed, cumulative assurance revenues at Big 4 firms doubled — from $11 billion in 2000 to more than $21 billion in 2022 — and tax went from $7 billion in 2000 to $18 billion in 2022, an increase of 168%.

They go on to analyze the individual firms’ revenue by service line, go check it out if you want.

The post Who Wants to See How Much Big 4 Revenue by Service Line Has Changed Since SOX? appeared first on Going Concern.

Now KPMG Australia is nuking its law practice. Fellow Americans reading this are probably like “KPMG has a law practice?” Well, it did. That’s a thing they’re allowed to do over there. It sounds like they finally arrived at the conclusion that’s fucking stupid and they should stick to what they know.

Writes Maxim Shanahan in Australian Financial Review:

The decision will cost dozens of jobs and marks the end of the big four consultancies’ ambitious attempt, launched at the peak of their influence, to take on established major law firms in traditional commercial practice areas.

KPMG Law’s Tax Controversy & Disputes practice will be incorporated into the firm’s tax division, but the big four firm will no longer operate its own distinct commercial law practice.

Ben Travers, head of the firm’s tax and legal division, said KPMG would now “look to further develop alliances with law firms that offer complementary services to ours, rather than invest in our own commercial law businesses”.

Sky News clip for the reading-averse:

The firm believes rolling the Tax Controversy & Disputes people into tax will work out much better than the separate law practice. “We have an ambition to be Australia’s leading firm in tax controversy and disputes,” said Ben Travers to AFR. “We believe focusing on [this area], and extending alliance relationships, will enable clients to better leverage broader capabilities to solve their issues.”

So who or what is next to go at KPMG Australia? Fiscal ’24 revenue is due to come out in August, wouldn’t be surprised if another significant slashing comes immediately after.

KPMG axes legal division, dozens of jobs to go [Australia Financial Review]

Related reading: The Reemergence of the Big Four in Law [Harvard Law School’s The Practice, 2016]

The post KPMG Australia Gives Up on the Idea of Competing With Big Law (or Medium Law, or Small Law) appeared first on Going Concern.

As a direct result of this unpleasant market, KPMG Australia is laying off another 200 people (on top of the 3 percent reduction of headcount last year) and completely changing up their consulting business. That means they’re going to start emulating Accenture, not McKinsey.

Reports Financial Review:

KPMG Australia will overhaul its consulting business to focus on tech-related advisory and software installation as part of an $80 million cost-cutting exercise that will include shedding about 200 jobs.

Consulting leader Paul Howes said the changes were being made in response to a “fundamental shift in that market” at a global level away from “legacy assessment and advice services”.

“I think the era of generalist management consulting being standalone is over, and that all consulting into the future will need to be tech-enabled,” Mr Howes told AFR Weekend, describing the year as a “bumpy” one for the firm.

All cuts will be at the senior consultant level and above. A fortunate 50-ish people will be spared from layoffs and will instead get reshuffled elsewhere in the firm.

On the topic of a troubled market, KPMG Australia reported total revenue of $2.55 billion AUD ($1.7 billion USD) for fiscal 2023, an increase of 9.1 percent from prior year. That figure includes $0.175 in recoverable expenses and actual revenue of $2.38 billion. At the time they released these numbers in August 2023, the firm talked about beginning to take hits in December of 2022 and CEO Andrew Yates said KPMG had to “adjust our business” in order to “reflect the new landscape.”

Revenue by service line (percentage change over 2022 in parentheses) for FY23 broke down to:

• Audit, Assurance & Risk Consulting: $671 million (+4%)
• Deals, Tax & Legal: $401 million (-2%)
• Enterprise: $361 million (+23%)
• Infrastructure, Assets & Places: $200 million (+22%)
• Management Consulting: $745 million (+12%)

They’re hoping to make tech consulting about 60 percent of the consulting take going forward.

Added AFR’s story, Howes said part of this consulting transformation will include “looking at org design, understanding working behaviours … [and] organisational psychology in terms of the way in which you actually get different bits of quite a large sprawling company to talk to each other.” Hmm. Maybe some delayering too?

KPMG launches radical overhaul, cuts 200 senior jobs [Financial Review]

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They’re doing this because according to them:

In a fast-paced, globally focused business environment driven by new technology and increasing regulatory complexity, clients’ needs have also evolved. To meet these, both firms will bring their complementary strengths and technology solutions together to enhance the range of services offered across audit, tax and legal, and advisory. With a wider geographic coverage, the new firm will be able to expand its service and sector expertise complementing the already deep local market understanding for its national and international clients.

Partners at both firms voted “overwhelmingly” for the merger. “This will make the firm the second largest in the KPMG network by some distance,” said the press release. That distance being about $32 billion behind KPMG US’s $36 billion in revenue. [disregard, we’re dumb and used global revenue here]

You may recall a dubious rumor floating around last year that KPMG US, UK, and India were exploring merging their advisory practices. After we included a link to an Economic Times of India story about so-called Project Himalaya, this was quickly debunked by a KPMG spokesperson who reached out to us saying “KPMG is a network of member firms, which are independent of each other. We are, as always, focused on opportunities for greater collaboration within our existing India-based client delivery network.”

A potential UK/Switzerland deal, however, was correctly floated by Financial Times back in December:

KPMG is planning to merge its UK and Swiss businesses in a tie-up that executives hope can boost growth and profits at the smallest of accounting’s Big Four. 

Partners in KPMG’s operations in the two countries were told last Friday that the firms were in discussions over a possible combination, people familiar with the matter told the Financial Times. Rank-and-file employees were given a more limited briefing on Monday. 

The merger, which would be subject to partner votes in both countries, would be the biggest strategic shift at the Big Four accounting firm since UK chief executive Jon Holt took over in 2021 after the sudden resignation of his predecessor Bill Michael. 

Holt is seeking both to repair KPMG’s reputation, after a series of fines and scandals, and to boost profits, which have lagged behind those of rivals. 

Quick refresher on what happened with Bill Michael:

Related: KPMG UK Asks Staff to Stop Snitching to the Media When the Firm Does Something Stupid

Although total revenue was up nine percent from the year prior, KPMG UK laid off six percent of its deals people in October and froze pay for 12,000 staff across all service lines while reducing bonuses for some. So they’ve had a rough go of it lately and that’s not counting the tongue-lashings and fines they’ve received from regulators in recent years.

Of the news, the press release of course has complimentary quotes from the CEOs.

“This marks a historic moment for both firms,” said Jon Holt, chief executive and senior partner of KPMG UK. “We will be stronger as one combined firm and together we will have the scale to significantly enhance our ability to deliver great outcomes for our clients both internationally and within our domestic markets. Merging brings huge benefits for our clients, our people, and our partnership and means we can now grow faster, be more profitable and invest together to create new services in a sustainable way.”

“Both partnerships have made an important decision today, which will evolve and future proof our firms for the global business challenges ahead,” KPMG Switzerland CEO Stefan Pfister said. “Together we will be more agile and can bring the best of KPMG’s multidisciplinary model and sector expertise to clients nationally and internationally while at the same time maintaining our local market understanding and execution power.”

As for the structure of the merged firm, KPMG will establish a new limited liability partnership comprised of equity partners and the LLP will own the existing UK and Swiss firms. Jon Holt will lead the new partnership as Group CEO and Stefan Pfister will get the consolation prize of the title Group Deputy CEO.

October 1 will be MechaKPMG’s first official day.

The post KPMG Merges With KPMG appeared first on Going Concern.

As an industry publication that started out as a voice for millennials (and cool Gen Xers), we’ve never bought into the “Gen Z is lazy” stereotype because that stereotype was pinned on our generation too when we started entering the workforce at the turn of the millennium. It’s clear the root of it is less that an entire generation is lazy — some are, no doubt — but that the old guard couldn’t understand why young people were not interested in taking shit from their employers like they did back in their day. See, in their day they paid less than $5k for college and could afford a house and a couple kids on a single salary. We, the 40-something and unders, know we have to job hop to get good salary increases and learned early on that unless you really like the work or have eyes on a corner office, there’s very little incentive to stay with the same employer for too long. That’s all that is.

Alas, the lazy stereotype persists. And the 433 interns across tax, audit, and advisory service lines KPMG surveyed for its Intern Pulse Survey are over it.

You’ll notice none of these key takeaways say anything about TikTok or Fortnite.

• Gen Z talent is seeking stability amid a tight labor market and is pushing back against the notion that they are lazy.
• Gen Z is fully embracing GenAI – both in their personal and professional lives – and the availability of AI-related trainings is an important factor when considering a future employer.
• Gen Z strongly values a positive culture and working environment with opportunities to engage coworkers in-person and up-level their soft skills, but don’t forget salary.
• Gen Z values home ownership most when it comes to their long-term financial goals and most plan to vote in the U.S. presidential election this year.

Bonus points to KPMG for that “but don’t forget salary.” Gen Z, like all of us, doesn’t want to work in a hellhole staffed with actual demons, power-trippers, and Machiavellian managers who mentally torture you for sport. But their desire (or ability) to avoid such an environment is trumped by the bottom-most sections of Mazlow’s hierarchy of needs — that is to say food, shelter, sleep. You know, the basics. Basics that have grown increasingly expensive just in the past few years. Corporate leadership loves saying Gen Z values purpose as if that’s the only thing they value but let’s be honest, the rent’s got to get paid above all else. And the rent is obscene right now.

Here’s what KPMG says about their interns’ opinions that third bullet:

“Purpose, culture, sustainability and opportunity are all important factors as Gen Z talent consider job opportunities, but this generation is more confident talking about what they need – from salary to work-life-balance. It’s important that employers continue to actively manage these expectations,” said Derek Thomas, National Partner-in-Charge, University Talent Acquisition at KPMG U.S.

• When asked for the top three factors they value most in a future employer, respondents identified salary as most common (25%), closely followed by a positive culture and working environment (24%) and opportunities for advancement (20%). Scheduling flexibility (15%) was an additional factor, followed by learning and development as well as benefits—such as good options for paid time off, healthcare/dental/vision coverage, and mental health benefits and programs.
• 78% agree or somewhat agree that an employer’s ESG efforts (e.g., prioritizes environment/sustainability; is committed to DEI and social equity; and demonstrates ethical business practices) is an important factor when considering a job/employer.
• 89% agree or somewhat agree that access to trainings on “soft skills” or professional skills (e.g., presentation skills, executive presence, client etiquette, interpersonal skills) is an important factor when considering a job/employer.
• 82% believe a hybrid work model will provide the most opportunity for growth as they start their career. However, the survey does not find a significant desire for fully in-person or remote work. 14% believe that fully in-person will be most conducive to career growth, and only 4% think that fully remote is best.

Also of note: Nearly half of all respondents (48 percent, and mind you these are current KPMG interns) believe that 20 percent of their future full-time job as it exists today will be automated by AI. 39 percent are using ChatGPT frequently, 14 percent say they’ve never used it. A little more than half (51 percent) use generative AI for work-related purposes (or claim to be doing so), be it for administrative tasks not detailed in the survey results of project-based tasks. Almost three-quarters (72 percent) agree that being offered AI-related training and tools is an important factor when looking at potential employers.

And here’s an interesting footnote on salary they stuck in there:

A KPMG 2022 survey found alumni who stayed with KPMG for an extra year saw an 18% increase in their annual compensation value. Projecting this accelerated earnings potential over a nearly 40-year career period could potentially yield millions in extra lifetime earnings.

So you’re saying there’s value in loyalty after all?

The post KPMG Interns Firmly Disavow the Lazy Gen Z Stereotype appeared first on Going Concern.

Who or what is Fair360, you ask? Who cares!

For real though, Fair360 used to be called DiversityInc, a name that might be slightly more familiar to you. They rebranded last year, citing “the ever-changing sociopolitical landscape and our commitment to a holistic approach to workplace fairness” as why. The list methodology is long and complicated, let’s not get too deep into it. The ranking is “based on empirical data obtained through organizations completing and submitting the online survey” and this next part is too long for quotation marks so here you go:

The assessment provides detailed insights into representation metrics across several dimensions and intersectionality segments including race/ethnicity, gender identity, sexual orientation, disability status and veteran/active military status of employees, leadership and board of directors. In addition, the assessment captures information regarding supplier fairness and philanthropy-related spending and practices to generate relevant benchmarks, best practices and research.

KPMG naturally put out a press release to inform everyone of this wonderful news.

KPMG LLP ranked #5 on Fair360’s 2024 Top 50 Companies list, appearing on the list for the 18th consecutive year. The announcement was made live on May 13, 2024, at Fair360’s annual event in New York.

Since 2001, the Fair360 (previously known as DiversityInc) Top 50 survey has recognized U.S. employers that are committed to overall workplace fairness.

The obligatory leadership fluff:

“The world is growing increasingly complex, and the future leaders of our industry will be those who attract the most innovative and skilled people, create diverse and well-managed teams, and build connections based on trust with their clients and our society,” said KPMG U.S. Chair and CEO, Paul Knopp. “By fostering a work environment where everyone feels valued, respected, and empowered, we unlock the full potential of our people and create a culture of innovation and excellence.”

And more fluff:

As a values-driven organization, KPMG has a long-standing commitment to advancing diversity, equity, inclusion and a sense of belonging both within the firm and in the broader marketplace, and it continues to be a strategic priority. 

And MORE fluff:

“At KPMG, we prioritize a culture of genuine understanding and empathy, so we are equipped to meet the unique needs of our workforce,” said KPMG U.S. Chief Diversity, Equity and Inclusion Officer, Elena Richards. “Together, we are building an environment where everyone can flourish and reach their highest potential.”

OK, we’ve gotten to the end of the fluff. Really was worried for a minute there it was going to go on for many more paragraphs.

KPMG moved up one spot from #6 on last year’s list and amazingly, this isn’t their first time as the only Big 4 firm on the list. See our 2019 report: KPMG Gets Another Award For Being the Big 4 Firm That Is the Least Old, Male, and Pale

We suppose it’s worth noting that neither EY nor PwC qualify for the Top 50 list as once a company earns a #1 spot, they’re forever retired to the Hall of Fame. PwC took #1 in 2012, EY in 2017. This makes them ineligible for inclusion in the Top 50, possibly to prevent the kind of PwC/Deloitte domination we’ve witnessed year after year on the Vault rankings. Only makes sense an organization called Fair360 would like to give others their fair shot at glory.

Fans of lists will love to hear that there are even more lists, Fair360 has conveniently listed (ugh) them out and included KPMG’s rank for each.

Specialty Lists

They better watch out, EY is dangerously close to unseating them as supreme leader of employee resource groups.

Congrats to them and maybe if they keep self-reporting performing as well as they have they will one day join PwC and EY in that storied Hall of Fame.

KPMG named No. 5 on Fair360 Top 50 Companies List [KPMG]

The post You’ll Never Guess Which Big 4 Firm Is the Only One to Make This Top Companies List appeared first on Going Concern.

According to the most recent data from the gubmint, the cannabis market in Canada was a $5.07 billion Canadian dollar ($3.7 billion USD) business in 2023, up 12.2 percent from the prior year.

And now KPMG is walking away from it.

The post Once Leaders in the Cannabis Space, Canuck KPMG Decides to Ditch All Its Weed Clients appeared first on Going Concern.

Jeffrey Johanns, associate professor at The University of Texas at Austin McCombs School of Business and regular audit industry commentator, wrote a really good LinkedIn Pulse post about the situation when the redaction first appeared. This, uh, unique choice by the PCAOB obviously led to more questions than answers. Such as:

· The other 13 reports issued along with KPMG’s included each firm’s Deficiency Rate, including the other three Big 4 firms. Why was KPMG handled differently?

· In KPMG’s listing of “Audits with Unsupported Opinions”, containing issuers labeled as “A” through “P”, issuer “N” is omitted from the list? Who is the mysterious Issuer N? Are there other missing issuers?

· After more than two years of inspection, discussion, and negotiation with KPMG, why can’t the PCAOB decide whether any particular audit is deficient? It is the regulator. The Board has the final say. It is their responsibility to draw a conclusion and move on, whether the firm agrees or not. The purpose of the response letter included in the report is for the inspected firm to indicate if they have any disagreements with the determinations in the report. If KPMG doesn’t agree with the Board’s decisions about individual audits, they should say it in their response letter.

· Why didn’t KPMG (apparently) not agree with some of the Board’s conclusions, or object in the normal inspection process? This question raises a lot of speculation, not particularly helpful to KPMG. Are there one or more audits they are being advised not to agree to as deficient? For what reasons?

We still don’t have answers to those questions but we do now have a number: 30 percent.

So a 30 percent Part I.A. deficiency rate, up from 26 percent in 2021 and 2020. Why does this feel so anticlimactic?

The number of audits selected for review was on par with previous years:

What was the secrecy all about then?? Why is this all so weird? Bloomberg Tax has an explanation:

The US accounting oversight board issued a complete version of KPMG LLP’s 2022 inspections review on Friday that detailed an extra audit with a single deficiency tied to income tax accounting.

KPMG had appealed portions of the Public Company Accounting Oversight Board’s inspection findings resulting in the release of a partially redacted report in February. In total, inspectors found fault with 30% of the firm’s inspected audits, work that generally covered 2021 financial statements, according to the amended report.

Quick update: The PCAOB tweeted about the inspection report and didn’t even mention KPMG by name. HMM.

This low-key post is in reference to the @KPMG_US 2022 Inspection Report that previously redacted key #audit deficiency related information, including the firm's overall Part 1A deficiency rate (now known to be 30% of audits inspected) and the nature of the previously redacted… https://t.co/LPBWdv9ACP

— Jeffrey Johanns (@JohannsAudit) April 28, 2024

Full report embedded below for your reading pleasure.

The post Solved: The Mystery of KPMG’s Redacted PCAOB Inspection Report (Kinda) appeared first on Going Concern.

For accountants under some categories — Chartered and certified accountants Accountant (qualified), Auditor (qualified), Chartered accountant, Company accountant, Cost accountant (qualified), Financial controller (qualified accountant), and Management accountant (qualified) — the standard going rate is now £46,800 ($58k) or £24.00 ($30) per hour. Here’s a good read from a UK immigration lawyer on all the specifics.

After net migration to the UK hit a record 745,000 in 2022, Prime Minister Rishi Sunak expressed his displeasure and a desire to get those numbers down.

But that’s another issue. For people under 26, the minimum they must earn to qualify for a visa is £30,960 ($38k-ish). Apparently this was too much for KPMG so they’ve yanked job offers from some foreign grads who were expecting to start their careers at the House of Klynveld.

Reports FT:

KPMG has revoked job offers to some foreign graduates in the UK after the government tightened visa rules for overseas workers in an effort to cut record immigration.

The Big Four firm, one of the UK’s biggest graduate employers, told affected incoming staff this week that their offers had been rescinded, pinning the move on the government’s decision to raise the minimum salary required to sponsor a skilled worker visa in the UK, according to documents seen by the Financial Times.

KPMG said the changes to eligibility criteria had “unfortunately impacted some of our graduate programmes that were previously eligible for sponsorship under the skilled worker visa category”, according to the documents. The firm declined to comment on how many offers had been revoked.

FT said the average graduate makes between £25,000 and £35,000 at Big 4 firms in the UK.

KPMG has stopped hiring overseas graduates who need skilled worker visas outside of London as a result of the changes to the eligibility rules, said FT. Except for junior actuaries, they’re still in.

The post KPMG Was Too Cheap to Pay Foreign Graduates More So They Yanked All Their Job Offers appeared first on Going Concern.

The section on Generative AI is of particular interest as it covers GenAI application, deployment, and concerns over the next 12-18 months. We have no way of knowing just how many of these CEOs actually know what generative AI is or how it can be used in their business beyond asking ChatGPT for some fun ideas for Employee Appreciation Day though 77 percent of them did say they’re confident leadership has a good understanding of it [X].

In order, the surveyed CEOs said the top challenges in deploying GenAI are:

• Ethical challenges (38%)
• Security and compliance (36%)
• Integration with existing systems and processes (33%)

A bit concerning that only 19 percent of CEOs surveyed said they’re currently using watermarks or disclosures that would let consumers know content is made with the assistance of AI. And that only 37 percent of them say they’ve prioritized data privacy using “robust data anonymization techniques.”

The Talent & Culture section shows that hybrid work rules the day while fully remote models are on the decline. What happened between February/March 2024 and last year that made them pull back on 5 days a week in the office?

Revisiting the 2023 CEO Outlook released last October, 64 percent of CEOs surveyed for that report said they anticipated a full return to office within three years. And 87 percent of them said they were likely to reward employees who make an effort to come into the office with favorable assignments, raises or promotions (hey, we just talked about remote workers getting passed over for promotions and raises yesterday).

Although workplace wellness programs are a joke and scientifically proven to do jack shit for individual employee mental health if the workplace itself is broken, respondents say they’re doing the following to address employee well-being and prevent burnout:

• Implementing more initiatives focused on mental well-being such as digital wellness solutions, mindfulness seminars, resilience workshops and coaching sessions (74%)
• Encouraging employees to use GenAI to automate mundane tasks to better manage their workload and relieve stress (61%)
• Facilitating opportunities for employees to strengthen personal relationships with coworkers, such as employee volunteering and in-person training and development (60%)
• Implementing trainings for managers to more effectively address well-being concerns and burnout among their direct reports (56%)
• Exploring new organization-wide work schedule shifts such as 4-day or 4.5-day workweek (30%)

That’s it. Well, there’s a last section on sustainability and ESG but who cares. Certainly not the CEOs.

KPMG Study: CEOs tackling risks to growth including geopolitics, cyber and structural changes such as tight labor market, new regulations [KPMG]

The post CEOs Feel Good About the Economy and Hybrid Work Is Winning, Says KPMG in This CEO Survey appeared first on Going Concern.

First, the earlier reporting. DutchNews wrote in July 2023:

At least 500 workers at KPMG in the Netherlands have cheated during the compulsory exams which accountants are required to take, the consultancy group has confirmed.

KPMG said it had imposed sanctions on an unknown number of employees, and “a handful” had been fired following an internal investigation into the claims that staff had swapped answers to the tests.

KPMG Nederland director Marc Hogeboom is also stepping down as boss of the accounting arm, but remains an auditor and partner at KPMG. He said in a statement he “should have been more alert to signals” that pointed towards workers sharing their answers.

We brought the situation up again late last month when Mazars’ Dutch arm reported their own “misconduct on exams” in its annual report. If the PCAOB wasn’t interested in digging around already, that certainly would have gotten their attention.

Alas, they had already been on the case. Announced today, the PCAOB has hit both KPMG Netherlands and former Head of Assurance Marc Hogeboom with some hefty fines related to cheating.

Said the PCAOB in a press release:

As described in the PCAOB’s orders, from 2017 to 2022, hundreds of professionals at KPMG Netherlands engaged in improper answer sharing – either by providing access to test questions or answers, or by receiving such access without reporting it – in connection with tests for mandatory firm training courses. These courses related to a variety of topics, including U.S. auditing standards, professional ethics, and independence. The improper answer sharing reached as far as partners and senior firm leaders, including Hogeboom (at the time the firm’s Head of Assurance and a member of the firm’s Management Board). The growth of this widespread answer sharing was enabled by the firm’s failure to take appropriate steps to monitor, investigate, and identify the potential misconduct. For example, starting in June 2020, the firm was aware that (1) answer sharing had occurred at a KPMG service delivery center serving KPMG Netherlands and KPMG LLP (United Kingdom) and (2) the sharing had extended to the U.K. firm’s personnel. Nevertheless, KPMG Netherlands took virtually no steps to investigate potential answer sharing among its personnel until a whistleblower reported such misconduct in July 2022.

During the PCAOB’s investigation, the firm submitted – and failed to correct – multiple inaccurate representations to the PCAOB. In the submissions, the firm claimed that it had no knowledge of answer sharing by its personnel until it received the July 2022 whistleblower report. These submissions, reviewed by the firm’s Management Board and Supervisory Board, were false because members of those two Boards had themselves already engaged in answer sharing misconduct before July 2022.

The above misconduct revealed an inappropriate tone at the top of KPMG Netherlands and a failure by firm leadership to effectively promote an ethical culture among firm personnel with respect to improper answer sharing and monitoring of the firm’s system of quality control.

“The PCAOB will not tolerate cheating nor any other unethical behavior, period,” said PCAOB Chair Erica Y. Williams. “Impaired ethics threaten the investor confidence our system relies on, and the PCAOB will take action to hold firms accountable when they fail to enforce a culture of honesty and integrity. I thank the Dutch Authority for the Financial Markets for its cooperation in the investigation of this matter and applaud the enhanced supervision measures it has taken to hold the firm accountable going forward.”

Don’t say we didn’t warn you.

Look, a historic fine is great and all but the question that always gets asked in the comments every time this issue comes up is does it really matter? There was a big scandal with PwC Canada sharing answers that came to a head in 2020 — staff thought helping each other out on these bullshit training exams was “collaborative culture” — yet while it was happening the firm was getting ZERO deficiencies in its PCAOB inspections. Isn’t that what we want? Isn’t that peak performance?

To be fair, the lying to the PCAOB part is a little out of line.

PCAOB Imposes Record $25 Million Fine on KPMG Netherlands and Bars a Firm Leader After Exam Cheating, Misinforming Investigators [PCAOB]

The post The PCAOB Just Handed Out Its Biggest Fine to Date to Some KPMG Cheaters appeared first on Going Concern.

Today’s lucky contestants are CHOI Chung Chuen (“Choi”), MA Hong Chao (“Ma”), and DONG Chang Ling (“Dong”), all partners of mainland China-based KPMG Huazhen LLP.

The three were accused of violating PCAOB standards in connection with the firm’s audit of the 2017 financial statements of Tarena International, Inc. (n/k/a TCTM Kids IT Education Inc.), a mainland China-based education service provider listed in the United States. In 2019, Tarena restated its 2017 financial statements for, among other things, intentional revenue inflation and improper charges against accounts receivable.

Tarena’s audit committee opened an independent investigation in April 2019 and retained Kirkland & Ellis International LLP as independent legal counsel to advise the committee. K&E was assisted by Deloitte & Touche Financial Advisory Services as forensic accounting expert.

That investigation revealed quite a bit:

• Revenue Inaccuracies: The Audit Committee’s independent review found that the Company’s reported revenues for fiscal years 2014, 2015, 2016 and 2017 and previously announced unaudited revenues for each quarter of and full year 2018 were not accurate. Factors contributing to the misstatement of revenue included intentional revenue inflation, inaccurate student account, status and loan data recorded in the company’s customer relationship management (CRM) system, premature recognition of revenue from certain students, and inaccurate accounting treatment of tuition refunds.

• Expense Inaccuracies and Irregularities: The audit committee discovered instances of improper charges against accounts receivable and/or bad debts through payment to third parties, as well as guarantee payments to certain financial institutions or peer-to-peer financial tools for certain overdue student loans. The audit committee also identified certain expenses that were not supported by appropriate documentation and indications that funds or other benefits were provided to third parties contrary to company policy.

• Conflicts of Interest and Related Party Transactions: The audit committee found evidence that the company engaged in business transactions with organizations owned, invested in or controlled by company employees or their family members which in some instances were not properly disclosed by the company.

• Interference With External Audit Process: It was found that certain employees interfered with the external audit of the company’s financial statements for certain periods.

Back to the PCAOB order against Choi, Ma, and Dong. Specifically, the PCAOB found that Choi and Ma, the engagement partner and a second partner on the 2017 audit, respectively, failed to obtain sufficient appropriate audit evidence to support Tarena’s reported revenue. In evaluating Tarena’s revenue, Choi and Ma planned to rely on the company’s internal controls, including information technology-related controls. However, after learning of numerous unremediated deficiencies in Tarena’s IT Controls, Choi and Ma improperly continued to rely on those controls to support their audit conclusions as if those controls were effective.

The PCAOB also found that Choi and Ma failed to exercise due care and professional skepticism and failed to obtain sufficient appropriate audit evidence to support Tarena’s net accounts receivable. Specifically, they did not appropriately evaluate the reasonableness of Tarena’s allowance for doubtful accounts. Choi and Ma did not obtain an adequate understanding of how management developed the estimate, did not appropriately evaluate its reasonableness, and did not adequately consider evidence indicating that the estimate might not be reasonable.

Finally, the PCAOB found that Dong, the partner with overall responsibility for the involvement of the Firm’s IT professionals in the Tarena audit, failed to sufficiently supervise those IT professionals. As a result, Dong failed to identify several deficiencies in the IT audit procedures.

Without admitting or denying the findings, the respondents consented to the PCAOB order that includes censure, civil money penalties in the amounts of $75,000 on Choi, $50,000 on Ma, and $25,000 on Dong, and the usual stuff like Choi and Ma being barred for at least a year and continuing professional education for all involved.

Earlier settled enforcements with China firms are below. Two were for violating PCAOB quality control standards related to integrity and personnel management (they were sharing exam answers), the third was more serious with issuing a false audit report, failing to maintain independence from their issuer client, and improperly adopting the work of another accounting firm as their own among the violations.

PDF alert

• PricewaterhouseCoopers Zhong Tian, LLP (“PwC China”)
• Hong Kong-based PricewaterhouseCoopers (“PwC Hong Kong”)
• Shandong Haoxin Certified Public Accountants Co., Ltd. (“Haoxin”)

Article:

PCAOB Sanctions Three Partners of KPMG China for Violations of Audit Standards [PCAOB]

The post The PCAOB Racks Up Its Fourth Enforcement Against a Chinese Affiliate With This KPMG China Order appeared first on Going Concern.

It all started when the client discovered accounting errors and restated its FY2018 profit in the FY2019 annual accounts. This prompted a FRC investigation into the audit which led them to dig into revenue recognition, journal entries, and the year-end consolidation process.

KPMG and lead engagement partner Adrian Wilcox admitted breaches of relevant requirements in these areas:

• A failure to audit with sufficient professional scepticism the release of WIP credits (a type of client payment on account), which increased revenue by £1,200,000. These releases, processed as UK sub-consolidation adjustments, were subsequently reversed in the FY2019 annual accounts.
• Failures to properly audit journal entries across a number of subsidiary companies, including a lack of any journals-testing at all for two subsidiaries, and a failure to identify potentially high-risk journals for testing across a number of entities.
• A failure to document the auditors’ reasoning, or complete their enquires with management, in relation to the retention of rebates under a contract which, on its face, appeared to require such rebates to be passed back to a client. The level of professional scepticism was insufficient.

The FRC acknowledges it was a “challenging” audit and that “the auditors demonstrated some robustness in pushing back the signing date until they obtained further evidence from management.” However, the FRC said, “the breaches of relevant requirements included serious failings and, specifically, breaches relating to UK sub-consolidation adjustments affecting or potentially affecting a significant number of people in the United Kingdom such as the public, investors, or other market users.”

Taken together, the breaches undermine confidence in statutory audit and the truth and fairness of financial statements, wrote the FRC in the press release.

For the fiscal year ended March 2022, UK audit firms were fined a record £46.5 ($59.2 million USD) by the FRC, more than half of that was levied against KPMG alone. 2023 saw £40.4 million in penalties — including investigation costs paid by the firms — and KPMG was at the center of four out of five concluded FRC investigations. They also earned the highest fine ever recorded by the FRC for their work on collapsed construction company Carillion. The £21 million ($26 million USD) fine was a mere £8 million more than the £29 million Carillion paid in audit fees over 19 years.

Sanctions against KPMG LLP and audit partner [Financial Reporting Council]

The post KPMG UK Going For a FRC Penalty High Score Again This Year appeared first on Going Concern.

WSJ doesn’t know why it was redacted either. NO ONE DOES.

We’ve got some more inspection reports to dig into shortly, lots of them. EY, PwC, Deloitte, GT, BDO, RSM, Moss Adams…does anyone want to know all that? We were warned last year that this batch of PCAOB inspection reports would be “completely unacceptable” but no one said they would be completely unknowable. Thankfully they gave us deficiency rates for the other firms.

The post Why Did the PCAOB Redact KPMG’s Audit Failure Rate? appeared first on Going Concern.

11 people at KPMG are celebrating today as the firm, them, and 29 people who worked at Credit Suisse will not be headed to the town pillory for misconduct related to the bank going down in flames last year.

Dozens of former Credit Suisse officials and the auditor KPMG won the dismissal of a U.S. shareholder lawsuit claiming they allowed 20 years of “continuous mismanagement” that led to the Swiss bank’s demise and takeover by UBS.

In a 92-page decision released on Thursday, U.S. District Judge Colleen McMahon in Manhattan said accusations that the defendants allowed the improper “plunder” of Credit Suisse did not support racketeering claims in the proposed class action.

And:

KPMG was accused of “active complicity,” with its New York offices being “all but part of” Credit Suisse’s nearby offices, before PricewaterhouseCoopers became the bank’s auditor in 2020.

Shares of Credit Suisse dropped as low as a little over two bucks on March 17, 2023, UBS swept in to buy CS for $3 billion, and then gave 1 UBS share for every 22.48 Credit Suisse shares held to shareholders. UBS Group AG is trading at $27.77 as of publication time.

Credit Suisse officials, KPMG beat US lawsuit over bank’s demise [Reuters]

The post KPMG Beat the Credit Suisse Lawsuit appeared first on Going Concern.

First of all, LOL:

The story:

Payouts for UK partners at KPMG climbed 4 per cent to an average of £746,000 (approx. $949k USD) last year despite a surge in fines for audit failures and a slowdown in growth at the Big Four firm.

The accounting and consulting firm reported a 9 per cent jump in revenues to £2.96bn during the year to September, compared with growth of 16 per cent in the previous 12 months.

Pre-tax profits fell nearly a fifth to £364mn, with the firm blaming higher staff costs. However, a cull in the firm’s senior ranks, which left the partnership at its lowest level in more than two decades, meant that average individual payouts rose.

Partner pay last year averaged out to £717,000 (approximately $912k USD) per. Compare that to the £906,000 ($1.2 million USD) at PwC and Deloitte partners taking home more than £1 million for the third year in a row.

According to KPMG UK’s most recent people report, the firm has 833 partners as of October 2023, up from 786 the year prior. Total people and partners (separated in the report because partners aren’t people) are at 18,126 individuals, up from 16,822 in 2022.

FT said in October the equity partnership is at new lows, falling twelve percent from 571 to 502 after 94 partners left the firm and just 25 new ones were brought in. The “salaried partner” role was introduced in 2021, touted by the firm as a way to offer “the firm’s future leaders additional routes into the partnership.” The route they should be taking is straight through the front door and over to a different firm, what a stupid consolation prize. But that’s why the numbers don’t match up, the firm is counting Diet Partners in its overall partner total.

KPMG UK partner pay climbs despite slowdown [Financial Times]

.

The post KPMG UK Partners Brought Home More Money This Year appeared first on Going Concern.

Growth by service line was modest but decent considering the year advisory has had:

• Audit: Local growth 9% (6% US$)*
• Advisory: 7% (4% US$)
• Tax & Legal: 10% (7% US$)

Obligatory explainer on the difference between local and US$ growth:

*Local growth percentages maintain consistent US$ exchange rates in FY23 and FY22 and therefore do not reflect exchange rate changes between the years. US$ growth rates are derived from underlying revenue numbers and not rounded figures used for presentation purposes.

Headcounts across the globe saw single-digit increases except Americas where the headcount shrunk by six percent.

KPMG global revenue by region:

And service line:

Global partners, directors, leadership, and others:

The post KPMG Announces $36 Billion in Global Revenue, Comes in 4th Yet Again appeared first on Going Concern.

Financial Times reported on the Friday after Thanksgiving — just another day to the Bri’ish, thank goodness — that the pay freeze at KPMG UK initially in effect only for its suffering deals business is now extending to 12,000 staff across service lines. Said FT:

Bosses at the Big Four accountancy firm told staff across its four divisions in recent weeks that they would not receive a pay rise this year unless they were promoted, according to people familiar with the matter.

Bonuses will also be cut, with staff in KPMG’s 2,900-strong tax and legal arm receiving 55 per cent of the full amount that could have been paid, an insider said.

The pay freeze will not affect the firm’s graduate and apprenticeship staff, according to the people familiar with the situation.

Over the past few years the UK has seen brutal inflation though it’s currently on its way down from a peak of 11.1 percent in October of last year.

See? Not so bad.

So sure, they’re getting what’s essentially a 5% pay cut but it could be so much worse. October 2023’s inflation of 4.6 percent is the lowest it’s been since October two years before and the Bank of England expects inflation to continue to fall in 2024.

In 2022, KPMG UK CEO Jon Holt hopped on LinkedIn to announce a salary increase of between £2,000 and £4,000 (approx. $2,500 to 5,000 USD) for staff writing:

It’s progressive and we’ve deliberately designed this so that our more junior colleagues feel the greatest benefit now. This is separate to our annual pay review later in the year and doesn’t include our partners or associate partners.

In total it’s an additional £51.7m ($65.7 million USD) investment in our people. Based on current trading performance, we’re also expecting to match our £100m colleague bonus pot from last year.

Things started to take a turn after that however, for example everyone in audit finding out in the spring there would be no mid-year promotions. A spokeswoman told the Times in March that “promotions typically follow an annual cycle and so in most years mid-year ones would be by exception only” and that the firm continues “to significantly invest in the development of our talent and many of our colleagues will be promoted as part of our annual promotions cycle later this year.”

And it isn’t only staff who are hurting. The firm is at its lowest equity partner level in two decades — 467 partners paid an average of £757,000 last year — bringing it to about half the size of the partnership at PwC. The firm also has 359 salaried partners, they don’t really count because Diet Partners don’t get a share of the year’s take.

Things are getting a little dark on the other side of the Atlantic, let’s hope it doesn’t make its way over here like Sir Walter Raleigh’s crew ready to conquer America.

KPMG extends pay freeze to 12,000 UK staff [Financial Times]

The post KPMGers Across the Pond Will Not Be Having a Happy Christmas appeared first on Going Concern.

That’s what happened last week when a group of academics presented AI-generated case studies on Big 4 malfeasance before Australian parliament. The academic who claimed responsibility for the submission — Macquarie University Professor of Accounting and Corporate Governance James Guthrie — had only started using Google Bard that same week and did not fact check Bard’s work. A+ trolling by Bard there.

Maybe this warning needs to be larger.

The Guardian:

The original submission falsely accused KPMG of being complicit in a “KPMG 7-Eleven wage theft scandal” that led to the resignation of several partners. It also accused KPMG of auditing the Commonwealth Bank during a financial planning scandal. KPMG never audited the Commonwealth Bank.

Deloitte’s general counsel, Tala Bennett, also expressed concern about the submission wrongly accusing her firm of being sued by the liquidators of the collapsed building company Probuild for allegedly failing to properly audit its accounts. Deloitte never audited Probuild.

The submission raised concerns about a “Deloitte NAB financial planning scandal” and wrongly accused the firm of advising the bank on a scheme that defrauded customers of millions of dollars. Deloitte told the Senate there was no such scandal.

It also accused Deloitte of falsifying the accounts of a company called Patisserie Valerie. Deloitte had never audited the company.

Patisserie Valerie was audited by Grant Thornton (incompetently) and Deloitte is well within its rights to be outraged by this mix-up because even the dumbest of AIs shouldn’t have gotten that one wrong. Worse, the accounting professor who received that information from Bard should have known better. If the burnouts here at Going Concern can remember which firm screwed up which audit you’d expect esteemed academics to do at minimum the same if not better.

“Deloitte supports academic freedom and constructive discourse in relation to those matters currently before the committee, however, it considers that it is important to have factually incorrect information corrected,” said Deloitte’s annoyed lawyer. “It is disappointing that this has occurred, and we look forward to understanding the committee’s approach to correcting this information.”

KPMG, too, was pissed and wrote a strongly worded letter to the academics’ employers to complain. There was a 7-Eleven wage theft scandal (“widespread systematic underpayment of workers by franchisees“) though it appears the only connection it has to KPMG is former Partner in Charge of KPMG Australia’s People Advisory Practice Dharmendra Chandran joining the 7-Eleven board post-scandal.

Having taken responsibility for the egregious mistake, Professor Guthrie proceeded to drive the bus over himself in a letter to the Senate. Some quotes from the letter as shared by Guardian and Americanized for our audience (as in we switched the S for a Z in “realize”):

“Given that the use of AI has largely led to these inaccuracies, the entire authorship team sincerely apologizes to the committee and the named Big Four partnerships in those parts of the two submissions that used and referenced the Google Bard Large Language model generator,” Guthrie said in the letter.

“Given we are also accounting academics, we are deeply invested in the public interest and ensuring accountability and transparency in the sector – which is why we unreservedly offer our apologies and deep regret.”

“I now realize that AI can generate authoritative-sounding output that can be incorrect, incomplete or biased,” Guthrie said.

Ahem.

With the apology out of the way, Guthrie stands by the overall sentiment that Big 4 firms are scandalous and might be in need of breaking up. “Our substantive arguments and our recommendations for reform remain important to ensure a sustainable sector built on shared community values,” he said in the letter. For further reading, see this Australian Financial Review opinion piece: “PwC scandal makes a case for breaking up the big four.”

Because the false statements were covered by parliamentary privilege, the firms can’t sue for defamation. So the lesson here is if you’re going to accuse Big 4 firms of things they didn’t actually do and don’t want to get sued for it, do it at a parliamentary inquiry.

The post Academics Let AI Ruthlessly Slander Big 4 Firms, They’re Very Sorry They Didn’t Think to Fact Check appeared first on Going Concern.

Take it away, ChatGPT.

Warren Mundine is an Australian Indigenous leader, businessman, and former politician. He’s been involved in various aspects of Australian public life, advocating for Indigenous rights and economic development. Mundine has also been a member of the Australian Labor Party and served as the national president of the Australian Labor Party. In 2012, he left the Labor Party and later joined the Liberal Party. He’s had a diverse career, including roles in the corporate sector and Indigenous organizations.

Asked if he’s known for using profanity our future AI overlord said:

No, Warren Mundine is not particularly known for using profanity. He has generally maintained a professional and measured tone in his public appearances and communications. While individuals may express themselves differently in various contexts, Mundine has typically focused on conveying his ideas and perspectives in a thoughtful and respectful manner, especially when addressing important issues such as Indigenous rights and social justice.

Well that’s going to change when the next GPT update rolls out.

As covered by Daily Mail this morning but first reported by less reputationally challenged publication The Guardian, Mundine sent a series of “foul-mouthed text messages to a top accounting firm” after KPMG cheaped out on his speaker fee and later canceled his appearance altogether.

Toward the end of last year, Mundine was invited to speak to KPMG’s board and executives, something he does quite regularly and is happy to do. He was invited because the 2023 Australian Indigenous Voice referendum would have altered the Australian Constitution to recognize the First Peoples of Australia by establishing an Aboriginal and Torres Strait Islander Voice in parliament and businesses were educating their staff on it. Leading up to the vote, Indigenous figureheads like Mundine were critical of corporations running “biased education programs” and pushing corporate agendas. “These big corporations, they’ve all gone woke and they’ve been sucking on the Kool-Aid,” he said to The Australian in January. Mundine was publicly anti-Voice and urged voters to think carefully before voting.

Why the corporates are supporting the Voice is because they have been advised by one side of the debate. Jacinta & I tried to put an other side to them but companies such @KPMG refused.

— Nyunggai Warren Mundine AO (@nyunggai) December 29, 2022

Jacinta is Jacinta Yangapi Nampijinpa Price, another former politician and prominent anti-Voicer.

Around the time Mundine was talking to the media about firms chugging Kool-Aid, KPMG was planning to host optional seminars for employees “committing to work with pro-voice organisations to ‘educate our own people,’ according to a firm spokesperson.

So anyway, Mundine was tapped to speak to KPMG Australia leadership, presumably after his vocal criticism of wokeness and bias to offer a different viewpoint. According to DM the firm said “we will pay you,” he told the firm that’ll be $10,000, the firm said nah. At that point Mundine said to one of the partners on the negotiation “don’t you like paying Aboriginals?” and the firm eventually offered him five thousand. He accepted their offer but KPMG ended up canceling.

“It was compensating for some of my time and also the flights,” Mundine said to The Guardian. “I was unhappy with KPMG and I am still unhappy with the way they treated me. I have not had any conversations with them for months. If big corporations are going to get Aboriginal people in, whatever the topic is, they should pay. Aboriginal and Torres Strait Islander people have done a hell of a lot of stuff for free over the years.”

In March he sent a partner a series of messages expressing his disappointment:

Mundine used the N-word to describe how he felt the big four firm had treated him over many months, before warning the partner he was “going to treat you cunts like you treated me!”

“I’m a proud Aboriginal man,” he said in the text messages. “I have [had] a gutful of KPMG. I’m going to treat you cunts like you treated me!

“And for me to talk like this tells you how angry I am.”

Although Guardian published the word “cunts” without censorship, they didn’t publish screenshots of the messages. That’s alright, due to their much looser editorial standards we have this from the Mail:

It seems pretty obvious the messages were leaked to the press by the partner on the receiving end of them, the Mail said as much in their headline: “Warren Mundine: I’m a proud Aboriginal man who asked a Big Four accounting firm to pay me to give a speech. Instead, KPMG leaked my private texts – but I stand by every furious word I said.”

DM’s story is a bit different:

Mr Mundine said it was ‘predictable’ his text exchanges would find their way into the media.

‘They were massive Yes people so I am not surprised private emails and text messages have been leaked,’ he said.

‘I expected it because of the type of people these are. They sat down with people who were calling Australians racist who were calling Australia a racist country.’

The firm had called him at the end of last year saying it had read an op-ed he wrote arguing that corporate Australia needed to listen to both the Yes and No cases for the Indigenous Voice to Parliament.

‘They said, “We will pay you,”‘ Mr Mundine said.

‘I said, “Sure, ‘I’ll take 10 grand to come and talk because it is going to take up a bit of my time.”

‘I never heard anything for a while and they got back to me and said, “We decided to go a different way,” and I said, “Fair enough.”‘

He said he doesn’t regret the messages and actually I think he called me a cunt too. “I laugh about some of these media people who want to get dirt on me. They should go buy my book and read it because I have a chapter called “I am a c***”,’ he said. Whatever, wouldn’t be the first time.

The post This Guy Thinks KPMG Are a Bunch of C U Next Tuesdays appeared first on Going Concern.

Said a KPMG spokesperson to City A.M.:

“A challenging economic environment has driven a softening in a number of markets, including the deals market. These conditions have impacted demand in certain areas, as some clients have chosen to pause or delay projects. We have therefore taken the difficult decision to put forward proposals to reduce our headcount in a small number of areas of our business. Our people are at the heart of our firm and our priority is to support them throughout this consultation.”

Financial Times reported a couple weeks ago that KPMG UK was looking to get rid of 125 staff — 2.3 per cent of consulting — and that the cuts were due in part to low attrition. “The person added that KPMG’s issues arose partly from a decline in the consultant “attrition rate” — the number leaving the firm each year,” the FT article said. “The drop, which sector watchers attribute to the decline in alternative options for consultants, has led to excessive growth in staff numbers because hiring plans were designed around higher anticipated rates of departure.”

See also: KPMG to lay off about 6% of deal advisory staff in UK – source [Reuters]

The post Layoff Watch ’23: KPMG UK Is Laying Off 6 Percent of Its Deal Advisory People appeared first on Going Concern.

When Carillion collapsed in 2018, 3,000 people lost their jobs and 450 public sector projects including hospitals, schools and prisons were plunged into crisis. Here’s a detailed breakdown of what happened in the years leading up to its spectacular implosion.

The jist of the audit failures, in a wide range of areas, and in respect of a wide variety of items, as described by the FRC:

KPMG failed to gather sufficient appropriate audit evidence to enable it to conclude that the financial statements were true and fair, and failed to consider (adequately or at all) the implications for the audit of evidence suggesting that Carillion’s accounting might have been incorrect or unreliable.

KPMG failed to conduct its audit work with an adequate degree of professional scepticism. Instead of consistently challenging and scrutinising such audit evidence as it gathered, KPMG failed to subject Carillion’s management’s judgements and estimates to effective scrutiny, even where those judgements and estimates appeared unreasonable and/or appeared to be inconsistent with accounting standards and might suggest potential management bias.

Peter Meehan, the engagement partner for financial years ended 31 December 2014, 2015, and 2016, and additional audit work in 2017, got a £500,000 fine — reduced by 30% to £350,000 — for his blatant lack of supervision on Carillion.

Additionally, in the 2016 audit Mr Meehan and KPMG failed in their duties to ensure that the audit engagement was properly managed and supervised. Audit procedures in a range of areas were not completed until more than six weeks after the date of the audit report was signed and records of the preparation and review of working papers were unreliable and, in some cases, misleading. Overall, no effective process was implemented to ensure that all the audit procedures underpinning the 2016 audit report had been completed, documented, and reviewed satisfactorily before the audit report was issued. In light of these deficiencies, Mr Meehan did not have a proper basis to be satisfied that the opinion given in the 2016 audit report was appropriate.

The breaches found in [relation to Meehan’s audit supervision] were not dishonest and in the majority of cases were not intentional, deliberate or reckless. However, there is a finding of a lack of integrity in respect of Mr Meehan’s record of his review of the 2016 audit and four findings of a lack of objectivity. There is one finding of a failure to assess a threat to independence. These breaches are particularly serious because of threir impact on the credibility of the opinions and reports issued by the auditor.

Said KPMG UK chief executive and senior partner Jon Holt on the FRC announcement today: “I am very sorry that these failings happened in our firm. It is clear to me that our audit work on Carillion was very bad, over an extended period … Since this audit work was undertaken, we have done an enormous amount to improve controls and oversight across our firm, to ensure that these failings could not take place today.” This is quite the departure from the words of former chair Bill Michael who said in 2018 that parliamentary accusations of complacency in the Carillion work “does not reflect the hard work and commitment of the Carillion audit team.”

Like its counterpart here in the US, the FRC has been accused for years of being toothless and too soft on audit failures. Seems they’ve taken a page from the PCAOB and aren’t gonna take it anymore.

Sanctions against KPMG LLP, KPMG Audit plc and two former partners [FRC]

The post As KPMG UK Gets Hit With a Record Fine, the Boss Admits the Auditing Was “Very Bad” appeared first on Going Concern.

This year’s challenging global landscape underscores the pressures CEOs feel to make decisions on a variety of critical issues — and they impact how CEOs plan to support and attract talent over the next three years.

Notably, global CEOs are steadfast in signaling their support of pre-pandemic ways of working, with a majority (64 percent) anticipating a full return to office is only three years away. This remains consistent with their views in the 2022 CEO Outlook. What’s more, 87 percent of CEOs say they are likely to reward employees who make an effort to come into the office with favorable assignments, raises or promotions.

This sentiment underscores the persistence of traditional office-centric thinking among CEOs. It comes against a backdrop of the debate surrounding hybrid working, which has had a largely positive impact on productivity over the past three years and has strong employee support, particularly among the younger generation of workers. As organizations continue to roll out their return-to-office plans, it is crucial that leaders take a long-term view that embraces the employee value proposition and encompasses the considerations and needs of employees to ensure that talent is nurtured and supported.

In picture form if you are morally opposed to reading:

“The data underscores the immense pressure on CEOs to make quick decisions on the big issues,” said Nhlamu Dlomu, Global Head of People at KPMG International. “The war for talent may have softened in this period of economic uncertainty, but the evidence suggests a one-size-fits-all approach to return-to-office could be detrimental.”

Coincidentally, Fortune published an article a week before the CEO survey results came out about workers’ willingness to return to the office. They’ll do it…if their employers make it worth it (literally).

According to exclusive data from a report from video-conferencing devices company Owl Labs, first provided to Fortune, almost all (94%) of workers are willing to make an office return—but they’re underwhelmed by the current suite of perks companies are shelling out for. In a post-pandemic world, the ante has been upped, and they expect bosses to level up—by paying up—too.

The perks they’re after aren’t wellness rooms or ping-pong tables. What they really want is to save money. Nearly two in five (38%) hybrid workers told Owl Labs they’d be more likely to go to their office voluntarily if their companies shelled out for their commuting costs. That’s the most desired perk by a wide margin, and it’s no wonder why. “Working remotely is often a money saver because it reduces commuting costs to zero, while also making lunch, coffee, et cetera, much more affordable,” George Anders, LinkedIn’s senior editor at large, told Fortune earlier this year.

The article linked at the end with George’s quote: Commuting costs $2,000 and 39 hours more than it did before the pandemic. It explains why no one wants to return to office

They got their numbers from Clever Real Estate’s May 2022 listicle The Best and Worst Cities for Commuters in 2022 which says:

• The average worker commutes a total of 28 minutes one-way to work. In the average U.S. metro, workers spend an average of 239 hours every year commuting – amounting to 3% of their year in total!
• The average commuter in the U.S. spends $8,466 and about 19% of their annual income on their commute every year. As part of that overall cost, the average commuter spends $867 on fuel and $410 on vehicle maintenance each year as a result of commuting. Additionally, the average driver in America loses 32 hours to traffic annually.

Funny that Deloitte is ending its commuting subsidy now. They’re really trying to get those attrition numbers up aren’t they. Anyone else pulling back on the perks? Let us know.

The takeaway here is that if leaders want people back in the office, they better pay up. Or just keep hoping for a recession and people to get desperate.

The post A Majority of Leaders Are Down to Give Financial Rewards and Promotions to Those Who Return to Office appeared first on Going Concern.

Stuff had the story first:

Two people at KPMG are suspected to have been victims of drink-spiking at separate work drinks, with the executive chair saying whoever is responsible is a “grubby little coward”.

Stuff has obtained a leaked email from Matt Pritchard, Executive Chair of KPMG in New Zealand, who begins by saying “this email is not something I ever expected to have to write”.

“Distressingly, last Friday at our monthly Auckland Partners’ shout, one of our people was a victim of drink-spiking.”

Thankfully that victim made it home safely.

At last month’s shout there was another drink-spiking incident though the Stuff piece doesn’t get into the specifics. Said Pritchard in his email, “While the location of the incident was not certain, it was likely to have also been at our premises.” The firm installed a security guard in response to the first incident in August and hoped between that and three supervising partners, there wouldn’t be a problem the next time around. Unfortunately that wasn’t the case.

“We expected these measures, combined with the policies we have in place to ensure we’re responsible hosts, including ensuring one drink per person per bar visit – with no drink stacking, would be effective. Unfortunately, this wasn’t enough, and we are reviewing our approach to these events,” Pritchard’s email said.

“Each and every one of us needs to feel safe in our workplace.”

The firm is now going to add extra cameras to the space where these monthly events take place and may discontinue the event completely.

“It is shocking to us a member of the KPMG family would do something so despicable and cowardly to another member of our family and, while we are currently focused on our affected team members, we want to minimise the risk of this ever happening again,” Pritchard wrote.

The person or persons responsible have not been identified, Pritchard said, and there was now an internal investigation with the priority being the victims and “finding the grubby little cowards who has done this”.

It’s been reported to police and Pritchard urged anyone with photo or video from Friday’s event to submit it for review. “I hope they are found and prosecuted,” he said to Stuff. “I’m a parent of five young children, and we treat our workplace like a family, I’m very angry, shocked and distressed someone would behave this way to your work family. It’s unthinkable.”

Drink-spiking suspected at international accounting firm’s Auckland staff events [Stuff]

The post Who’s Putting Roofies in the Drinks at KPMG In-Office Get Togethers? appeared first on Going Concern.

Two people found guilty in a corruption scandal involving KPMG and the US audit regulator are set to have their convictions dropped, after prosecutors conceded they had misinterpreted the law.

David Middendorf, a former KPMG managing partner for audit quality, and Jeffrey Wada, who worked at the Public Company Accounting Oversight Board, were convicted of fraud over claims that Wada passed confidential information to KPMG to help the firm prepare for PCAOB audit inspections, in the hope of being given a job at the Big Four firm.

The Department of Justice conceded this week in a court filing that its reading of wire fraud statutes was incorrect, in light of subsequent legal judgments in unrelated cases. It said it would ask for the jury verdict to be set aside and the charges dismissed.

Another KPMG audit quality partner, David Britt, who was deported to Australia after pleading guilty to a similar charge, is now planning to ask the court to allow him to reverse his plea so he can return to the US, his lawyer told the Financial Times.

When we last checked in on David Middendorf in early 2020 he was suspended by the SEC due to his conviction in United States v. Middendorf, 18-CR-36. Let’s run through the indictment quickly while we’re here.

KPMG LLP (“KPMG”) is an accounting firm subject to the PCAOB’s GNF program. KPMG fared poorly in its 2013 and 2014 PCAOB inspections, so in 2015 the firm began making a concerted effort to improve its inspection performance. The Indictment alleges that in addition to KPMG’s various lawful efforts, a handful of KPMG and PCAOB employees orchestrated a scheme to give KPMG access to the PCAOB’s confidential list of audits selected for inspection. Defendants are alleged to have participated in that scheme.

There are six relevant players. Brian Sweet, Defendant Cynthia Holder, and Defendant Jeffrey Wada started out as employees of the PCAOB, assigned to the team tasked with inspecting KPMG. Defendants David Middendorf, Thomas Whittle, and David Britt were employees of KPMG and, in various capacities, were responsible for maintaining audit quality at KPMG. Both Sweet and Holder left the PCAOB and began employment with KPMG in April and August of 2015, respectively.

The Indictment alleges that shortly before Sweet’s last day of employment with the PCAOB in April 2015, he downloaded and copied various confidential PCAOB documents to a personal hard drive. Among these documents was a “planning spreadsheet” containing a list of KPMG audits that had been selected for inspection in 2015—most of which had not yet been officially noticed for inspection by the PCAOB. The Indictment alleges that in response to requests from Middendorf, Whittle, and Britt, Sweet shared this 2015 inspection list with Britt and Whittle, who then passed it on to Middendorf. The Indictment alleges that throughout 2015, Sweet continued to share confidential information, including risk factors used by the PCAOB in making inspection selections, with Defendants Middendorf, Whittle, and Britt.

It seems the conviction hinged on a determination that the Public Company Accounting Oversight Board’s confidential list of planned audit inspections constitutes intangible “property” for the purposes of wire fraud. Thanks to a recent Supreme Court decision in ‘Bridgegate’ (by recent we mean 2020), wire fraud is no longer the junk drawer of convictions.

WSJ:

At issue were the 2016 convictions of Bridget Kelly, a onetime aide to former Gov. Chris Christie, and William Baroni, a Christie appointee at the Port Authority of New York and New Jersey. They were found to have participated in a 2013 scheme to create traffic backups in Fort Lee, N.J., by limiting motorists’ access to the George Washington Bridge that crosses into New York—in retaliation against Fort Lee’s Democratic mayor, Mark Sokolich, for not supporting the re-election bid of Mr. Christie, a Republican.

Jurors found that Ms. Kelly and Mr. Baroni falsely claimed the lane closures were for a traffic study.

“Time for some traffic problems in Fort Lee,” Ms. Kelly said in an August 2013 email after the endorsement didn’t materialize.

The court, in a unanimous ruling by Justice Elena Kagan, said the defendants’ actions involved an abuse of power and political payback, but “not every corrupt act by state or local officials is a federal crime. Because the scheme here did not aim to obtain money or property, Baroni and Kelly could not have violated the federal-program fraud or wire fraud laws.”

David Britt’s lawyer told FT he will try to get the guilty plea reversed and expunged so Britt can return to the US to be reunited with his three adult children and wife who still live here.

The post Turns Out the Secret PCAOB Inspection List Isn’t Intangible Property for the Purposes of Wire Fraud After All appeared first on Going Concern.

At least 500 workers at KPMG in the Netherlands have cheated during the compulsory exams which accountants are required to take, the consultancy group has confirmed.

KPMG said it had imposed sanctions on an unknown number of employees, and “a handful” had been fired following an internal investigation into the claims that staff had swapped answers to the tests.

KPMG Nederland director Marc Hogeboom is also stepping down as boss of the accounting arm, but remains an auditor and partner at KPMG. He said in a statement he “should have been more alert to signals” that pointed towards workers sharing their answers.

Per DutchNews reporting, it was a lone employee who reported answer sharing to senior management.

I want to call special attention to this reaction from Mike Shaub, Auditing and Accounting Ethics clinical professor at Texas A&M and the guy we follow on Twitter for the hottest in ethics hot takes.

The moral cowardice in public accounting worldwide just stuns me sometimes. It took ONE person informing senior mgmt to bring this out, same as in the US. And if everyone is cheating on CPE, do these folks really know anything? https://t.co/StlYD9p3cm

— Mike Shaub (@mikeshaub) July 17, 2023

Netherlands Authority for the Financial Markets Director Hanzo van Beusekom (what an incredible name) said he is shocked by the scale of this exam fraud. Technically he said “Ik ben geschokt” but no one around here speaks Dutch. The AFM is their version of the SEC.

Said van Beusekom in a statement (translation): “I am shocked by the scale of this exam fraud and by the fact that this has happened at all levels of the organisation. Unfortunately, this is not a unique event. Internationally, several cases of exam fraud within the accountancy sector are known. This affects the integrity and professional competence of accountants.

Exam fraud is all about behavior and culture. We will take great care to ensure that this necessary change in behavior will be implemented as soon as possible. We strongly call on employees within the sector to proactively report abuses. The sector is close to my heart. She must investigate exam fraud properly and quickly and address the underlying problems, after which we can hopefully continue on the path of restoring trust.”

The rest of the statement for your reading pleasure:

The AFM is shocked about the exam fraud that took place at KPMG. Director Hanzo van Beusekom wants KPMG to implement the necessary change in behaviour as soon as possible. The AFM will closely monitor this.

As a supervisor of the Dutch accountancy sector, exam fraud has the explicit attention of the AFM. There is no room for doubt about the integrity and professional competence of accountants. Accountancy firms play an important role in society. For example, everyone must be able to rely on the opinion of an auditor in the audit report accompanying annual accounts. Investors, analysts, suppliers and other users of the financial statements base important (economic) decisions on it.

It is up to the audit firms to prevent exam fraud, to detect and tackle any abuses. The AFM has urged the PIE audit firms to pay extra attention to this. We are working together with the American regulator PCAOB.

In September 2021, the PCAOB fined KPMG Australia $450,000 for exam cheating; 12 of the 422 KPMGers who took part in systemic exam cheating went through the Chartered Accountants ANZ individual disciplinary process in their home country, the other 410 did not meet the threshold for further action under the Code of Ethics. CA ANZ bylaws prevent the supervisory body from sharing details on the individuals involved and any sanctions, though they did say eight of the 12 were disciplined.

Closer to home, KPMG was hit with a huge SEC fine in 2019 not just for exam cheating but cheating of the highest order. In that case, audit partners gave exam answers to other partners, some of these also sent answers to and solicited answers from their subordinates. On top of that, for a period of time up to November 2015, certain audit professionals made unauthorized changes to KPMG’s server instructions that allowed them to manually select the scores necessary to pass the tests, which they often lowered to the point of passing exams with less than 25 percent of the questions answered correctly. The $50 million fine was not only for exam cheating but for the firm altering past audit work after receiving stolen information about PCAOB inspections. SEC order on that here.

PwC and EY have also gotten in trouble for cheating in recent years.

Major exam fraud at KPMG Nederland, several employees sacked [DutchNews]

The post Dutch KPMG Cheaters Might Get a Call From the PCAOB appeared first on Going Concern.

Wrote The Telegraph on Sunday:

KPMG is giving extra training to its graduate recruits and hauling them into the office more regularly amid concerns that lockdown damaged Gen Z’s development and confidence.

The Big Four accounting and consulting firm has overhauled its graduate training programme after noticing that its “lockdown generation” recruits were finding it difficult to adapt to working life, sources told The Telegraph.

It comes after bosses at the firm observed that some of its new junior staff were lacking in confidence when it came to basic skills like working in teams and project management.

The firm, which is one of Britain’s biggest graduate recruiters, will now provide classes on “soft skills”, such as how to give presentations in person and how to work in a team.

The firm hired around a thousand new graduates in the UK last year and is expecting to increase that to about 1,500 this year.

KPMG has been doing new hire orientation completely remote since the pandemic, they’re now pivoting to three days in the office and two at home. The idea being that shy young recruits need to be socialized, much like how one would tame feral kittens by forcing them to be held and pet. Hopefully there’s less hissing involved.

“There’s no doubt that the pandemic has impacted recent graduates and apprentices, who are now joining the workforce,” said Jon Holt, KPMG UK CEO. “They have missed out on a lot. If I think back to my own time at the University of Nottingham it’s hard to imagine how my experiences – including the friendships I formed – might have been affected by lockdowns.”

“I admire their resilience and it’s important that as a business we support them as they begin their training and careers with us,” he added. “This includes offering additional courses to help them build soft skills, as well as training them in the big issues facing our clients such as ESG and technology.”

Bro, these kids are afraid of their own shadow, who gives a flying flip about ESG?

Related:

Big 4 Firms Are Noticing a Sudden Skills Gap in New Hires

The post ‘Lockdown-Damaged’ New Hires Struggle to Socialize at KPMG UK appeared first on Going Concern.

In July 2019, ESL announced that a review had been conducted into its prior year financial statements. Following this review, ESL disclosed significant prior year accounting adjustments to the 2017 financial year. Said the FRC, KPMG and engagement partner Nicola Quayle breached Relevant Requirements in some of the areas which were subject to prior year adjustments.

The audit went bad around the following:

• property transactions entered into by ESL, and the disclosure in the financial statements regarding those transactions. These transactions had a
• significant effect on ESL’s financial performance, and without the profit generated from them, ESL would have been in a loss-making position;
• dilapidations; and
• accounting for a subsidiary company.

Regarding the property transactions, auditors failed to obtain sufficient appropriate evidence of services provided by ESL in those transactions to allow revenue to be ascribed to the provision of those services and recognized up-front in the financial year. On top of that, the disclosures in the financial statements relating to the property transactions did not adequately explain the impact of those transactions on ESL’s financial performance.

The failings were serious but not pervasive, said the FRC.

And here’s the pound of flesh:

Against KPMG:

• A financial sanction of £1.35 million, discounted for admissions and early disposal to £877,500. KPMG’s poor disciplinary record was noted as an aggravating factor;
• Non-financial sanctions, comprising:
  • a Severe Reprimand;
  • a declaration that the 2017 audit report did not satisfy the Relevant Requirements; and
  • an order requiring KPMG to take specified actions to prevent the re-occurrence of the contravention.

Against Ms Quayle:

• A financial sanction of £70,000 discounted for admissions and early disposal to £45,500. Notable aggravating factors were Ms Quayle’s seniority at the point of signing the audit report and past disciplinary record;
• Non-financial sanctions, comprising:
  • a Severe Reprimand; and
  • a declaration that the 2017 audit report did not satisfy the Relevant Requirements.

Engagement partner Nicola Quayle quit performing statutory audits in 2020 and no longer holds a practicing certificate. She has pledged not to carry out statutory audits or sign their reports going forward.

“There were some serious failings admitted in this case; although they were not pervasive throughout the audit,” said FRC Deputy Executive Counsel Claudia Mortimore. “The case highlights the importance of, firstly, the auditor’s work in ensuring that disclosures in financial statements enable users to understand the impact of particular transactions on the entity’s financial performance; and secondly, ensuring that advice received in technical consultations is effectively implemented.”

PwC’s reprimand for their 2018 audit of ESL was a bit less harsh. Both the firm and the engagement partner received sanctions, neither got mentions of poor disciplinary records.

Against PwC:

• A financial sanction of £3.5 million adjusted for the mitigating factor of exceptional cooperation and further discounted for admissions and early disposal to £1,990,625.
• Non-financial sanctions, comprising:
  • a Severe Reprimand;
  • a declaration that the 2018 audit report did not satisfy the Relevant Requirements; and
  • an order requiring PwC to take specified actions to prevent the occurrence of the contravention.

Against Mr Storer:

• A financial sanction of £90,000 adjusted for the mitigating factor of exceptional cooperation and further discounted for admissions and early disposal to £51,187.50.
• Non-financial sanctions, comprising:
  • a Severe Reprimand; and
  • a declaration that the 2018 audit report did not satisfy the Relevant Requirements.

There were numerous serious failures in relation to PwC’s audit work on ESL’s property transactions, including a failure to identify revenue recognition on those transactions as a significant risk of material misstatement; failing to carry out a formal consultation on the technical aspects of accounting for these transactions; a lack of challenge of management’s selection of accounting policy; and a lack of professional judgement in their work on the transactions. Furthermore, the disclosures in the financial statements failed to adequately explain the impact of the property transactions on ESL’s financial performance.

PwC and Storer assisted in the investigation by making comprehensive early admissions (including admissions relating to matters which were not in the communicated scope of the investigation) for which the FRC gave a discount to the financial sanction of 12.5% (in addition to the 35% reduction for early settlement) to reflect what the FRC describes as exceptional cooperation as a mitigating factor.

ESL almost imploded in December 2019 until saved by an investment of £55 million from shareholder and financier DBay Advisers. A couple months before getting rescued by DBay, ESL’s terrible revenue recognition led to a £2 million accounting error, thus leading the FRC to open inquiries into its two most recent auditors.

Sanctions against KPMG LLP and former audit partner [FRC]
Sanctions against PricewaterhouseCoopers LLP and audit partner [FRC]

The post KPMG Got Extra Roasted By the FRC Thanks to the Firm’s “Poor Disciplinary Record” appeared first on Going Concern.

Update 8.18.23: reports of layoffs in advisory (and memes about them) began trickling out on social media this week. We confirmed with KPMG that these layoffs are the last batch of people let go as part of the 5% reduction in force reported here in June and referenced in KPMG Chair and CEO Paul Knopp’s email to staff at that time included below (“Those impacted in Advisory and the other process groups will be notified later this summer.”) TL;DR People at KPMG did get laid off this week, these people are included in the 5% RIF announced in June of this year.

Rumors have been buzzing for a few weeks now that KPMG would be making some cuts, the most notable of these buzzes an extra buzzy post on Reddit suggesting an incoming RIF. This morning (Monday), all-hands calls started appearing in people’s calendars and, well, you know what happens after that.

For a few weeks now we’ve been hearing from various tipsters that the firm has been encouraging voluntarily resignations, here’s one tip we got on that earlier this month:

KPMG has been lopping off more and more heads this year, but with the current batch, they have far limited the incentives. Seasoned employees are only being offered a maximum of 12 weeks severance. Just a year ago, some directors and associate directors were getting many months of compensation.

KPMG is frantically trying to convince people in all service lines, and in many back-office functions, to take a quick buy-out before June 30. Almost nobody is taking the bait, due to the dismal terms of these agreements for all but the most senior people. so, expect a bloodbath on July 1st.

*checks watch*

We can now tell you that KPMG is reducing its workforce by approximately 5%. Staff found out at noon today via all-hands calls for each service line.

KPMG was the first US Big 4 firm to announce layoffs earlier this year, 700 or so people in advisory. Since then, Deloitte let go of about 1,200 people and EY 3,000, though EY’s was related not only to market conditions but that whole Everest thing costing the firm hundreds of millions of dollars.

This is a developing story, if more details come in we’ll update the story [Ed. note: we have below]. Anyone with more information and/or gory details is welcome to reach out by email or through our tipline at 202-505-8885.

Statement from the firm coming soon.

Update: A KPMG spokesperson issued this statement:

“We remain confident in our growth prospects as we continue to compete and win in the marketplace. Economic headwinds, coupled with historically low attrition, led us to this decision. We do not take this decision lightly. However, we believe it is in the best long-term interest of our firm and will position us for continued success into the future.

“We are focused on supporting our impacted colleagues with severance, access to healthcare and well-being benefits, and career transition services.

“We will continue to strategically invest, focus on quality, deliver excellent services and solutions, and innovate for the future.”

Update #2: Here is the email to KPMGers from Chair and CEO Paul Knopp today. We’re bumping it up above the service line email that followed (Audit’s is below) as this email was sent out first.

Today, I’m sharing difficult news about a decision we have made to reduce our U.S. workforce by approximately 5 percent. I do not take this decision lightly. We have reached this conclusion after already taking other measures and following considerable deliberation and deep reflection on our firm’s Values.

I regret that the workforce reduction is necessary and want to provide you with the context for it.

Over the past few years, we’ve achieved strong growth, and we set an ambitious FY23 plan to capitalize on the demand for our services and solutions.

While our pipeline of opportunities is strong and we continue to win in the marketplace, we are experiencing economic headwinds that are not unique to our business or firm. Additionally, we planned for a level of attrition that has not materialized. These economic headwinds, coupled with historically low attrition, translate into a significant mismatch between the size of our workforce and the measure of resources that will be needed to deliver services in the coming year. The workforce reduction is designed to address that mismatch.

I do not underestimate the impact this decision has on the lives of our colleagues and friends. We aim to impact as few people as possible as we align the appropriate complement of resources and skills with our business priorities to continue to compete, win and grow in the market. As difficult as this decision is, I believe it is in the best long-term interest of our firm and will position us for continued success into the future.

I’ve asked each Vice Chair to host an all-hands meeting today to share more about the business-specific dynamics and timing of notifications in their groups. I want you to know that those impacted in Audit, Tax and Digital Nexus will be notified today. Those impacted in Advisory and the other process groups will be notified later this summer.

To our colleagues who are impacted: Thank you for everything you have done to support our clients, communities and firm. We are truly grateful and wish you the best. We will support you with empathy and resources to help in this transition.

Our purpose and Values guide our actions during these difficult times. We will treat our departing colleagues with the compassion and respect they deserve as alumni of the firm. They will receive severance, access to extended health and well-being benefits, and career transition services.

I am confident in our business and the opportunities that are in front of us. As we move forward, we will continue to invest in the future and, as always, lead with our Values and strong culture.

Thank you for everything you do.

Paul

Update #2 #3: GC was provided a copy of the email that went out to everyone in audit from their vice chair Scott Flynn today. It is transcribed in its entirety below (thanks, tipster):

As I shared on our Audit All-Hands, and as Paul Knopp shared earlier in his firmwide message, we have made the decision to reduce our U.S. workforce. We have reached the conclusion after considerable deliberation, having already taken other measures, and with deep reflection on our firm’s Values.

Over the past few years, we’ve achieved strong growth and we set an ambitious FY23 plan to capitalize on the demand for our services and solution. While our pipeline of opportunities is strong, and we continue to win in the marketplace, we are experiencing economic headwinds, coupled with historically low attrition, which translated into a significant mismatch between the size of our workforce and the measure of resources that will be needed to deliver services in the coming year.

Those impacted in Audit, Tax and Digital Nexus will be notified today, and those impacted in Advisory, functional BPG — including Audit BPG professionals — and the other process groups will be notified later this summer.

All impacted individuals in Audit will receive a meeting invitation and email with additional information from Talent and Culture within the next hour.

Our purpose and values guide our actions during these difficult times. We will treat our departing colleagues with compassion and respect. They will receive severance, access to extended health and well-being benefits and career transition services.

I am confident in our business and the opportunities that are in front of us. My ask of you — our partners, professionals, colleagues, and friends — is that you are sensitive to actions taking place in our group and across the firm and that you support each other during this difficult process.

The post Layoff Watch ’23: The KPMG Workforce is Shrinking By About 5% (UPDATED) appeared first on Going Concern.

KPMG boss Andrew Yates publicly rebuked PwC for the tax scandal that is impacting the entire multibillion-dollar financial consulting industry while apologising for his firm’s own failings, which include 1000 staff cheating on an exam about acting with integrity in their work.

Yates told a Senate committee on Wednesday that it was essential that government can have absolute trust in the private sector companies it works with.

“That’s why the PwC issue is so disturbing. Based on the findings of the Tax Practitioners Board, and the more recent revelations from Senate estimates, the conduct at PwC was clearly unethical and unacceptable,” he said.

He added that had KPMG been in the same position, the firm would have released the names of any staff involved. “There would have been strong action taken by our chairman and board, and subject to any legalities that I’m unaware of, the names would have been shared,” he said.

PwC tax scandal disturbing and unacceptable, says KPMG boss [Sydney Morning Herald]

The post Finally Having Something to Roast Them About, KPMG CEO Takes This Opportunity to Talk Sh*t About PwC appeared first on Going Concern.

KPMG has slashed the bonus pool of its UK workforce and reined in commission for salespeople as its profits falter amid a slowdown in the dealmaking environment this year, City A.M. has learned.

The big four firm told staff in its mid-year update last week that some bonuses would be slashed by as much as half while sales staff were told their commission could be held back until the end of the year.

In a note to staff seen by City A.M., bosses told workers that while the company had seen “double-digit growth in many areas of the firm” it had “not been as high as we’d planned”.

“This means that our profit, and our bonus pool as a result, will be reduced on our original expectations,” bosses said.

Staff in the firm’s UK-wide business development team were told yesterday that the company would hold back 40 per cent of total discretionary commission until the year end, but it could not guarantee they would be paid the full amount, a source on the call told City A.M.

Staff were already told in March there would not be mid-year promotions in 2023, in audit anyway.

While we haven’t seen any communications here in the US yet, a tipster did advise us that KPMG bonuses on this side of the pond may be light as well. “No bonus to some and bonuses will be less for others,” they said. Those who brought in business will for sure see a bonus, they added. That’s as yet unconfirmed but our tipster is solid, reach out if you have more info.

Last year, KPMG US was quite generous with mid-year raises on April 1. The market has shifted dramatically since then as firms across the board are seeing a significant contraction in consulting fees and lower-than-expected attrition due in part to a cooling off of last year’s scorching hot accounting job market. Will be interesting to see how things shake out in October, here’s some Reddit gossip about that.

2022’s generosity was also spread to our friends across the pond when KPMG UK handed out £2,000 ($2500) or £4,000 raises to 15,800 staff, costing the firm £51.7 million. That’s on top of a £100 million bonus pool. Wrote CEO Jon Holt (who took home £2.7 million in 2022) on LinkedIn 13 months ago:

Because of our people’s efforts, and the work they do every day for our clients and communities, our business is performing strongly and we’re making great progress on our strategy. And we want to recognise that contribution and address some of the immediate pressures on them.

So I was really proud to announce to our colleagues yesterday that everyone in our firm will each receive an overnight flat salary increase of between £2,000 and £4,000. It’s progressive and we’ve deliberately designed this so that our more junior colleagues feel the greatest benefit now. This is separate to our annual pay review later in the year and doesn’t include our partners or associate partners.

This came months before the firm announced revenue of £2.72 billion ($3.4 billion) for the year ended September 30, 2022, a 12 percent increase over the year prior. Deal advisory saw the biggest jump, increasing 24 percent to £443 million ($555 million). Audit, Tax and Legal, and Consulting also saw double digit growth of 10 percent, 13 percent, and 22 percent, respectively. When revenue numbers came out in January, it was expected that consulting would continue to drive growth, meanwhile KPMG UK told audit clients they would be raising fees. “The sector is facing a number of upward cost drivers, from new audit and accounting standards to inflationary pressures,” said their CEO at the time. Audit fees at Big 4 firms in the UK have been on the rise for years, increasing 22 percent since 2018. Clients naturally dislike this.

But then the great slowdown hit and KPMG US became the first of the Big 4 to lay off advisory staff. Since then we’ve seen EY, Deloitte, BDO, and Grant Thornton shed about 5,300 staff all told (tbf 3,000 of those belong to EY). And that isn’t counting silent layoffs and performance-based separations. As of February, KPMG UK spokesfolks said there is no plan for layoffs.

And the belts continue to tighten across the profession.

The post Bonus Season Is Not Looking Good at the King’s KPMG appeared first on Going Concern.

Along with KPMG CEO Paul Knopp and KPMG Global Chairman and CEO Bill Thomas, the suit names Global Head of Audit Larry Bradley, Deputy Chair and Chief Operating Officer Laura Newinski, Global Head of Clients and Markets Regina Mayor, and the long-exited former Global Chairman John B. Veihmeyer who hasn’t been mentioned on this website in at least four years.

The suit also names Brian Sweet, the former PCAOB director and KPMG partner who made up one fifth of the five ex-KPMG executives indicted in January 2018 (“The KPMG 5”) for their roles in the infamous scheme to get steal confidential PCAOB information with the intent of using that info to improve KPMG’s inspection results. With him on the shit list is the rest of KPMG’s PCAOB cheating scandal team: Scott Marcello, David Middendorf, Thomas Whittle, David Britt, former PCAOB inspections leader and also former KPMG executive director Cynthia Holder along with former PCAOB inspector and fellow cheating conspirator Jeffrey Wada.

This is Stevenson’s gripe from Bloomberg Law:

KPMG knew that Credit Suisse lacked sufficient internal controls for more than 15 years, while certifying its financial statements as accurate, Stevenson alleges. It did so “because the New York KPMG operation wanted the huge fees from Credit Suisse, upon which KPMG had become dependent, and which were very important to the individual top partners in New York,” he says.

“Credit Suisse insiders, with the help and acquiescence of the KPMG Defendants, plundered Credit Suisse, and personally profited from their misconduct to the tune of many billions of dollars, including secret illegal bonus pools,” said Stevenson’s complaint. He also refers to the PCAOB cheating scandal as Credit Suisse was among the clients the KPMG conspirators found out were up for PCAOB inspection (along with Citigroup, Deutsche Bank, Banc of California, BBVA, Ambac, Phoenix Life, and NewStar Financial, plus some other non-financials). “Upon learning that the Credit Suisse audits were on the list, KPMG destroyed and altered the workpapers in New York to deceive regulators,” he said. He goes on to say that had KPMG audit leaders not conspired to lift PCAOB information they were not entitled to with the goal of improving inspection results “the discovery would have disrupted the ongoing conspiracy and ameliorated the damage to be suffered by the Credit Suisse shareholders,” he says.

KPMG has not audited Credit Suisse since PwC took their place in 2020. PwC’s audit report prior to the bank’s failure in March included an adverse opinion and management identified material weaknesses in internal controls as of December 31, 2022 and December 31, 2021 per the bank’s 2022 annual report.

We’ll keep you posted on any developments.

KPMG, Credit Suisse Leaders Sued for ‘Reckless’ Bank Management [Bloomberg Law]

The post KPMG Gets Sued, Accused of Allowing Pirate-Like Activity at Credit Suisse appeared first on Going Concern.

Deloitte’s decision may have something to do with this:

Violent protests over long work weeks tonight at Atlanta’s Deloitte office
by u/titty_brain in Accounting

Guys, don’t make this lore. There were protests at their building, it had nothing to do with hours.

More likely, however, is that Deloitte realized they don’t need a quarter of million square feet of office space in the heart of downtown Atlanta in a post-pandemic world. It’s rumored Deloitte will announce a soft return to office the Tuesday after Memorial Day (May 30) but even then, there’s no way they’re going to require 100% of their people in the office 100% of the time (a rumor-spreader says it will be 75% in office for tax, 100% in office for those below manager without engagement partner approval to work from home).

Atlanta Business Chronicle has once again broke Big 4 office real estate news and reported Friday that with two years left on its lease at Truist Plaza on 303 Peachtree Street, KPMG is looking for new digs, too:

KPMG hired Cushman & Wakefield to represent the firm in its search for space, according to multiple sources with knowledge of the market. John Winter, Kirk Diamond, April Parrish and Erin Smith have the assignment.

They add:

KPMG follows a hybrid work model, and has begun to shed its real estate in other markets to better adjust to its space needs. In New York, the firm is in the process of shrinking its office space by 40%. KPMG is downsizing in Seattle and Minneapolis, too. This trend — companies downsizing leases, often in newer buildings with better amenities — is occurring all across the U.S.

Here’s what they’re working with now:

You should know that this isn’t the first time Atlanta Business Chronicle reported KPMG would be leaving its Atlanta home when the firm had two years left on its lease. Back in 2008 they said KPMG was looking to downsize its downtown office — the building used to be called SunTrust Plaza before SunTrust merged with BB&T to create the dumbly named Truist — and obviously nothing came of it.

KPMG has about 182,000 square feet of office space spread out among SunTrust Tower and the Garden Offices, but it’s looking for a new lease and less space, according to commercial real estate brokers.

Its lease at SunTrust Plaza expires in 2010.

Several of the large brokerage houses recently made pitches to KPMG to represent the firm in its search for about 150,000 square feet, which will most likely focus on downtown and could include Cousins Properties Inc.’s One Ninety One tower and Hal Barry’s Ivan Allen Plaza.

Guess we’ll just have to see what happens in 2025. Let’s just hope they don’t end up in a hideous office park.

The post KPMG Might Be the Next Big 4 Firm Ditching Its Downtown Atlanta Office appeared first on Going Concern.

Sky News:

The fiasco is understood to have arisen as a result of HM Revenue & Customs being provided with incorrect documentation by a third party following the simplification of the legal structure of KPMG companies.

Sources said UK employees’ contracts had been transferred from KPMG UK Ltd to KPMG LLP on April 1 – a process which did not involve any changes to their terms and conditions.

However, a clerical error is understood to have resulted in the change being communicated to the tax authorities with effect from the 2023-24 tax year.

A source close to the firm insisted that the issue had not resulted in any incorrect payments being made to staff.

The article goes on to describe a “payroll processing problem” on ADP’s end that caused KPMG staff paychecks to arrive in bank accounts a few hours later than scheduled last week. You may remember ADP at the center of a payroll issue at EY last summer that caused numerous overdrafts when salaries were mistakenly clawed back from tens of thousands of US employee bank accounts. The issue has been resolved on ADP’s end, said KPMG.

A KPMG UK spokesperson said: “We are very sorry to our colleagues who were affected by this issue from our provider. We will ensure that none of our people will be left out of pocket as a result.”

The post The King’s KPMG Had a Little Tax and Payroll Problem appeared first on Going Concern.

On Wednesday, the FRC announced sanctions against KPMG and lead engagement partner Anthony Sykes in relation to the audit The Works for the financial year ended April 26, 2020.

What did they do? Inventory got ’em. KPMG and Sykes admitted to breaches (the word FRC uses for “fuck ups”) relating to the audit of inventory existence including the requirements to plan and perform an audit with professional skepticism, to prepare sufficient audit documentation and to design and perform audit procedures in order to obtain sufficient appropriate audit evidence.

KPMG’s approach to the audit of inventory existence was flawed by a succession of failings, such as, in particular:

• Failure to respond appropriately to variances in stock counts identified during controls testing, including by not investigating management’s explanations for those variances and by omitting the test results from the audit file such that the audit file documentation provided a false degree of assurance;

• The adoption of a substantive testing approach (once the controls testing had failed), without adequate consideration or consultation, based on a subset of the same stock count results, from which the stock counts with variances had been removed, as part of a selection process described on the audit file as “random”; and

• Failure to perform appropriate roll-forward and roll-back procedures.

The FRC gives naughty auditors a discount on fines if they cooperate and admit fault so both parties got a bit of a break. Of the £1,750,000 financial sanction, KPMG will pay £1,023,750 (approx. $1.3 million USD) and lead engagement partner Sykes will pay £43,875 of the original £75,000 sanction to to reflect his cooperation and admissions.

Both Sykes and the firm are required to provide a signed declaration that the audit report did not satisfy relevant requirements and the firm is expected to take actions with the intent of preventing this from happening again.

“The admitted failings, which critically undermined KPMG’s approach to the audit of inventory at a retail entity, were rudimentary and should not have occurred,” said Claudia Mortimore, Deputy Executive Counsel at the FRC. “The financial and non-financial sanctions, which include measures intended to enhance KPMG’s second line of defense function, are aimed at preventing a repetition of such failings in the future.”

The post The King’s KPMG Gets Fined for Rookie Mistakes appeared first on Going Concern.

Similar to previous suits, a complaint filed Friday in the federal court in San Francisco names Silicon Valley Bank Chief Executive Officer Greg Becker and other bank directors and officers as defendants. The complaint appears to be the first to target the bank’s auditors and underwriters.

Collectively, the defendants “misrepresented the strength of the company’s balance sheet, liquidity, and position in the market,” according to the lawsuit. The executives, auditor and underwriters “understated and concealed the magnitude of the risks” facing the bank, which undermined the value of its own securities portfolio, it said.

As you may recall, KPMG issued an unqualified audit opinion two weeks before SVB went down in flames. There was a really good explainer on what exactly happened at SVB written by a CPA and posted on Medium.com shortly after SVB collapsed but looks like OP deleted their account and took the explainer with them. No worries though, here’s an excerpt:

Just like in 2008, there were events which preceded the crisis and events which preceded the failure of SVB. Most of these events were the result of the Covid-19 Pandemic and included but are not limited to:

1. Historically low levels of interest rates (a result of 2008)
2. A rapid increase in the money supply to stabilize markets and the economy during and after the pandemic lockdowns
3. Historically high levels of savings and high asset valuation
4. Inflation caused by both supply and demand fallout from the pandemic
5. The invasion of Ukraine by Russia
6. The rise in interest rates by the Federal Reserve (“The Fed”) in order to combat higher levels of inflation
7. The failure and fallout of several large cryptocurrency companies due to both decreasing prices of cryptocurrencies and alleged fraud of FTX

As interest rates rise prices and thus value of securities decline. So like many other banks SVB was holding these longer dates fixed income assets, while the FED was increasing rates over the past year. The price and ultimately the value of these assets, which are Available-For-Sale (“AFS”), declined causing what is known an unrealized losses. AFS securities are subject to fair value or mark to market (“MTM”). This is in contrast to Held-To-Maturity (“HTM”) securities which are marked at amortized cost. In the case of SVB, the losses are unrealized until the securities are sold and become realized.

Just like other banks SVB had these fixed income assets incur unrealized losses but what SVB failed to do was manage their risk and portfolio duration (duration can be thought of as time). As a publicly traded company, SVB would be required to provide a 10-Q, which is an unaudited and condensed version of a 10-K, which are audited financial statements. Over the last year or so, you could read SVB’s, 10-Qs which would provide insight on a quarterly basis through unaudited financial statements and disclosures. SVB kept holding these assets with unrealized losses, but finally their clients realized that the bank had a liquidity issue, which meant the bank had to sell these fixed income assets to meet their customers withdrawal requests to get their deposits out for payroll, day to day expenses, etc. However, in the wake of FTX, which was first a liquidity crisis and ultimately turned out to be an alleged fraud, with assets which could not make their customers whole, customers of SVB began to worry and that worry turned into panic.

Speaking of panic, banks in the United States are holding onto about $620 billion of unrealized losses. Good read about that with some pretty graphics here.

On March 8, two days before the bank went under, SVB sold a bond portfolio consisting mostly of U.S. Treasuries with a book value of $23.97 billion to Goldman Sachs, leading to a $1.8 billion loss for SVB. And you know what happened after that.

“Even though SVB’s deposits began to decline in 2022, falling $25 billion during the final nine months of 2022 and reducing SVB’s liquidity, KPMG did not identify risks associated with SVB’s declining deposits or SVB’s ability to hold debt securities to maturity in its report,” reads the lawsuit. It adds that KPMG “was silent” on whether there is substantial doubt about the entity’s ability to continue as a going concern. KPMG did communicate a critical audit issue — allowance for credit losses for loans and unfunded loan commitments for certain portfolio segments evaluated on a collective basis — otherwise the audit report is pretty standard. 10-K can be found here, you’re looking for Part II, Item 8 “Report of Independent Registered Public Accounting Firm”

KPMG stands behind the SVB audit and told us last month that “any unanticipated events or actions taken by management after the date of an opinion could not be contemplated as part of the audit.”

The post KPMG Gets Sued Because Their Longtime Client Went Down in Flames appeared first on Going Concern.

Before that, AFR dug deeper into misconduct complaints at the firm from 2014 and 2019 and revealed 27 bullying complaints levied against senior staff and partners (sexual harassment complaints were more frequent in sub-manager roles).

For those doing the math at home, bullying made up approximately 44.6% of the 92 total misconduct complaints. The rate of complaints equates to roughly one per 500 staff per year, said AFR.

There was also the “boys’ night out” incident in 2015 that involved guys in the Melbourne team’s private enterprise division expensing strippers to the firm and trying to get junior staff and new hires so wasted on pub crawls that they’d puke their brains out. Invitations were sent only to male employees and events happened off campus after work hours. At the time “boys’ night out” was first reported on in 2021, CEO Gary Wingrove said “the conduct was totally unaligned with our values. The activity was covertly organised, and in no way sanctioned by KPMG.” Naturally, some of the guys involved were exited from the firm.

Then there’s this complaint as described by AFR:

In one 2016 complaint recorded in the documents, a junior accountant at KPMG claimed she was verbally abused, isolated and intimidated in its Sydney office to the extent that she was unable to do her job on client work for Suncorp properly.

The accountant said she was then “blamed for her performance fall[ing] short of expectation” in performance review meetings, despite the workplace bullying going unaddressed by KPMG.

She also claimed she was told by a senior member of the human resources team not to take sick leave to treat an injury she acquired at work because of “workload pressure”.

The accountant left the firm while the two alleged perpetrators were promoted to manager.

But wait, there’s more!

Keeping in mind that it’s a publication that makes Going Concern look like The New York Times, Daily Mail Australia has shared the story of a woman in her 30s working as a manager at KPMG Australia who says she was bullied by colleagues at the Sydney office just months after she was brought on in August 2022. She was isolated from work projects and colleagues made belittling comments about her looks, she told DM.

Per DM, she filed a complaint with KPMG in February and was told the firm would look into it. At the time, she already planned to take two weeks leave (note: she worked in IT, they have the luxury of being able to do that in February) and was told KPMG would investigate while she was gone. When she returned from break on March 7, she says, the firm told her she’d been made redundant (American translation = laid off, usually due to workforce reduction) and was expected to leave the next day. KPMG told her that her position had been eliminated. As for the bullying complaint, she says the firm told her they interviewed employees and found nothing to substantiate her bullying complaints.

“I had a panic attack. I was trembling, my mind went blank,” she told Daily Mail Australia. “It was the first day I arrived back, I was expecting justice, support. I was so astonished. I felt suicidal.”

KPMG did lay some people off in February, about 200 in consulting. At the time, managing partner of people and inclusion Dorothy Hisgrove said the firm was “fine-tuning at the margins” after a year of “strong headcount growth.” Meaning they may have overshot their hiring target.

KPMG policy allows for redundant staff to apply for a different position, so she did. The afternoon she was let go, she submitted her resume to HR for another role; three days later, the firm told her her skillset was unsuitable. This surprised her as the firm had just sent out an email saying her specific skillset was in demand (DM doesn’t elaborate on what that is). Her employment was ultimately terminated on March 13.

Per her contract, if she got let go KPMG was supposed to give her four weeks notice or pay her in lieu if given less than four weeks notice. They offered her $11,834.32 in lieu of notice and a $13,076 severance package if she signed a redunancy contract.

See, in Australia they have this thing called the Fair Work Commission. And the Fair Work Commission would not get involved and investigate if she signed that contract. A quick explanation courtesy the FWC:

What the FWC does

• help employees and employers bargain in good faith and to make, vary or terminate enterprise agreements
• deal with applications relating to ending employment including unfair dismissal, unlawful termination or general protections
• deal with applications for an order to stop bullying at work
• deal with applications for an order to stop sexual harassment at work
• make orders about industrial action, including strikes, work bans and lock outs
• provide mediation, conciliation and in some cases hold public tribunal hearings to resolve various individual and collective workplace disputes
• make workplace determinations, hear and decide on equal remuneration claims, and deal with applications about transfer of business, stand down,
• general protections and right of entry disputes
• play a role in regulating unions and employer groups.

She told DM she is planning to take legal action and has reported her experience to Fair Work. We’ll keep an eye out for any developments.

A KPMG spokeperson told DM: “Like many other businesses, uncertain market conditions mean that we are looking at our costs right across the firm. All staff whose roles were impacted by redundancy were given access to our EAP [Employee Assistance Program] and outplacement support.”

The post What in the Bullying Hell is Happening at KPMG Australia? appeared first on Going Concern.

(Auditors and people who scored a 71 or above on AUD may ignore this next part, you know this already) An audit isn’t the financial equivalent of a doctor running every blood test available and feeling around in your butthole with a gloved finger to figure out everything wrong with you. It’s more like a trip to your general practitioner, checking vitals, getting a routine complete blood count and basic metabolic panel, giving the patient a thorough look over, and determining that the patient is not in immediate medical danger. (Anyone with a better analogy that doesn’t involve rooting around in butts is welcome to message the editor, thank you) Auditors don’t provide absolute assurance but reasonable; stated another way: audits are not perfect, they are good enough. This of course opens the floor for a discussion about why even bother with audits then, a topic best left to people who know better than we do (Francine McKenna and Jim Peterson are two such people I can think of off the top of my head).

Back to the auditors. KPMG Chair and CEO Paul Knopp talked about his firm’s work on the failed banks at an event at the NYU Stern Center for Sustainable Business on Tuesday and made it clear that the firm stands behind their opinions, per an article in Financial Times yesterday. “As we take into account everything we know today . . . we stand behind the reports we issued and we think we followed all professional standards,” he said.

“You have a responsibility until the day you issue the audit report to consider all facts that you know, so we absolutely did do that. But what you can’t know with certainty is what might happen after that audit report is issued.”

“There were actions taken in the month of March that set off another set of reactions that led to those two institutions being closed,” he said.

12 days after KPMG said it is their opinion that the consolidated financial statements present fairly, in all material respects, the financial position of the Company in conformity with U.S. generally accepted accounting principles, SVB parent company SVB Financial Group disclosed it sold $21 billion of bonds and booked an after-tax loss of $1.8 billion.

Former Federal Reserve bank examiner Mark T. Williams told Fortune‘s Sheryl Estrada he thought the actions taken by SVB Financial Group in March were a risk nightmare and “a colossal failure in asset-liability risk management.”

“To prevent a crisis of confidence, SVB’s CEO and CFO should have relied more on an old-fashioned banking approach of diversification of its lending and deposit customers,” says Williams, a master lecturer in the finance department at Boston University’s Questrom School of Business. “Venture capital is a highly risky business. So not only did the bank expose its asset side of the balance sheet but also its liability side.”

“The CFO and, I would argue, the board failed to adequately protect shareholder value,” Williams says. “The board-appointed risk management committee, which works closely with the CFO, should have done adequate scenario analysis to examine the deposit withdrawal risk. That, in fact, was the bank’s downfall.”

During this time, Y Combinator CEO Garry Tan warned his organization’s startups to be wary of the developing situation as it could mean life and death for them. “We have no specific knowledge of what’s happening at SVB,” he wrote in an internal message seen by Bloomberg News. “But anytime you hear problems of solvency in any bank, and it can be deemed credible, you should take it seriously and prioritize the interests of your startup by not exposing yourself to more than $250K of exposure there. As always, your startup dies when you run out of money for whatever reason.” Let’s be real, he wasn’t saying “be wary.” He was saying “GTFO while you can.”

Meanwhile, there was a storm brewing online from the time KPMG issued their opinion on February 24 and Silicon Valley Bank’s collapse two weeks later, an event that would require a kind of clairvoyance not currently required by PCAOB standards to foresee. A day before regulators seized the bank, investors and depositors attempted to pull $42 billion from SVB. Precipitating that, an influential person said some things and people who value this person’s opinion reacted in swift and extreme fashion.

First reported on Fortune, Evan Armstrong of Napkin Math pinned the whole thing (“potentially“) on Byrne Hobart and his newsletter The Diff so expect lawmakers to say we should regulate newsletters any day now. Armstrong tweeted:

Kinda insane that this entire debacle was potentially caused by @ByrneHobart‘s newsletter. Here’s how the butterfly effect happened.

1) Byrne posts this article/Tweet calling out SVB’s risk.
2) Pretty much every VC I know reads this newsletter
3) They all start to pay very,… https://t.co/zUSKF1ZW4J

— Evan Armstrong (@itsurboyevan) March 11, 2023

Full text:

Kinda insane that this entire debacle was potentially caused by @ByrneHobart’s newsletter. Here’s how the butterfly effect happened.

1) Byrne posts this article/Tweet calling out SVB’s risk.
2) Pretty much every VC I know reads this newsletter
3) They all start to pay very, very close attention to SVB earnings
4) Absolutely massive earnings miss by SVB
5) Peter Thiel, USV, and Coatue are first to send out messages/mass emails to portfolio co’s to pull out funds
6) Tech Twitter catches word of this
7) Bank Run
8) Collapse
9) If FDIC/Buyer doesn’t come in, in the next 7 days, potential 20%+ collapse of entire startup industry.

All started by one overly prolific dude in Austin. Amazing.

He then links to the one overly prolific dude in Austin who tweeted this on February 23:

Also in today’s newsletter: Silicon Valley Bank was, based on the market value of their assets, technically insolvent last quarter and is now levered 185:1.

One thing to add—there was viral thread that talked about it earlier. I’ve also heard reports of 1 or 2 firms warning their portcos late last year. But my estimation is that this tweet/newsletter was the one that truly entered the vc hive consciousness https://t.co/ZXnUZmMLM8

— Evan Armstrong (@itsurboyevan) March 11, 2023

“I think Byrne helped tipped the industry into a frenzy, but the speed and ferocity of this was beyond anything I thought possible,” wrote Armstrong.

House Financial Services Committee Chairman Patrick McHenry (R-NC) called the events of the past few days “the first Twitter fueled bank run” and The Atlantic said earlier this week that the world’s first online-inspired bank run doesn’t bode well for the next major crisis. Finger-pointing at the internet aside, these incidents have once again put audit front and center as a checkbox exercise that even when performed perfectly is anything but perfect. And that’s when audits are done right, which they so often are not. So again the public has to ask: what is the point then? And who do we blame for this? 

Of these questions, ex-Freddie Mac CFO, former PwC partner, and former PCAOB chief auditor Marty Baumann said: “I suspect that may cause some people to question the value of an audit, but I believe the audit is incredibly valuable to investors. But I do question whether accounting disclosures of asset and liability duration mismatch is adequate.” Expect the PCAOB to start digging around in the SVB workpapers post haste.

A KPMG spokesperson provided the following statement to Going Concern regarding the SVB and Signature Bank audits: “Due to client confidentiality, we have no specific comment. We conduct our audits in accordance with professional standards. Any unanticipated events or actions taken by management after the date of an opinion could not be contemplated as part of the audit. It’s important to recognize that audit opinions, which only address the financial statements and internal controls of the business, are based on audit evidence available up to and at the date of the opinion.”

Whatever happened and how much of it should have been called out by auditors, I think we all agree that this is a bad look for a profession already struggling with optics.

Related:
This SVB Securities Exec’s Resume Reads Like a Wikipedia Page For 21st Century Accounting Trash Fires

The post WTF Happened at SVB and Should KPMG Auditors Have Seen It Coming? appeared first on Going Concern.

Alright folks, the moment we’ve been saying wasn’t going to happen to us now has: layoffs are here. Bet you feel dumb for saying firms won’t be laying anyone off because they don’t have enough people to lay off eh? I know I do.

We’ve been informed that layoffs began today in KPMG’s advisory practice, less than 2% of the workforce has been axed. According to a statement provided to us by KPMG which you’ll get to read in full momentarily, the firm has experienced “prolonged uncertainty affecting certain parts” of the advisory business.

Our business and outlook remain strong. However, we have experienced prolonged uncertainty affecting certain parts of our Advisory business that drove outsized growth in recent years. We have reduced expenses and prioritized investments in those areas and remain confident in the future of our firm and these services. However, we are taking prudent actions to match our resources to the needs of the market today.

These actions are incredibly difficult and impact people’s lives. We are supporting our colleagues with a holistic package that includes severance, healthcare, emotional and well-being support, career counseling, and learning and development opportunities.

We continue to make strategic investments for the future of our business and to deliver with quality and excellence in FY23 and beyond. In these moments, we lead with our values and are focused on supporting all of our colleagues.

We don’t have a whole lot of information beyond that. Apparently there was some ominous all-hands call earlier today and those who were let go were informed earlier today.

No one panic, this could just mean KPMG overhired in advisory and needed to cut the bench. If you know otherwise, please get in touch.

This didn’t age well.

The post Layoff Watch ’23: KPMG Let Some Advisory People Go Today appeared first on Going Concern.

Smith’s parents, Angela Smith, 61 and Richard Smith, 63, of Quakertown, PA, filed a wrongful death lawsuit against Dr. John R. Henson, Mercy Hospital, and Northern Light Health, which owns Mercy Hospital and nine other hospitals in Maine, in April 2021, according to the Bangor Daily News. 

The trial began on Jan. 23 at the courthouse in Portland, ME. The jury deliberated for about three and a half hours before announcing its verdict on Feb. 1.

Smith had visited Henson at Mercy Hospital twice in June 2017, but the doctor didn’t diagnose him with Lyme disease. The Bangor Daily News reported:

Smith, a graduate of Temple University, was living in Portland temporarily on assignment from his employer KPMG as an auditor when he fell ill. He first visited Hanson on June 7, 2017, complaining of a spreading rash, fever, chills, dizziness and a recent headache, the complaint said. Hanson diagnosed him with a rash that was most likely an allergic reaction and a viral infection. The doctor noted, “No signs of Lyme disease.”

The patient returned on June 20, 2017, with similar complaints but was diagnosed with hives.

Five days later, Smith was so ill that he called an ambulance to Maine Medical Center in Portland, the complaint said. Physicians there immediately diagnosed him with Lyme disease and found it had invaded his heart. Smith was treated and released but died July 2, 2017, in Pennsylvania.

A hospital spokesperson said following the verdict, “Mercy Hospital extends its heartfelt sympathy to Mr. Smith’s family and regrets the circumstances that occurred leading to his death.”

Jurors voted 7-2 that Henson and Mercy Hospital must pay $1.5 million for Peter Smith’s “conscious pain and suffering” and $2 million for economic damages. They also awarded $3 million for loss of life, but state law at the time of Smith’s death capped that at $500,000, according to a Portland Press Herald article. The damage award is expected to be reduced to $4 million because of a state law that caps loss-of-life damages.

Even after all that, Henson still works for the hospital, although he no longer is in the emergency department that treated Smith, the Portland Press Herald reported. He was still listed as a doctor of emergency medicine on the hospital’s website as of Feb. 2, and his license was listed as active in the database of the Maine Board of Licensure in Medicine.

Smith was studying for the CPA exam at the time of his death and wrote on his LinkedIn profile that his goal was to complete the CPA exam and to improve his skills in accounting.

Jury awards 25-year-old’s parents $6.5 million for Lyme disease misdiagnosis [Bangor Daily News]
Mercy Hospital ordered to pay $6.5 million to family of man who died after misdiagnosis [Portland Press Herald]

The post Former KPMG Employee’s Parents Awarded $6.5 Million In Wrongful Death Lawsuit appeared first on Going Concern.

The full list of 30 firms costs $30 and we don’t have money like that so we’re looking at the five we can see for free. There’s a note at the top that “information was obtained from firm representatives through questionnaires and could not be independently verified by the Portland Business Journal” so keep that in mind.

Sharing this because it includes global CPA numbers and it’s probably good to document that so we can look back twenty years from now and tell our grandchildren stories about the time entities called “accounting firms” employed tens of thousands of people.

As you can see, Moss Adams comes in #1 with almost 100 CPAs working in Clackamas, Columbia, Multnomah, Washington and Yamhill counties in Oregon as well as Clark and Skamania counties in Washington (that’s how PBJ has defined “metro”). Deloitte employs the most non-CPA professionals in the area but just 71 CPAs, a mere blip against its worldwide 11,217 CPAs. As we know, Moss Adams is headquartered in nearby Seattle, Perkins & Co. and Geffen Mesher are local to Oregon.

Per its last headcount in 2022, Deloitte US employs 129,110 staff, 135,118 professionals total including PPMDs, and 21,279 administrative, bringing its total to 156,397. We’re elaborating on Deloitte because they appear to have the most CPAs globally and Googling “Deloitte US headcount” returned detailed information in under five seconds. Here, have the whole chart just because:11217

If the global CPA number above is correct, that means 2.7% of Deloitte’s global workforce of 415,000 are CPAs. Today we learned.

The post The Largest Accounting Firms in Portland, Ranked by Number of CPAs Working There appeared first on Going Concern.

KPMG expects to increase its audit fees this year as the accounting firm looks to offset higher costs from regulatory requirements and operating expenses.

“The price of audit will have to increase this year,” the firm’s UK chief executive officer Jon Holt said in an interview with Bloomberg as the firm published its annual results. “The sector is facing a number of upward cost drivers, from new audit and accounting standards to inflationary pressures.”

“Higher costs from regulatory requirements” may include the numerous Financial Reporting Council fines levied against KPMG in recent years. For the fiscal year ended March 2022, audit firms in the UK were fined a record £46.5 ($57.3 million USD), more than half of that was levied against KPMG alone for a grab bag of audit mishaps. Total FRC fines are up £16.7 million from the fiscal year prior and the regulator is taking a similar approach to our own PCAOB this side of the Atlantic: zero tolerance.

KPMG is not unique in raising fees, revenue generation for the FRC Fine Department aside (note: no such department actually exists). In December, Big 4 firms’ largest clients across the pond wrote a strongly-worded letter about audit fee increases. “At this time of increasing cost pressure on big business we should not be expected to pick up the escalating costs within service company supply chains through further price increases,” read the CFOs’ letter to their auditors. “[The CFOs] do not commission our work and they are not the ones who we are reporting to,” said one audit partner in response to the letter.

The Bloomberg article goes on to discuss KPMG UK partner pay — the lowest of Big 4 firms at £717,000 for each of the firm’s 786 partners — and investments in people and technology:

KPMG UK said it invested £130 million into new hires and technology in 2022 as part of a push to expand the range of services it offers to clients. The firm also increased its bonus pot to over £105 million.

The firm hired over 4,500 people in the 12 months to September, and has a total of 16,036 employees on its payroll.

“Every area of the business contributed to our growth, showing the important role our multi-disciplinary model plays to support our clients,” said Jon Holt, KPMG’s UK chief executive officer.

Is that a dig at EY? Oh yeah, definitely is.

KPMG UK CEO Says Audit Fees Will Increase Despite Complaints [Bloomberg]

The post The Most-Fined Big 4 Firm in the UK is Raising Audit Fees, Knows Clients Will Complain About It appeared first on Going Concern.

I debated even posting this at all but everyone is already talking about it and maybe it will encourage someone reading it to get help if they too are struggling.

On Thursday, a recently-hired audit associate working out of KPMG’s New York City office at 345 Park Avenue committed suicide. It is understood that the deceased jumped from the building. Her name has not been released.

Going Concern has been furnished a copy of the firm’s communication on the internal site. It is uncharacteristically transparent, and we commend KPMG leadership for openly and candidly addressing the issue. The communication is transcribed below:

We want to share difficult and sad news with you. On January 26, we learned that one of our NY Audit associates, who joined the firm earlier this month, tragically died. We are still gathering the facts, but our understanding from the NYPD is our colleague died by suicide. We’re all deeply saddened by this loss. Over the past 24 hours, we’ve focused on supporting our colleagues and engagement teams in the New York hub and our colleague’s family during this incredibly difficult time, while also respecting their need for privacy and space.

We will continue to come together to discuss the importance of suicide prevention and mental health challenges, while partnering with external experts to guide our actions and benefits.

It is important that we care for ourselves and our colleagues. In addition to reaching out to PMLs or other colleagues for help, if you or your teams need additional assistance, please leverage the Employee Assistance Program, which is available through Resources for Living [Ed. note: we have removed the login information the firm included here]. Or, you can dial the 24/7 National Suicide Prevention hotline at 988 or go to SuicidePreventionLifeline.org.

Thank you for all you do and take care.

Paul and Laura

Said our tipster:

My initial reaction was shock. Literally my jaw dropped. But honestly I’m not really surprised. The firm encouraged public jobs to move controls work forward earlier into the year so that this time of year there would be less peaks in the traditional busy season. It has worked for some engagements but not for others, it made no difference. Just a lot of stress all around and short handed etc etc.

Our deepest sympathies go out to her family. And seriously, PLEASE speak up if you are in crisis. It doesn’t have to be to your colleagues or the firm, just talk to someone. This is an issue of personal significance to me, believe me when I say you are not alone.

The post An Audit Associate at KPMG’s NYC Office Has Died appeared first on Going Concern.

Not to worry, Engel has hope. Hope that the ongoing layoffs in tech will scare people into accounting.

“A lot of people went to the technology sector because it was exciting. But now that Meta and Twitter and all these other companies are laying off people, kids going into college might go, ‘wait a minute, maybe KPMG sounds a little better than Twitter,’” Engel said in an interview. “Accounting is that boring, stable profession that doesn’t do as well in hugely expansive economies but does great when the economy’s on the downslide.”

If that idea sounds familiar, it should. In December the Wall Street Journal wrote about the accountant shortage and got a quote from someone at Robert Half who said: “In a downturn, students tend to gravitate toward degrees in accounting and finance because they are considered more stable career paths than, for example, marketing and communications.” Everyone is waiting with bated breath for the economy to really get ugly, because then finally firm leaders will get some rest knowing that young people are getting terrified into the accounting track and at last our talent problems shall be solved. What a strategy, eh?

Greg’s competitors at EY also thought tech layoffs would help them find talent, salivating over the idea of swathes of desperate, unemployed tech workers flocking to the safety and security of accounting firms. That hasn’t panned out so far. 79% of laid off tech workers find a new job within three months, four out of ten of them found a new gig within a month. This isn’t Grapes of Wrath with caravans of dusty programmers in American Apparel hoodies roaming the country for any work they can get. Sorry, Greg.

And this brings us back to the PR problem driving the shortage in the first place. “If things get really bad, you’ll get desperate enough to work for us” isn’t a great selling point. Especially for a younger generation who did not personally experience the joy (read: difficulty) of staying employed in 2008, it’s harder to scare people who haven’t been through something like that. Not to mention it was only three short years ago that firms cut pay and staff due to COVID (handy COVID layoff tracker here), only for many of them to turn around months later to announce record-breaking revenue. So tell us again how accounting isn’t sensitive to the economy as any other sector, Greg.

Anyway, guess we’ll see. Surely 20-year-olds picking college majors can be swayed by this argument, 20-year-olds are known for their ability to think about the distant future and their financial security after all.

KPMG primes shrinking CFO, CPA pipeline [CFO Dive]

The post KPMG Vice Chair Hopes All the Tech Layoffs Will Scare College Kids Into Accounting appeared first on Going Concern.

Anyway, here’s the research from KPMG UK which uses their own data on client-facing employees to analyze the connection between socioeconomic background and career progression:

Social class is the biggest barrier to career progression, KPMG research finds

Socio-economic background has the strongest effect on an individual’s career progression, compared to any other diversity characteristic, according to ground-breaking research published by KPMG UK.

In the biggest ‘progression gap’ analysis ever published by a business, experts from the Bridge Group analysed the career paths of over 16,500 partners and employees at KPMG over a five-year period. The team examined the average time it took individuals to be promoted, looking at their gender, ethnicity, disability, sexual orientation as well as socio-economic background.

The data showed that socio-economic background, measured by parental occupation, had the strongest effect on how quickly an individual progressed through the firm. Individuals from lower socio-economic backgrounds took on average 19% longer to progress to the next grade, when compared to those from higher socio-economic backgrounds.

For the record, a quarter of KPMG’s partners (25%) come from low socioeconomic backgrounds, up from 23% last year.

Suppose this is a good time to look at how the researchers define low socioeconomic background. Higher socioeconomic background means the individual’s highest earning parent at the age of 14 was in a professional or intermediate background, whereas lower socioeconomic background means the individual’s highest earning parent at the age of 13 was in a manual or blue-collar role.

The research found that senior and junior ranks are the most socioeconomically diverse cohorts, but middle management grades are comparatively less diverse, suggesting there is a bottleneck for those from a low socioeconomic background as they work their way up. Picture an hourglass here, or a “my computer is stuck trying to load a file” icon for those of you who have never seen an actual hourglass. To address this, KPMG is trialing a new promotion readiness program designed to support individuals at a manager grade, who are from historically underrepresented groups and have been identified as ready for promotion in the near-term.

Interestingly, as people climb the ladder, those from lower socioeconomic backgrounds who were promoted from director to partner actually progressed more quickly, compared to higher socioeconomic background.

Let’s throw another blockquote in here:

The report also found a recurring ‘hierarchy of progression’ based on combined characteristics. Where there are intersections between lower socio-economic background and other characteristics, this has a significant effect. Lower socio-economic background combined with female gender identity and/or ethnic minority background is associated with the slowest progression.

If comparing the fastest progressing combination (Asian males from high socio-economic backgrounds) with the slowest (White females from low socio-economic backgrounds), the progression gap is 32%.

The full report “Social Mobility Progression Report 2022: Mind the Gap” can be found here [PDF].

The post If Your Parents Were Poor, It Takes Longer to Climb the Ladder at KPMG (No Really) appeared first on Going Concern.

In the 2021 inspection of KPMG LLP, the PCAOB assessed the firm’s compliance with laws, rules, and professional standards applicable to the audits of public companies.

We selected for review 54 audits of issuers with fiscal years generally ending in 2020. For each issuer audit selected, we reviewed a portion of the audit. We also evaluated elements of the firm’s system of quality control.

We also selected for review two reviews of interim financial information (“interim reviews”). Our reviews were performed to gain a timely understanding of emerging financial reporting and auditing risks associated with issuers that were formed by mergers between non-public operating companies and special purpose acquisition companies (SPACs). We did not identify any instances of non-compliance with PCAOB standards related to the interim reviews that we reviewed.

[…]

Fourteen of the 54 audits we reviewed in 2021 are included in Part I.A of this report due to the significance of the deficiencies identified. The identified deficiencies primarily related to the firm’s testing of controls over and/or substantive testing of revenue and related accounts, allowance for credit losses, inventory, and going concern.

So that’s an error rate of 26%, which is behind EY’s 21.4%, Deloitte’s 13%, and PwC’s 3.6%. The good news for KPMG is its deficient rate for 2021 was slightly better than the one in its 2020 auditing report card—26% vs. 26.4%.

For 2021, eight audits had problems in both internal control over financial reporting and in the financial statement, two had deficiencies in the financial statement only, and four had deficiencies in ICFR only. The most common Part I.A deficiencies related to testing the design or operating effectiveness of controls selected for testing, testing controls over the accuracy and completeness of data or reports used in the operation of controls, testing data or reports used in substantive testing, and in some cases the resulting overreliance on controls when performing substantive testing, according to the PCAOB.

The five main trouble spots for KPMG auditors were:

• Revenue and related accounts: The deficiencies in 2021 (as well as in 2020 and 2019) related to substantive testing of, and testing controls over, revenue.
• Allowance for credit losses: The deficiencies in 2021 primarily related to testing controls over the allowance for credit losses.
• Inventory: The deficiencies in 2021 primarily related to testing controls over the existence of inventory.
• Going concern: The deficiencies in 2021 primarily related to substantive testing of the evaluation of an issuer’s ability to continue as a going concern.
• Investment securities: The deficiency in 2021 related to testing a control over the evaluation of investment securities for possible impairment.

KPMG failed five of its nine audits for issuers in the financials sector, while mistakes were found in three of the seven audits of issuers in the consumer discretionary sector, three of the 12 audits of issuers in the industrials sector, two of the seven audits of issuers in the IT sector, and in one of the four audits of issuers in the energy sector. KPMG did get a passing grade in its audits of issuers in the communications, consumer staples, materials, real estate, and utilities sectors.

You can read more about the 2021 audit inspection season at KPMG below.

The post KPMG Still Rocks at Having the Worst PCAOB Inspection Report Among the Big 4 appeared first on Going Concern.

And of course there’s a press release:

KPMG International announces strong annual aggregated revenues for KPMG firms globally of US$35 billion for the fiscal year ending 30 September 2022 (FY22) — an increase of 14%.

During continued economic and geopolitical uncertainty, robust numbers and consistent growth were achieved across all functions. Advisory achieved the largest growth increase — up 19% on FY21 across KPMG firms globally. Growth was driven by the success of Transaction and Deal Advisory services, as well as continued demand for innovative technologies and advanced cyber security solutions. Tax & Legal Services experienced 10% growth while Audit grew 8%, benefiting from a combination of the investments made in technology and our KPMG firms’ globally connected local knowledge.

“FY22 has been a strong year. KPMG firms’ financial performance validates an unwavering commitment to deliver services of the highest quality, through a multi-disciplinary approach that helps us to provide solutions to clients’ most difficult challenges and the stability and resilience to invest, even in hard times,” said Bill Thomas, global chairman and CEO of KPMG International.

“But the true measure of our success is what we’ve been able to accomplish for those that rely on us most. Clients and wider society continue to face complex problems that require KPMG professionals to work across borders and disciplines and to collaborate more closely than ever. Few organizations have the expertise and global reach that KPMG has, and we’re at our best when we work together to inspire confidence and empower change.”

Officially the House of Klynveld brought in $34.6 billion globally in 2022, up from $32.1 billion in 2021. Here are a couple of graphics that show how KPMG did revenue-wise by business line and by region during its most recent fiscal year:

Now that KPMG’s numbers are in, here’s your Big 4 global revenue scoreboard for 2022:

1. Deloitte: $59.3 billion
2. PwC: $50.3 billion
3. EY: $45.4 billion
4. KPMG: $34.6 billion

That’s roughly $189.7 billion in total global revenues in 2022. Don’t worry, folks, the Big 4 firms are doing just fine.

The post KPMG Pulled In a Kool $34.6 Billion in Global Revenue in FY 2022 appeared first on Going Concern.

In addition to fines, Wednesday’s sanctions include barring or suspending four auditors from participating in public company audits and requiring three KPMG member firms to review and improve as necessary their quality control policies and procedures. One of the sanctioned firms, KPMG S.A.S. (“KPMG Colombia”), admitted that it failed to cooperate with a PCAOB inspection. The firm also agreed to retain an independent consultant to recommend improvements in the firm’s quality controls with respect to internal training.

“These actions should send the message to KPMG and all other registered firms that the PCAOB is committed to rooting out misconduct wherever it occurs and will employ all sanctions at its disposal to protect investors and improve audit quality,” said PCAOB Chair Erica Y. Williams. Reminder to naughty auditors: the PCAOB is comin’ for dat ass.

In the press release, PCAOB Acting Director of Enforcement and Investigations Mark Adler is sure to flex the PCAOB’s muscle. “The breadth of the misconduct uncovered in these matters and the aggregate size of the sanctions imposed demonstrate the global reach of the PCAOB’s oversight and the Board’s heightened vigilance in enforcement,” he said.

Here’s what they got nailed for.

KPMG Colombia

Altered audit documentation, answer-sharing on internal training exams

In the KPMG Colombia matter, the PCAOB sanctioned the firm [PDF] and three of its associated persons – José Daniel Meléndez Giménez [PDF] (“Meléndez”), Edgar Mauricio Ramírez Rueda [PDF] (“Ramírez”), and Marco Alexander Rodríguez Ramírez [PDF] (“Rodríguez”) – for violating PCAOB rules and standards in connection with the PCAOB’s 2016 inspection of the firm. The PCAOB also charged the firm with violating quality control standards relating to audit documentation and the firm’s internal training program.

The PCAOB found that, in 2016, the firm and various individuals improperly altered audit documentation for two audits in anticipation of a PCAOB inspection, and provided that altered documentation to PCAOB inspectors. Meléndez, the engagement partner for one of those audits, directed the improper alterations for that audit, and Ramírez and Rodríguez participated in the misconduct. The noncooperation resulted in part from deficiencies in KPMG Colombia’s system of quality control, which failed to provide reasonable assurance that (1) audit documentation was protected against improper alteration and (2) appropriate control was maintained over administrative passwords that could be, and were, used to backdate changes to work papers.

The PCAOB also found that from at least 2016 to 2020, KPMG Colombia violated PCAOB quality control standards related to integrity and personnel management. Those quality control failures prevented the firm from identifying extensive, improper answer-sharing among firm personnel in connection with tests on internal training exams covering topics that were relevant to compliance with PCAOB rules and standards.

KPMG UK

Answer-sharing on internal training, failing to supervise an unregistered audit firm, violation of PCAOB standards relating to due professional care, audit planning, audit committee communications, and quality control

The PCAOB issued two disciplinary orders against KPMG LLP (“KPMG UK”).

In one order [PDF], the PCAOB sanctioned KPMG UK for violating PCAOB quality control standards related to integrity and personnel management. Similar to KPMG Colombia, KPMG UK failed to detect or prevent extensive, improper answer sharing on tests for mandatory internal training courses. From 2018 until March 2021, hundreds of individuals from KPMG UK and KPMG Resource Centre Private Limited, an India-based entity that provides support for KPMG UK’s issuer audit work, engaged in improper answer sharing. The improper answer sharing occurred in connection with tests for training courses covering topics that included auditing, accounting, and professional independence. All of the professionals implicated in the answer sharing performed work for KPMG UK’s Assurance practice.

Without admitting or denying the findings in the order concerning the improper answer sharing, KPMG UK was censured and agreed to pay a $2 million civil money penalty and to review and improve as necessary its quality control policies and procedures to provide reasonable assurance that its personnel act with integrity in connection with internal training.

In a second order [PDF], the PCAOB sanctioned KPMG UK for failing to reasonably supervise an unregistered audit firm in four consecutive audits of a public company client. In particular, KPMG UK allowed the unregistered Romanian audit firm KPMG Audit SRL to play a substantial role in four consecutive audits in which KPMG Audit SRL incurred as many as 74% of the total audit hours. Compounding the failure, in three of the four audits, KPMG UK erroneously reported that PCAOB-registered firm KPMG Romania SRL, not KPMG Audit SRL, had participated in the audits.

Additionally, KPMG UK was found to have violated, in connection with the same four audits, PCAOB standards relating to due professional care, audit planning, audit committee communications, and quality control. The Board also found that the firm had made several inaccurate filings on PCAOB Form AP regarding other audit clients, disclosing that registered KPMG affiliates had participated in various audits, when in fact separate, unregistered firms had done the work. The firm has since corrected the Form APs at issue and agreed to review and improve its quality control policies and procedures as necessary.

KPMG India

Signing off on blank work papers, failing to supervise engagement team members

The PCAOB also sanctioned KPMG Assurance and Consulting Services LLP (“KPMG India”) and KPMG India engagement partner Sagar Pravin Lakhani [PDF] (“Lakhani”). The sanctions are based on KPMG India’s quality control failures and Lakhani’s supervisory and documentation failures in connection with a practice of signing off on blank placeholder work papers during the 2017 audit of a public company.

The PCAOB found that, in the course of that audit, Lakhani and other members of the KPMG India engagement team signed off on dozens of blank work papers. The blank work papers were replaced with completed work papers, in many cases after the issuance of the audit report, but the sign off dates were not updated. As a result of this practice, the work papers did not appropriately reflect the dates on which the audit work was actually completed and reviewed. KPMG India was aware that its audit software allowed personnel to modify or update audit documentation without modifying the sign off date.

By signing off on blank work papers and failing to appropriately supervise engagement team members who he knew were doing the same, Lakhani violated PCAOB documentation and supervision standards and failed to act with due professional care. In addition, KPMG India violated PCAOB quality control standards because its policies and procedures failed to provide adequate assurance that its personnel would document audit work in compliance with PCAOB standards.

Imposing $7.7 Million in Fines, PCAOB Sanctions Three Firms and Four Individuals From KPMG Global Network [PCAOB]

The post We Forgot to Mention KPMG Got Caught Cheating Again appeared first on Going Concern.

WSJ:

KPMG received £29 million from Carillion without qualifying its audit opinions over the course of 19 years, according to the liquidators. Qualified opinions indicate that auditors have found issues in a company’s financials.

Carillion’s liquidators in court filings Friday said that KPMG has yet to address claims that it failed to properly audit the accounting of 20 construction contracts. Carillion says the value of two contracts alone in the year ended in 2016 was misstated by nearly £352 million and that had KPMG acted as a reasonably competent auditor, it would have detected the misstatements.

KPMG says that the value of the construction contracts was concealed, a claim the liquidators countered by saying a concealment on that level would have “required all relevant personnel in the project teams, business units and senior management to engage in a widespread and concerted fraud on the Group’s auditors, which they would not have done.” And if this were the case, say the liquidators, a reasonably competent auditor wouldn’t have allowed Carillion to withhold relevant documents.

The allegations are without merit, a KPMG spokesman said in a statement to WSJ. “Responsibility for the failure of Carillion lies solely with the company’s board and management, who set the strategy and ran the business,” he added.

So what even is the point of an audit then?

The post Carillion Liquidators Roast KPMG: “A Competent Auditor Would Have Detected the Misstatements” appeared first on Going Concern.

Video:

7News writes:

KPMG Australia’s pilot traineeship program launched this year after the company struggled to find enough technology graduates to fill positions.

The rapid expansion of the tech industry in Australia and the impacts of COVID-19 are largely to blame, KPMG head of technology consulting Richard Marrison told 7NEWS.com.au.

And salaries. You forgot salaries, Mr. Marrison. Accounting firms are cheap and if you’re a tech graduate why work for KPMG when you can work for literally anyone else more prestigious technology companies.

He goes on to tell 7News that the industry has been reliant on a steady stream of immigrants in the labor market and since the Rona cut that source off they had to look elsewhere. So KPMG went to several schools in the greater Sydney burbs where not as many kids go on to university hoping to find some hidden gems.

“We thought, well, there’s probably a large number of really smart young people but, for whatever reason, and it may be social, cultural, economic reasons, (they) choose not to go to university,” Marrison said. “But they’re still smart kids that could work in our industry.”

There are eleven high school graduates in the three-year program (the video segment says ten? Maybe they round down in Australia) and so far none of them have dropped out. “The level of engagement and enthusiasm has been really, really high,” said Marrison. Their work experience includes data analytics and software implementation, and KPMG Australia plans to expand the program to other offices. No mention of what the group is currently making but he does say getting your foot in the door eventually pays off. “Very, very quickly you can get into six figures, well into six figures,” Marrison said. “(The average salary) is pretty high.”

Just going to leave this here:

And one last quote from the 7News article that seems relevant: “We think we’re doing something really positive by giving kids that wouldn’t ordinarily have the opportunity to join our profession a path into the profession,” said Marrison.

Snark aside, this seems like a good way to bring in fresh meat and give them hands-on experience that their peers who pursued university won’t get until they themselves start internships. Right? I encourage any naysayers to use the comment section to explain in excruciating detail what’s wrong with this idea, I’m open to a perspective change as always.

The post KPMG Australia Recruits From High Schools to Meet Demand For Talent appeared first on Going Concern.

As the leaves start changing to PwC colors, it signals the start of compensation season at another Big 4 firm: KPMG. The results of the most recent round of comp talks are in and can be found on r/accounting, per usual. So during this spooky szn, were raises scary bad or scary good for KPMGers? Let’s take a look.

The calendar year started off on a good note for employees of the Radio Station as it was announced last January that mid-year raises would be coming on April 1. If you look at the Reddit thread, one newly promoted first-year senior saw their salary increase by $25,000 since the start of fiscal year 2022 after the mid-year pay bump and the most recent FY 2023 comp talks earlier this month.

For this article, we took a look at how much base salaries increased from April’s raises until October’s raises. We also wanted to find out how this most recent round of raises compared to previous years at KPMG. So we examined the 2022, 2021, 2020, 2019, and 2018 KPMG comp threads on Reddit, as well as the 2017, 2016, 2015, 2014, and 2013 comp threads on Going Concern. We calculated the average raise percentage for each step up in rank or promotion where data was available (i.e., A1->A2, A2->S1, S2->S3, etc.).

Keep in mind these averages don’t take into effect factors like location/cost of living, line of service, academic degrees, competency rating, and bonuses (variable compensation). This is just the average percentage of how much base pay increased per step up in rank/promotion.

Here are the numbers (2022 raise percentage in bold):

A1->A2

• 10.6% (2022)
• 14% (2021)
• 5.2% (2020)
• 8.9% (2019)
• 6.4% (2018)
• 5.9% (2017)
• 9.2% (2016)
• 6.8% (2015)
• 7.4% (2014)
• 7.1% (2013)

A2->S1

• 25.2% (2022)
• 27.5% (2021)
• 9.3% (2020)
• 17.4% (2019)
• 18.4% (2018)
• 16.3% (2017)
• 17.5% (2016)
• 16.9% (2015)
• 16.5% (2014)
• 17.9% (2013)

S1->S2

• 9% (2022)
• 18% (2021)
• 0% (2020)
• 11.1% (2019)
• 6.5% (2018)
• 7.2% (2017)
• 8.9% (2016)
• 11.8% (2015)
• 14% (2014; only one entry)
• 10.2% (2013)

S2->M1

• 25.6% (2022; only one entry)
• 35.2% (2021)
• 10.5% (2020)
• N/A (2019)
• 22.3% (2018; only one entry)
• N/A (2017)
• N/A (2016)
• 16.5% (2015; only one entry)
• 20% (2014; only one entry)
• 18.4% (2013)

S2->S3

• 10.4% (2022)
• 18.3% (2021)
• 0% (2020)
• 9.1% (2019)
• 9.7% (2018)
• 5.9% (2017)
• 6.1% (2016)
• 6.8% (2015)
• 7.8% (2014)
• 11.2% (2013; only one entry)

S3->M1

• 21.3% (2022)
• 27.6% (2021)
• 10.1% (2020; only one entry)
• 23% (2019)
• 18% (2018)
• N/A (2017)
• 13% (2016; only one entry)
• N/A (2015)
• 16% (2014; only one entry)
• N/A (2013)

S3->S4

• N/A (2022)
• 15.8% (2021; only one entry)
• 0% (2020)
• N/A (2019)
• N/A (2018)
• N/A (2017)
• N/A (2016)
• N/A (2015)
• N/A (2014)
• N/A (2013)

S4->S5

• N/A (2022)
• 22% (2021; only one entry)
• 0% (2020)
• N/A (2019)
• N/A (2018)
• N/A (2017)
• N/A (2016)
• N/A (2015)
• N/A (2014)
• N/A (2013)

M1->M2

• 7% (2022)
• 30% (2021; only one entry)
• N/A (2020)
• 8.8% (2019; only one entry)
• N/A (2018)
• 5.5% (2017)
• N/A (2016)
• N/A (2015)
• 8% (2014; only one entry)
• 10.3% (2013)

M2->SM1

• N/A (2022)
• 20.6% (2021)
• N/A (2020)
• N/A (2019)
• N/A (2018)
• N/A (2017)
• N/A (2016)
• N/A (2015)
• 10% (2014; only one entry)
• N/A (2013)

SM1->SM2

• 8% (2022; only one entry)
• 9.4% (2021; only one entry)
• N/A (2020)
• N/A (2019)
• N/A (2018)
• N/A (2017)
• N/A (2016)
• N/A (2015)
• 8% (2014; only one entry)
• N/A (2013)

Raises seemed to even out this year after the lack of pay increases in 2020 because of pandemic uncertainty and the bigger-than-normal salary increases in 2021 to make up for 2020. We were a little surprised at the 9% average increase for S1->S2; it seems too low. But there were only 11 entries from new second-year seniors in the Reddit thread so it’s a small sample size.

If any KPMGers have different salary information they can share or can help us fill in some of the blanks, let us know in the comments section or email us at editor@goingconcern.com.

The post Compensation Watch ’22: Just How Scary Were Raises at KPMG This Year? (UPDATE) appeared first on Going Concern.

Via the PCAOB:

The Public Company Accounting Oversight Board (PCAOB) today announced settled disciplinary orders sanctioning three audit firms for failing to disclose on PCAOB Form AP the participation of unregistered firms in audits of public companies, in violation of PCAOB Rule 3211, Auditor Reporting of Certain Audit Participants. Each of the firms erroneously disclosed that a registered affiliate had participated in the audit, when in fact a separate, unregistered firm had done the work. The firms have since corrected the Form APs at issue.

“It is critical for firms to provide accurate information about accounting firms that work on audits of public companies, so that investors know who participates in the audits they rely on when making decisions,” said Mark A. Adler, PCAOB Acting Director of Enforcement and Investigations.

The firms, without admitting or denying the findings, consented to the PCAOB’s orders and the disciplinary actions. They are the following:

KPMG LLP (Canada) [PDF]– $150,000 civil money penalty and censure
KPMG S.p.A. (Italy) [PDF] – $75,000 civil money penalty and censure
KPMG Accountants N.V. (Netherlands) [PDF] – $50,000 civil money penalty and censure

Considering the record fines the PCAOB has been cranking out of late, this is nothing.

PCAOB Sanctions Three Firms for Failing to Disclose Unregistered Firm Participation in Public Company Audits [PCAOB]

The post ICYMI: KPMG Screwed Up appeared first on Going Concern.

The firm with a Sept. 30 fiscal year-end has begun comp talks with Klynveldians (we’ll dive deep into the numbers next week), won’t release its 2022 global revenue results until December, but it did earlier this week release the names of its 186 newest rainmakers in the U.S. The new partner class for fiscal 2023 is larger than the classes for FY 2022 (170), FY 2021 (119), and FY 2020 (138).

Of the 186 new partners, 56 are women (according to our count). The business unit with the most new partners is advisory with 81, followed by tax with 55, audit with 41, department of professional practice with five, risk management with three, and front office transformation with one.

Here are the names of the 186 KPMGers who will be counted on to bring in the big bucks:

Advisory

• Sam Abouzeid
• K. Agrawal
• May Boucherak
• Aaron Bowden
• Adam Brand
• Rebecca Brokmeier
• Brandon Bugg
• Rahima Butler
• Steve Carter
• James Case
• Swami Chandrasekaran
• Hillary Cimock
• Dan Click
• Brian Consolvo
• Kristine Coogan
• Jaime S. Pego Curcio
• Matt Dintelman
• Rob Erfort
• Marco Falzone
• Mark Glaid
• Jason Haward-Grau
• Scott Huie
• Garrett Hutson
• Parth Jhaveri
• Tim Jones
• Dmitriy Kagan
• Frank Kaiser
• Andrew Kersse
• Bindiya Khurana
• James Koch
• Michael T. Kokotajlo
• Mike Krajecki
• Brian LaHiff
• Bala Lakshman
• Michael Lalonde
• David Leach
• Catherine Lee
• Jo Liaw-Hickey
• Chris Lynch
• Deepak Mathur
• Annie McMillan
• Rahul Mehta
• John A. L. Milner
• Joe Nave
• Jay Nayak
• Hugh Nguyen
• Aila Pallera
• Stephanie Petruzzi
• Damian Plioplys
• Chad M. Polen
• David M. Pondillo
• Michael Pricer
• Michelle Quisenberry
• Brian Radakovich
• H. Sunder Ramakrishnan
• Zeeshan Ramzan Ali Rehmani
• Farah Remtulla
• Philip Rolland
• Nilotpal Roy
• Brian Sain
• Guillaume Sarfati
• Lio Saucedo
• Josh Scheumann
• Jonathan Seastrom
• Anand Sekhar
• Allen Sheldon
• Bryan Springer
• Kelly Stephenson
• Katherine Stilianesis
• Cindy H. Tjoe
• Matt R. Tobey
• Rico Tribuzzi
• Joseph P. Updegrove
• Rahul Wagh
• Meg Wheaton
• John K. Wilmarth
• Julia Wilson
• Christopher S. Worth
• Toby Yu
• A.J. Zang
• William F. Zizic

Audit

• Kweku Bankah
• Candace Beyer
• Alex Cadet
• Vincent Calabrese
• Shirley Choy
• Sheetal K. Daftary
• Jason L. Danielson
• Erin Frazier
• Lindsey Freeman
• Camille Fremont
• David Hermann
• Ed Hollywood
• Erin N. Huston
• Yusuke Imai
• Manish Jain
• Allan Juwonoputro
• Aaron Kline
• Jason Levitt
• Patrick S. Mallott
• John Maloney
• Gretchen McGuire
• Leo Miranda
• Matt Monahan
• Britta Mondi
• Noah Moravec
• Jim O’Meara
• Sarah B. Opfer
• Elizabeth Papay
• Lindsay Phillips
• Donatas Rackauskas
• Michelle Ross
• Robert Rutford
• Kimberly Shultz
• Suzanne St. George
• Christine M. St. Hilaire
• Carolyn Sted
• Randy Strait
• Brett Thompson
• Mary Irene Tripp
• Ryan W. Weidner
• James N. Williams

Department of Professional Practice

• Lisa Blackburn
• Heidi (Emde) Williams
• Moire Hirschhorn
• Carlos R. Martinez
• Justin Stone

Front Office Transformation

• Priya Emmanuel

Risk Management

• Richard F. Hull
• Steven Y. Owyoung
• Amanda Spikes

Tax

• Mohammad (Moe) Abdeljalil
• Rupali Amin
• Matthew Ams
• Christopher Armstrong
• Joel A. Blamey
• Raj Bodapati
• Joseph Bruckner
• Sarah Bumpers
• Vince Ceccacci
• Katy Chapman
• Sam Chen
• Brian Wonil Choi
• John DePaola
• Tooca K. Fardanesh
• Robert Ford
• Joe Friese
• Jeremy Gray
• Amanda Haffey
• Steve Herlocker
• Stefanie Humphrey
• Matt Jones
• Jack Karagulleyan
• Andrew Joseph Keller
• Jae H. Kim
• William S. King
• Robert Kolakowski
• Chris J. Kopel
• Paul Kraut
• Jeffrey Kung
• Peng Li
• Michael A. Liapakis
• Catherine Maldari
• Taylor Mallard
• Jonathan Mayer
• Pat McIntyre
• Michael McMahon
• John Modzelewski
• Tyler Orlowski
• Jeana B. Parker
• Nick Patras
• Sarah Perry
• Kristin Ridgway
• Lauren Rosa Sangaline
• Christopher Schulman
• Bill Sheridan
• John Skei
• Adam Smith
• Michael Spencer
• Arto Suren
• Bela Unell
• Koen Vredeveld
• Chen Wei
• Kelli Wooten
• Vessie Yondova
• Christopher Zibert

Congrats to all the new partners at the House of Knopp!

The post Promotion Watch ’22: KPMG Admits 186 to Partnership appeared first on Going Concern.

With the U.S. turnover rate projected to jump nearly 20% in 2022 over the pre-pandemic average, according to Gartner, and 31% of American workers actively thinking about or looking to leave their organization, according to KPMG, companies that don’t adapt risk losing their employees to the competition.

While financial reward is still a top priority, employees are thinking more holistically about their experience at work and which benefits they prioritize. This experience is giving rise to a more reflective workforce that thinks about what’s important in their work and personal lives and the correlation between them.

I like how they say this as if it wasn’t until Millennials came along that anyone expected to have work-life balance. Strap in, Gen Z, this is about to be your fault. Actually, they’re already recycling the articles they wrote 20 years ago about us and replacing “Millennials” with “Gen Z” now that Millennials are turning 40. “Gen Zers want it all – and are willing to work hard for the right employer. But if the juice isn’t worth the squeeze, they’ll leave and find other ways to make ends meet.” Uh yeah, and why shouldn’t they?

The HBR piece goes on to mention remote work and how because of it, it’s harder than ever to separate work from home. Of course, this was also the case prior to the pandemic for people at Big 4 firms, just that they didn’t sign off until 11 p.m. at the office instead of home. At least back then you got dinner and an Uber paid for by the firm.

The demands that have led American workers to focus on work-life balance have led to more incorporation of work in the flow of life. More people are working when, where, and how it is optimal for them rather than feeling constrained by the 9-to-5 tradition.

According to KPMG, 36% of American workers say the inability to maintain a healthy work-life balance is the number two reason—after the top reason, a noncompetitive financial package—that would make them want to leave their organization.

Well duh. Why do they even need a survey for this?

With greater work-life balance comes greater work-life harmony. Organizations have a growing recognition that workers will sometimes lean into their careers and at other times need to put more energy into their lives outside the workplace. There’s new awareness that work needs to integrate seamlessly into the bigger picture of life.

With that, employees are expecting employers to see them as whole humans, not just workers. More organizations need to recognize that factors such as health, well-being, and caring responsibilities all influence employees’ ability to bring the best version of themselves to the workplace.

Again DUH. How is this even something that employers need to be told in 2022? Big 4 culture is literally killing people so it’s beyond time for a discussion about firms seeing people as “whole humans.”

And what happens to organizations that don’t get on board with the crazy idea that people have lives outside of work, expect to be paid fairly, and shouldn’t be worked so hard that they have actual mental breakdowns? Their people leave. As they should. Life is way too short to work 20 hour days because your directors have made poor planning on their part an emergency on yours.

With employees aware of and increasingly vocal about what they want, their employers need to deliver on these benefits and opportunities. If they fail to deliver, their employees will look elsewhere to find them. Many organizations are indeed falling short; about a third of American workers have their eyes on greener pastures.

Just a third?

If you want more groundbreaking insight, check out KPMG’s 2022 American worker survey report. And if anyone needs help writing farewell emails you know who to call.

Looking for more: Employee expectations are on the rise [KPMG]

The post KPMG’s ‘Do As We Say Not As We Do’ Tips to Prevent Employee Turnover appeared first on Going Concern.

Today’s news falls under goal No. 3 in the PCAOB’s proposed five-year strategic plan. The audit cops said:

The post Even KPMG in South Africa Could Not Escape the Clutches of PCAOB Enforcement appeared first on Going Concern.

From the press release:

When construction on KPMG’s new space at Two Manhattan West – part of Brookfield Properties’ Manhattan West neighborhood – is completed in late 2025, it will provide the firm’s 5,500+ New York-based partners and professionals with an enhanced workplace experience through an innovative and sustainable design that fosters collaboration.

“KPMG has been based in New York since our inception on August 2, 1897, and we are proud to show our continuing commitment to this great city with our exciting new headquarters in Two Manhattan West in the vibrant Manhattan West neighborhood,” said Paul Knopp, KPMG U.S. Chair and CEO. “As we celebrate our 125th anniversary and think about our firm’s future, this is an incredible opportunity to bring our people together in a custom-designed office space that will showcase our firm’s commitment to culture, innovation, wellness and sustainability.”

“Our new headquarters space will be designed for the evolving needs and expectations of our professionals and clients with a modern, efficient and flexible space that will drive connection, collaboration and innovation,” said Yesenia Scheker Izquierdo, KPMG New York Office Managing Partner and Market Hub Leader. “This exciting new building is emblematic of our dedication to New York, and it embodies our New York spirit and the forward momentum of our people as we serve clients in the New York metro area well into the future.”

Of note: this lease is the largest office deal to close in New York City so far this year. KPMG’s future spot features energy-efficient design, optimization of electrical service performance, sustainable materials, maximization of natural light, stormwater harvesting and recycling and the latest in indoor air quality. The 58-story, 1.9 million square foot skyscraper is currently under construction.

Let’s check out some pics from developer Brookfield Properties. Keep in mind these aren’t KPMG’s actual office, we won’t be seeing that for a few years.

Not bad, not bad.

KPMG to Cut Manhattan Office Space in Move to New U.S. Headquarters at Hudson Yards [Wall Street Journal]

The post ICYMI: KPMG Is Downsizing Its NYC Digs Big Time appeared first on Going Concern.

Yello Co-founder Dan Bartfield said this year’s list was more competitive than ever, the total number of employer nominations judges had to review increased 33% over last year.

Since you’re dying to know which Big 4 firm made the cut, see if you can find it on this list:

That’s right…KPMG. “The KPMG internship is a collection of experiences that allow interns to see the depth and breadth of the company culture – from training, to innovation, to community impact, to performance management and mentoring opportunities, to real experience,” reads the expanded entry on the internship list.

Congrats to KPMG, this means next year the interns get a free pair of KPMG shoes yeah?

Yello Names Top 100 Internship Programs Across the U.S. [Globe Newswire]

The post Only One Big 4 Firm Made This Top 100 Internship Programs of 2022 List, You’ll Never Guess Who appeared first on Going Concern.

The post Would You Rock These KPMG Kicks? appeared first on Going Concern.

We even got a tip about this!

Interesting that these GE tax alums are headed to KPMG after stint at PWC. 5 of 8 former GE folks. With GE imploding, looks like PWC was taken to cleaners.

Ah, that’s right. It’s been five and a half years now since PwC hired General Electric’s tax department. It’s a weird side note to this news—and it does check out. Actually all six of the new Klynveldians from PwC worked at GE at one point in their careers, according to their LinkedIn profiles. Here’s what KPMG had to say about each of the people they hauled away from PwC:

David Mack – Tax Partner, New York. Previously a partner in the Insourced Solutions for Tax practice at PwC.

Chris Rain – Ignition Tax Managing Director, Atlanta, GA. Previously served as tax technology leader for the Insourced Solutions for Tax practice at PwC.

Michael Roussin – Tax Managing Director, Albany, NY. Previously served as the functional tax technology and process team leader for the Insourced Solutions for Tax practice at PwC.

Kory Schestag – Tax Partner, Grand Rapids, MI. Previously served as a director at PwC focused on developing and delivering managed service solutions.

Michael Steward – Tax Managing Director, Albany, NY. Previously a managing director at PwC.

Chris Yeaton – Tax Partner, Stamford, CT. Previously a partner and COO of the Insourced Solutions for Tax practice at PwC.

When the agreement between PwC and GE was announced in January 2017, Caleb wrote at the time:

KPMG maybe could’ve done this if their audit business hadn’t gotten in the way; or maybe they never could. Either way, I still feel like KPMG’s losing something to PwC here.

It took nearly six years, but KPMG finally reaped the benefits of the PwC/GE deal.

The post KPMG Poaches Someone From PwC and Issues a Press Release, Part XVII appeared first on Going Concern.

Despite getting fined £14.4 million by the Financial Reporting Council in July for issues related to Carillion and Regenersis audits, it seems the Queen’s KPMG has worked out all those pesky quality problems and is ready to jump back into some government gigs. City A.M. reports:

KPMG has restarted competing for UK government contracts, after the Big Four accounting firm withdrew from public sector tenders last December, following a series of high-profile accounting scandals.

The Big Four accountancy firm re-commenced bidding for UK public sector contracts in early-June, after it pulled out of competing for lucrative UK government contracts at the end of last year.

KPMG UK chief executive Jon Holt, who took over for the ignominious Bill Michael in April 2021, said: “I have been clear since coming into my role as Chief Executive that it is my personal priority to deal with our legacy issues, take action and learn from them.

KPMG’s latest FRC inspection report was better than the last few (84% of audits inspected required no more than limited
improvements) but the FRC is still keeping an eye on things. “KPMG’s individual audit inspections have significantly improved, which is promising, but is not yet a trend. The FRC will continue to closely monitor KPMG banking audits,” reads a July 2022 FRC press release.

“I am grateful to the Cabinet Office for their rigorous assessment of the steps we’ve taken, and continue to take, across all aspects of our business, controls and conduct to build a stronger and more sustainable firm. We will continue to engage with the Cabinet Office closely and transparently on the implementation of our ongoing improvement plans, and we are pleased to return as a strategic supplier to support the work of Government,” said Holt.

The post Hoping Everyone Has Forgotten About All the Scandals, KPMG UK Is Bidding for Government Contracts Again appeared first on Going Concern.

There’s a press release because of course there is:

KPMG LLP, the U.S. audit, tax and advisory firm, is celebrating its 125th anniversary on Aug. 2. In recognition of this milestone, the firm’s partners and professionals will participate in Community Impact Day, which includes community volunteer activities across the country and special events planned in key markets.

“Since 1897, our firm and our people have taken great pride in serving our clients, communities and the capital markets with excellence,” said Paul Knopp, Chair and CEO, KPMG LLP. “We look forward to celebrating our 125th anniversary and beyond by continuing to invest in and positively impact our communities across the country where our people live and work.”

In honor of the 125th anniversary, the firm and the KPMG U.S. Foundation will invest $125 million over the next five years in programs helping underrepresented groups confront systemic barriers to opportunities in education, health care and economic opportunity, while working together with these groups to help create stronger, more resilient communities.

All firm professionals have been provided with “impact hours” for participation in Community Impact Day activities on August 2, in addition to the community impact hours KPMG grants each person annually. KPMG’s 90 offices across the country identified 450 local non-profits to support for the 125th anniversary celebration.

“Although much has changed since our founding, supporting the communities where we live and work is core to who we are as a firm and will continue to be,” said KPMG Deputy Chair and Chief Operating Officer Laura Newinski. “It’s especially fitting that we spend the day of our 125th anniversary giving back.”

Special anniversary activities are planned in New York, where the firm’s headquarters are located, and Orlando, Fla., the home of KPMG Lakehouse, the firm’s learning, development and innovation facility. Follow the firm’s activities on Instagram, LinkedIn, Twitter and YouTube.

If you happen to see wild KPMGers out and about in the community this week now you know why.

Take a look at how we kicked off Community Impact Day in NYC as our Chair and CEO @paulknopp was joined by his predecessors and current KPMG leaders to ring the @Nasdaq Opening Bell this morning! #Beyond125 #KPMGCommunityImpact pic.twitter.com/2XBEaNwgrq

— KPMG US (@KPMG_US) August 2, 2022

To kick off the celebration of our 125th anniversary, U.S. Chair and CEO @paulknopp took the mound on the biggest stage of them all where he delivered the ceremonial first pitch at Yankee Stadium as the @Yankees face the Seattle Mariners! #Beyond125 #KPMGCommunityImpact #RepBX pic.twitter.com/jvhlCeX6Dc

— KPMG US (@KPMG_US) August 1, 2022

The post Happy 125th Birthday, KPMG! appeared first on Going Concern.

Twelve years ago my esteemed former colleague Caleb Newquist got clowned for calling six resignations at KPMG NYC an exodus so we’ll refrain from warnings about skies falling down for now.

The post Mass Exodus at KPMG or Just a Day Ending in Y? appeared first on Going Concern.

KPMG UK and the FRC had agreed upon the financial punishment last May (see below)—a £20 million fine reduced to £14.4 million to reflect KPMG’s self-reporting, cooperation, and admissions of wrongdoing. The firm also agreed to pay additional costs of £3.95 million, the FRC announced today. It’s the largest fine KPMG has received from the UK’s audit cops but not the largest fine ever doled out to an audit firm across the pond. That went to Deloitte UK in September 2020.

But what wasn’t known until today were sanctions, if any, given to five former KPMGers—Carillion lead auditor Peter Meehan; senior managers Alistair Wright, Richard Kitchen, and Adam Bennett; and junior auditor Pratik Paw—who testified during a five-week tribunal hearing in January and February, which revealed that during inspections of the Carillion audit, KPMG auditors misled the FRC by creating false documents, among other things. All five were found guilty of misconduct.

The FRC released the following summary of the tribunal’s findings today:

Regenersis AQR inspection

The Tribunal found that there had been Misconduct in respect of the Regenersis AQR [audit quality review] inspection, in that Mr Wright and Mr Bennett had:

• created or had a role in creating a false or misleading audit working paper on goodwill (“the Goodwill Paper”),
• made or had a role in the making of false or misleading representations to the AQR inspectors as to when and in what circumstances the Goodwill Paper was created,
• made false representations in the Goodwill Paper that certain audit work had been performed during the Regenersis audit.

And that in each case they were party to the deliberate misleading of the FRC’s AQR inspectors, and that their conduct was dishonest.

Carillion AQR inspection

The Tribunal found that there had been Misconduct in respect of the Carillion AQR inspection concerning minutes of year-end ‘clearance’ meetings, and an audit working paper on the selection of contracts for audit testing (the CCS Paper), that were presented to the AQR inspectors as having been created during the Carillion audit.

In respect of the meeting minutes the Tribunal found that Misconduct had been committed by Mr Meehan, Mr Wright, Mr Kitchen, Mr Bennett, and Mr Paw in that:

• Mr Wright and Mr Paw had created, and Mr Meehan, Mr Kitchen and Mr Bennett had assisted or encouraged the creation of, false or misleading meeting minutes, intending to mislead, or as a party to the deliberate misleading of, the AQR inspectors or being reckless as to whether they would be misled; and
• They had made, or connived in or were knowingly associated with making, certain false or misleading representations to the AQR inspectors as to when and in what circumstances the meeting minutes were created, intending to mislead, or as a party to the deliberate misleading of, them or being reckless as to whether they would be misled.

And that Mr Meehan, Mr Wright, Mr Kitchen, Mr Bennett were party to the dishonest misleading of the AQR inspectors. Mr Wright had already admitted these allegations, and that his conduct was dishonest.

The Tribunal found that Mr Paw, by implementing without question the instructions given to him by Mr Wright to create false minutes, acted without the integrity required of an accountant and became a party to the deliberate misleading of the AQR. However, Mr Paw was not found to have acted dishonestly.

A further allegation of Misconduct in relation to the content of the meeting minutes made by Executive Counsel against Mr Meehan, Mr Wright and Mr Kitchen was found not proved by the Tribunal.

In respect of the CCS Paper the Tribunal found that Misconduct had been committed by Mr Meehan, Mr Kitchen and Mr Bennett in that:

• Mr Kitchen had created, and Mr Meehan and Mr Bennett had assisted or encouraged the creation of a false or misleading audit working paper on the selection of construction contracts;
• They had made, or had connived in or were knowingly associated with making, false or misleading representations as to when and in what circumstances the audit working paper was created.

The Tribunal found that Mr Meehan and Mr Bennett acted without the integrity required of an accountant, but not dishonestly.  Mr Kitchen’s conduct was found to have been dishonest.

The Tribunal also found, in respect of Mr Kitchen alone, that he had made false representations in the CCS Paper that certain audit work had been performed during the Carillion audit and that his conduct was dishonest.

KPMG admitted its liability for the acts of all the individuals set out above and that those acts amounted to Misconduct.

Of the five ex-KPMG defendants, four received fines and multi-year suspensions from the profession:

• Meehan was fined £250,000 and excluded from membership of the Institute of Chartered Accountants in England and Wales for 10 years.
• Wright was fined £45,000 and excluded from membership of the Institute of Chartered Accountants in England and Wales for eight years.
• Bennett was fined £40,000 and excluded from membership of the Institute of Chartered Accountants in England and Wales for eight years.
• Kitchen was fined £30,000 and excluded from membership of the Institute of Chartered Accountants in England and Wales for seven years.

Paw only received a severe reprimand from the FRC. Another ex-KPMG auditor, Stuart Smith, who was the audit engagement partner for Regenersis, agreed to a £150,000 fine and a three-year ban from the profession as part of a settlement with the FRC in January.

[Original article below posted on May 12.]

I’m not a betting man, and that’s a good thing because, while not official yet, I would have bet my house on KPMG UK being fined more than £15 million for the whole Carillion audit fiasco.

The Financial Times reported this afternoon:

KPMG is set to be hit with its biggest-ever fine in the UK after a tribunal found that its auditors deliberately misled regulators during routine inspections of its work.

The largest fine KPMG has ever had to pay the Financial Reporting Council was £13 million last August for serious misconduct in its role in the sale of bed manufacturer Silentnight to a private equity fund.

Back to FT’s reporting:

The tribunal heard on Thursday that KPMG and the Financial Reporting Council had agreed the firm should be fined £20mn for its misconduct, but that this should be reduced to £14.4mn to reflect mitigating factors and KPMG’s admissions of wrongdoing. KPMG has also agreed to pay £4.3mn in costs.

Five individual defendants — Peter Meehan, who led the audit of collapsed government contractor Carillion; senior managers Alistair Wright, Richard Kitchen and Adam Bennett; and junior auditor Pratik Paw — were all found guilty of misconduct.

Another former KPMG auditor Stuart Smith accepted a £150,000 fine and a three-year ban from the profession as part of a settlement with the FRC in January.

The tribunal held a five-week hearing in January and February that focused not only on the major screw-ups and misconduct by KPMG and its auditors during the firm’s 2016 audit of Carillion, the construction and services company that collapsed nearly four years ago, but also failures in KPMG’s 2014 audit of Regenersis, an IT software company.

Smith, who was the audit engagement partner for Regenersis, was supposed to testify during the course of the hearing, but he got out of doing that by settling with the UK’s audit cops and accepting his punishment.

FT continued:

[The tribunal] ruled that during the inspections KPMG auditors created documents, including meeting minutes, spreadsheets and assessments of goodwill, but passed them off as having been produced before the accounts were signed off.

Summarising the tribunal’s findings, Mark Ellison QC for the FRC said Meehan, Wright, Kitchen and Bennett had “acted deliberately and dishonestly in the creation of false documents and the making of false representations” to the FRC. Paw acted without integrity but not dishonestly, the tribunal found.

The monetary amounts of the five ex-KPMG auditors’ punishments have yet to be decided. According to FT, the FRC called for Meehan to be fined £400,000 and be banned from the profession for 15 years; however, Meehan’s lawyers said he should be fined £250,000 and banned for 10 years. Wright, Kitchen, and Bennett are facing possible £100,000 fines and 12-year bans, with a 10% discount for Wright because he had admitted to some of the allegations against him. Paw, who was not yet a qualified accountant at the time, is facing a £50,000 fine and a four-year ban, FT reported.

If this all pans out, and it could be made official tomorrow, Deloitte will still hold the record for highest fine issued by the FRC at £15 million for its shoddy auditing of Autonomy, the UK-based software company that was acquired by Hewlett-Packard in 2011 and was involved in an epic accounting fraud.

We’ll update this article once the punishments are officially handed down to the Queen’s KPMG and its former auditors.

KPMG faces £14.4mn fine for misleading UK regulators over Carillion audit [Financial Times]

The post KPMG UK Somehow Won’t Be Getting a Record Fine From the Financial Reporting Council For Carillion Mess (UPDATE) appeared first on Going Concern.

Here’s the press release KPMG sent out yesterday:

KPMG has named Diane Swonk – a prominent economist, recognized industry voice and sought-after business advisor – as Chief Economist. Swonk, based in Chicago, will lead the firm’s Office of the Chief Economist, which provides deep insights to clients on the economy and how it impacts strategy, growth and operations.

“Our Office of the Chief Economist offers leading economic intelligence to help our clients improve strategic decision-making,” said Tandra Jackson, Vice Chair – Growth and Strategy, KPMG LLP. “Diane’s broad experience and wide-reaching influence will be tremendously valuable in leading those efforts.”

Swonk joins KPMG from Grant Thornton LLP, where she served as chief economist. She has more than three decades of experience in financial services and consulting and serves as an advisor to the Federal Reserve and its regional banks. Swonk also serves on the U.S. Chamber of Commerce economic advisory board and is a member of the Council on Foreign Relations.

Additionally, Swonk also advised the Council of Economic Advisers (CEA) for the White House under three presidents and served two terms on the Congressional Budget Office’s panel of economic advisors. She was named a fellow by the National Association for Business Economics for her outstanding contributions to the field of business economics and was named among the 100 most influential economists in the world for her analysis of the pandemic. She received a lifetime achievement award from the Association for Corporate Growth.

Diane is deeply committed to educational attainment and diversifying the ranks of leadership. She serves on the board of the Posse Foundation in Chicago, an education and leadership program. She works extensively with the Yale Dyslexia and Creative Institute. She just joined the Harris Policy School Council at the University of Chicago after serving for 15 years on the Council for Booth School of Business. She also serves on the board of the Foundation for the National Association for Business Economics (NABE); she serves on the statistics committee for NABE to promote the quality and integrity of U.S. economic data.

She advises the University of Michigan Economics Department, where she earned her B.A. and M.A. in economics with top honors. She earned an MBA in finance and strategic planning with top honors from the University of Chicago’s Booth School of Business.

So why is GT’s chief economist leaving the firm such a big deal? Because no one has given Grant Thornton more exposure in print and on TV (other than maybe Rickie Fowler) than Swonk has the past several years. She has been a go-to source on anything economy-related for outlets such as The Washington Post, New York Times, USA Today, Fortune, Bloomberg, CNBC, MSNBC, Yahoo! Finance, ABC News, and others. And she’s bringing some friends from GT with her to KPMG:

I am off the sidelines and back.

My team @YelenaMaleyev @KNyeEcon Na Tasha Lowe & I have joined the incredible economics team at @KPMGUS @KenKim_1 @tmahedy @seek_equilibria Meagan Martin, Henry Rubin, Debra Russeth & Chris Akers.

— Diane Swonk (@DianeSwonk) July 19, 2022

We don’t know the reason why Swonk and the other economists are leaving Grant Thornton for KPMG, but rumor has it some people at GT are not thrilled with the upcoming change in leadership there. We’ll speculate that’s the reason for Swonk’s departure because speculation is fun!

What we do know is that Grant Thornton’s loss is KPMG’s gain.

Related article:

Rumor: Is Some Culture Drama Going Down at Grant Thornton?

The post KPMG Poaches Someone From Grant Thornton and Issues a Press Release, Part IV appeared first on Going Concern.

Here’s the update from CA ANZ:

Chartered Accountants Australia and New Zealand (CA ANZ) takes all allegations of academic misconduct, including cheating, seriously, and all instances that come to our attention are reported to the Professional Conduct Committee.

The Professional Conduct Committee of CA ANZ has concluded its investigation into the remaining 12 members involved in the KPMG Australia internal training misconduct matter.

Four cases have been closed, and eight members have received a caution, which is noted on the member’s record, as well as a costs sanction.

Details regarding the individuals, sanctions and other outcomes remain confidential in line with CA ANZ’s By-Laws.

ICYMI: the PCAOB fined KPMG Australia $450,000 last September for training-related misconduct from 2016 until early 2020. Same old crap, sharing answers on mandatory training classes on independence blah blah…if that sounds familiar it should, KPMG US got in trouble in June 2019 for the same cheating, with a side of trying to cheat the PCAOB inspection process by using confidential information provided to the firm by a PCAOB insider which is just a slightly bigger deal than some overworked auditors sharing answers on internal training modules to save some time. Anyway, after the PCAOB situation, Chartered Accountants Australia and New Zealand opened their own investigation into the cheating and identified 422 CA ANZ members who engaged, to some degree, in the KPMG Training Misconduct. CA ANZ decided the activities undertaken by 410 of those 422 people did not meet the threshold for further action under the Code of Ethics and CA ANZ By-laws, and the sanctions and remedial actions already applied by KPMG Australia in response to the PCAOB findings were sufficient.

That leaves the 12 mentioned above, eight of whom have been disciplined. CA ANZ will not be releasing details on who they are. According to Australian Financial Review CA ANZ member Tony Alizzi said the findings took “far too long” and were too soft, building on complaints from members that it allowed KPMG to get away with systemic exam cheating because of the firm’s size and influence. “If this was a university there would be mass expulsions,” he said. “KPMG’s case is much worse – clients are paying for assurance services under the misguided belief all of the audit staff are not cheaters.”

Update on investigation into internal training misconduct at KPMG Australia [Chartered Accountants Australia and New Zealand]
KPMG accountants cautioned over systemic exam cheating [Australian Financial Review]

The post The KPMG Australia Cheaters Have Been Disciplined, Much Slapping of Wrists All Around appeared first on Going Concern.

Speaking of steaks, did they ever come back after The Great Unsteakoning of 2020?

Stay safe out there everyone and MUUUUUURICA!!!

The post Happy 4th of July and Also a Lesson in How Not to Be appeared first on Going Concern.

The Department of Justice today announced that it signed settlement agreements requiring 16 private employers to pay a total of $832,944 in civil penalties to resolve claims that each company discriminated against non-U.S. citizens in hiring. According to the department, each company posted at least one job announcement excluding non-U.S. citizens on an online job recruitment platform operated by the Georgia Institute of Technology (Georgia Tech). One employer posted as many as 74 discriminatory advertisements on Georgia Tech’s platform, while several of the employers posted discriminatory advertisements on other college or university platforms as well. The department determined that the advertisements deterred qualified students from applying for jobs because of their citizenship status, and in many cases the citizenship status restrictions also blocked students from applying or even meeting with company recruiters.

So KPMG posted 74 discriminatory advertisements right? Seems a safe assumption since their fine is the biggest.

A lawful permanent resident filed a discrimination complaint with the Civil Rights Division’s Immigrant and Employee Rights Section, alleging that a company advertised a U.S.-citizens only position on a Georgia Tech job recruitment platform. From there the DoJ discovered “a rash of other facially discriminatory advertisements on Georgia Tech’s job recruiting platform as well as other platforms operated by colleges and universities across the United States.”

Last year KPMG paid $10 million in an age and sex discrimination lawsuit that took ten years to work itself out so the bright side here is that A) this discrimination case was far cheaper to the firm and B) it didn’t have to drag out for a decade.

The DoJ is working on more settlements and is continuing investigations into additional employers. *Cue accounting firm partner anime sweats*

The post KPMG Will Pay the Department of Justice $307k For Discriminatory Job Postings appeared first on Going Concern.

We are a partnership that has been strong and growing in some countries for over 150 years.

Our culture fuels this growth and stability.

Our responsibility is to leave the firm better than we found it for those who come after us – we are stewards of the business for our mentees and the next generation.

This is the very fabric of who we are.

To monetize the goodwill of our firm that has been created for over a hundred years, at the expense of the next generation, would be entirely contrary to our culture.

Sky News interprets this memo as implying “such a radical restructuring would be akin to an act of corporate vandalism.” So basically EY partners are a bunch of greedy jerks who have no problem extracting large sums of money from the many years of exceptional client service they have provided and the reputation that comes along with it. Suck it, EY. Suck it and then go cry about it into the bags of money you will get from the split when the deal goes through.

Sources told Sky News KPMG did discuss following EY’s lead when the news of the split broke — rumor is Deloitte is already considering it, though Deloitte denies this — but ultimately decided to retain its current structure even if other Big 4 firms jump on the break-up bandwagon. PwC too has said it has no plans to change its multidisciplinary model.

KPMG chief takes swipe at rival EY’s $80bn break-up plan [Sky News]

The post KPMG CEO Pats His Firm on the Back For Being So Behind the Times, Roasts EY While He Does It appeared first on Going Concern.

Here’s a 2008 Journal of Accountancy write-up:

Second Life is a virtual world with education, public relations, and economic implications. CPA Island is the center of the public accounting profession in Second Life.

At a minimum, CPA Island presents a creative communication medium to appeal to a new generation. This generation has grown up with high-speed Internet connectivity, instant messaging, and multiplayer online gaming.

The spirit behind CPA Island goes beyond clearly demonstrating an awareness of the different skill set of this new generation. It embraces and celebrates these skills as important to the future of the accounting profession.

The economic implications of Second Life are just now unfolding. Suspend disbelief, log on, and experience CPA Island and the other aspects of Second Life for yourself.

I was MACPA’s target audience back then — a perpetually-connected, Internet-consuming, gaming-since-the-80s 20-something with an interest in accounting — and jokes about weapons and cool outfits hidden around CPA Island aside, I watched eagerly in the hope CPA Island would take off and inspire a rich digital world in which to do accounting things. Perhaps it was ambitious of the always-ahead-of-the-game Marylanders to think the profession was ready for a virtual space of this magnitude, perhaps it’s that Second Life users with no life and perpetually-connected roleplayers angrily chased off the CPAs. We may never know. I’ve emailed MACPA to find out what happened to it. The last I remember hearing about it was some time in 2013 I think for an event I attended — physically — at MACPA offices in Towson.

All these years later, a small handful of accounting firms are taking the leap into the metaverse. Which is almost exactly like Second Life except…well, I’m struggling to come up with a reason why it’s different. Because people are putting money into it? Prager Metis spent $35,000 on virtual three-story property on a metaverse site it bought last December, PwC Hong Kong purchased imaginary real estate on The Sandbox – a game where digital land has previously been purchased for a fee of upwards from $10,000, and this past February KPMG Canada bought “the highly acclaimed World of Women (WoW) non-fungible token (NFT) collection.”

Unsatisfied with the joy of owning non-fungible tokens, KPMG is going all in on this metaverse thing. From a press release yesterday:

Today, KPMG in the U.S. and KPMG in Canada announced the opening of the first KPMG metaverse collaboration hub, where employees, clients and communities will connect, engage and explore opportunities for growth across industries and sectors. The collaboration hub is the next step in both firms’ journeys to lead their people and clients into Web 3.0. Both firms have formed dedicated teams to help clients develop and execute their own metaverse strategies.

“The metaverse is a market opportunity, a way to re-engage talent and a path to connect people across the globe through a new collaborative experience,” said Laura Newinski, deputy chair and chief operating officer at KPMG in the U.S. “The unique experience provided by our collaboration hub will tap the creativity and passion of our people and clients to accelerate innovation.”

“Launching a collaborative space in the metaverse is a natural evolution in our journey as an innovation-driven firm,” said Elio Luongo, chief executive officer and senior partner at KPMG in Canada. “The world has changed drastically over the last few years, and our people and clients are interested in exploring new ways of working. This offers them a new immersive space to exchange ideas.”

CPA Island was innovative. 14 years ago. Back when the original iPhone had just come out.

With virtual reality what it is these days, we assumed the metaverse would look more like Overwatch 2 and less like original Half-Life released in 1998. Yet…let’s get in a time machine and visit MACPA headquarters in Second Life circa 2008:

And KPMG’s new “Metaverse Collaboration Hub” that’s making the rounds in the accounting news sphere today:

Mark has a rockin’ haircut. Does that come in KPMG lootboxes?

Perhaps it’s because we’ve been disappointed by this “accountant meeting space of the future” thing before, perhaps it’s because I played first-person shooters in 1999 as well as in 2022 and expect this “innovative” space to look, well, more innovative than a 23-year-old video game. Whatever the reason for our disappointment, expect more self-congratulatory press releases about exciting new Half-Life metaverse spaces with accounting firm logos on them to come as we trudge ever onward into the glorious virtual future.

Anyway, here’s Wonderwall.

Especially appreciated this bit where everyone is lagged out in this weird hallway with their arms outstretched as if eager to commit sexual harassment.

According to the Ready Player One timeline the sleek, immersive virtual world of Oasis was created in 2025 so who knows, maybe we’ll get something better than business casual VRChat within our lifetimes.

The post KPMG’s New Metaverse Space is Like the First-Person Shooters You Played in 1999 But Worse appeared first on Going Concern.

As I’m sure you’ve heard by now the profession is having trouble recruiting future CPAs. Accounting student numbers aren’t critically low yet but fewer and fewer graduates are taking the CPA exam, an issue that keeps AICPA President, CEO, and 1982 Hank Marino Invitational Winner Barry Melancon’s psychiatrist up at night Googling “effective treatments for insomnia.” This issue is called “the accounting pipeline problem” and expect to hear about relentlessly in the years ahead as it worsens. While The Powers That Be engage in countless conference calls and seminars to try and figure out what to do about it, there are small steps that can be taken to at least mitigate it a little for the time being.

KPMG US announced one such step last week. Let’s see the press release:

KPMG CPA Kickstart is a two-month, 40 hours a week program that provides new hires the time, along with compensation and full benefits, to focus on two of the most difficult sections of the CPA exam, enabling them to transition to full time work seamlessly. The program will be facilitated by KPMG in conjunction with a third party review course. Those enrolled in the program will receive additional support for completion of the final parts of the CPA exam once they begin client work.

WHICH TWO PARTS? It doesn’t say. We can safely assume FAR and…whatever. Oh wait here, Accounting Today says it’s FAR and REG. See, I was half right.

“Auditors are constrained without their CPA, and studying nights and weekends, can be a difficult, frustrating experience,” said Becky Sproul, Talent and Culture Leader – Audit. “Our program will provide extensive support in passing the CPA exam while adding top talent to our engagement teams.”

So they’re paying new hires to study for two months prior to their start date. You know what’s funny? I suggested exactly that last year:

Perhaps — and bear with me here, I’ve been accused of throwing out batshit insane ideas before — more early career accountants would be interested in sitting for the CPA exam if they were given the TIME to study. And no, I don’t mean the couple months between offer and start date. Nor do I mean the slight underutilization you might get at a firm that can afford to keep you half-sidelined every now and then so you can fill your time with studying. I mean give people real time to study and sit for the exam. Throw some money at them too while you’re at it. But the main issue here is time, or rather the lack thereof.

You’re welcome for the free ideas, KPMG.

KPMG CPA Kickstart launches this summer in 35 offices and so far 225 new hires are enrolled. We have no snark to interject here, this sounds like a great way to encourage new hires down the CPA path with a nice little financial incentive to boot. Why only Audit? Well it’s not because the firm is being cheap that’s for sure. Audit makes up a huge chunk of new hires at all firms due to a critical shortage made worse by everyone quitting. Perhaps it’s to sweeten the pot for future auditors with multiple offers to choose from?

Update: Soooo just hours after we posted this a kind Twitter user sent over this screenshot informing us that perhaps we should reconsider saying nice things about Big 4 initiatives which is true regardless:

According to this screenshot, the payment for this program is sort of an advance on the bonus you’d get for passing all four parts within your first or second year which is an important detail if true. We’ve reached out to KPMG for clarification and will update accordingly. In the meantime, I’ll be in the corner berating myself for not being a dickhead to a Big 4 firm for once in my miserable life. You’d think after doing this for 13 years I’d know better.

Update #2:
This is what we got from a KPMG spokesperson, make of it what you will:
“Participants are paid a program-specific salary to study for the CPA exam during the two month KPMG CPA Kickstart program, and are not performing client work during that time. In addition, they will receive a CPA exam completion bonus if they pass all four parts of the exam within a year of joining KPMG.”

The post [UPDATED] KPMG Will Pay Audit New Hires to Study for the CPA Exam appeared first on Going Concern.

But the U.K.’s House of Klynveld did something good for a change: KPMG gave an immediate pay raise of between £2,000 and £4,000 to its 15,800 U.K. employees but not to partners and associate partners. KPMG partners are doing just fine without it. According to The Times, the new salaries will be backdated to April and are in addition to KPMG’s annual pay review in October.

CEO Jon Holt announced the raises in a post on LinkedIn on May 6:

Will giving employees an out-of-the-blue raise in the middle of its fiscal year be enough to keep them from looking elsewhere? Who knows! But it’s more than some firms have done for their employees.

The post Compensation Watch ’22: Big 4 Firm With the Most Negative Publicity In the U.K. Tries to Change All That By Giving Staff Raises of At Least £2,000 appeared first on Going Concern.

Chartered Accountants ANZ has belatedly ruled that only 12 of the 422 members from big four consulting firm KPMG who took part in systemic exam cheating will be put through the professional body’s individual disciplinary process.

The body’s disciplinary committee ruled that the “activities undertaken” by 410 KPMG CA ANZ members involved in the cheating “did not meet the threshold for further action under the Code of Ethics and CA ANZ by-laws”, and the sanctions and remedial actions already applied by KPMG Australia were “sufficient”.

The wrongdoing, which involved KPMG partners and staff cheating on courses that covered independence, audit and accounting rules, continued for at least five years until early 2020 and involved 18 partners and more than 1100 staff at the firm.

The US audit watchdog, the Public Company Accounting Oversight Board (PCAOB), issued a detailed report last September outlining the extent of the cheating, and fined the firm $US450,000 ($608,600) over the behaviour.

Chartered Accountants may only discipline 12 of 422 KPMG cheaters [Australian Financial Review]

Related article:

KPMG Australia Audit Partners and Staff Didn’t Get Away with Cheating on Internal Training Exams Either

The post In KPMG Australia Cheating Scandal, Apparently Cheaters *Do* Win appeared first on Going Concern.

For the most part, people seem to enjoy working at KPMG. According to the website Great Place to Work, which partners with Fortune every year for the BCTWF, 86% of KPMGers say the firm is a great place to work, which is second highest among the Big 4 (Deloitte is at 88%). Other KPMG employee happiness findings from GPTW include:

• 93% say they felt welcomed when they joined KPMG.
• 92% believe management is honest and ethical in its business practices (that percentage was probably MUCH lower in 2017 and 2018).
• 92% say they are offered training or development to further their professional careers.

This is the 15th time KPMG has made Fortune’s BCTWF in the ranking’s 25-year history. In the previous five years, KPMG has been ranked:

• 2021: 39th
• 2020: 32nd
• 2019: 36th
• 2018: 29th
• 2017: 12th

Here’s why KPMG made this year’s BCTWF, according to Fortune:

KPMG doesn’t just acknowledge the pandemic’s toll on workers, it has deployed a host of tools to help them cope. To guard against burnout and overwork, the professional services firm introduced camera-free Fridays and two annual, firm-wide breaks that give employees at least nine consecutive days off in both the winter and summer. For mental health, employees or their family members can access up to 10 free counseling sessions. In order to cover the cost of a home office setup or other remote work expenses, everyone received an extra $1,000. For kids and parents struggling with remote learning, KPMG created a resource kit and facilitated the creation of learning pods. Those pandemic-era accommodations bolstered the firm’s longstanding commitment to career development, which is offered in the form of mentorships (some 13,000 of them) and numerous leadership training programs that in recent years have increased focus on women and other underrepresented groups.

In addition to all of that, KPMG’s employee retention maneuvers included changing its 401(k) contribution policy and lowering the vesting period from five years to three years, and giving all employees mid-year raises that went into effect on April 1 (in addition to the usual raises and bonuses employees received last fall), although many KPMGers started to panic on April 15 when their new inflated paychecks didn’t hit their bank accounts right away. And KPMG dumped Phil Mickelson in February.

Stats of note:

• Employees: 35,526
• Number of job openings: 4,225 (as of March 2022)
• Number of job applicants (last 12 months): 303,935
• Average number of applicants per opening: 23
• Number of new graduates hired: 4,600
• Percentage of women: N/A (46% according to KPMG’s 2021 DEI Transparency Report)
• Percentage of minorities: N/A (35% according to KPMG’s 2021 DEI Transparency Report)
• PTO limit (days): 37
• Number of sick days: Varies

We’ll continue our coverage of the Fortune 2022 BCTWF throughout this week.

Related articles:

The Fortune 100 Best Companies to Work For: Deloitte #24 (2022)
The Fortune 100 Best Companies to Work For: Plante Moran #30 (2022)
The Fortune 100 Best Companies to Work For: RSM US #40 (2022)

The post The Fortune 100 Best Companies to Work For: KPMG #41 (2022) appeared first on Going Concern.

I had no idea this was a thing. Someone in the comment section said the commercial was on KPMG US’s YouTube channel, so I went there, and sure enough, there are a series of three “Reconnect with KPMG” ads. And I watched them.

They are sorta fashioned after the “This is Sportscenter” commercials on ESPN, with the location, date, and time shown of when the scene was supposedly happening in KPMG’s offices. Are they cringey? Yes, very! Are they “return to office propaganda?” Absolutely! That’s the whole point of each of the three commercials. They want you to talk to your co-workers around the watercooler again. They want you to believe that once you walk through those KPMG doors for the first time in two years or however long it’s been since the Rona sent you home to work, there will be a celebration with streamers and balloons and your colleagues hootin’ and hollerin’. They want to entice you with a variety of nearby restaurant menus so you can go out to lunch with your co-workers again. All three are full of kumbaya cheesiness.

Are they the worst public accounting firm ads I’ve ever seen? No. At least KPMG tried to make them slightly entertaining. Have you seen a BDO USA TV commercial? Yeesh, they are horrible. I have to watch one nearly every day during the WGN Morning News. And nothing can be worse than that EY Super Bowl ad from a couple of years ago.

KPMG Norway did the same thing as KPMG US late last year, but their return-to-the-office ads are actually amusing for a stuffy Big 4 firm.

Anyway, the three “Reconnect with KPMG” ads are below. You can judge for yourself whether they are cringey, return-to-the-office propaganda or just another thing they can show potential recruits about how fun it can be to work at KPMG. Or both.

Related article:

KPMG Norway Has Achieved the Impossible And Created a Mildly Amusing Video (For an Accounting Firm)

The post Someone Is Not a Fan of KPMG’s New ‘Reconnect with KPMG’ Ad Campaign appeared first on Going Concern.

So in this Saturday shitpost, we ask: If KPMG was actually a radio station, what would its tagline or slogan be? We have a handful of suggestions:

• Good Auditing’s No. 1 Alternative
• Playing All the Hits (and Misses) of Auditing
• Formerly Phil Mickelson’s Favorite Country Station
• Clients’ Yacht Rock
• Where the Blues Are Here to Stay
• Your Station For Lakehouse Rock
• The Sound of (Scott) London
• We Make Our Clients Bang Their Heads

That’s a good start. Have a great weekend!

The post If KPMG Was a Radio Station, What Would Its Slogan Be? appeared first on Going Concern.

It only took five years, but Scott Marcello finally received some sort of punishment for what happened in KPMG’s audit practice several years ago as partners were working with PCAOB insiders to illegally receive advanced notice of the PCAOB’s inspection plans for KPMG audits. Marcello, KPMG’s former vice chair of audit, was fined $100,000 today by the PCAOB under a new disciplinary category—“supervisory failures”—regarding KPMG getting and using confidential PCAOB inspection information. The $100,000 fine is the largest monetary penalty ever imposed by the PCAOB on an individual in a settled case.

“This ‘first of its kind’ disciplinary action demonstrates that the PCAOB is committed to sanctioning top-level personnel at the largest firms when they fail to take sufficient supervisory steps aimed at preventing violations by their subordinates,” PCAOB Chair Erica Williams said in a statement. “Following the Department of Justice’s and the Securities and Exchange Commission’s actions against the perpetrators of the scheme, the board believes it is important to hold Mr. Marcello accountable as their supervisor for contributing to a culture that led to this serious misconduct.”

Why Marcello was not named in the criminal indictment or never faced any discipline from the SEC or federal authorities, unlike five of his co-workers at KPMG, is one of the main unanswered questions in the KPMG/PCAOB scandal. After all, as the PCAOB noted today in its order, Marcello failed in his duty to supervise senior members of KPMG’s audit practice who unlawfully obtained and used that confidential PCAOB information. The PCAOB said:

Under Marcello’s supervision, several of his subordinates, including his direct report, KPMG’s National Managing Partner for the Professional Practice Group [that would be David Middendorf], obtained confidential lists of the audits that the PCAOB would select for review during its 2016 and 2017 inspections of KPMG. Marcello’s subordinates used the 2016 confidential information to enhance the audit documentation for the engagements on those lists in an attempt to improve KPMG’s inspection results. The conduct of Marcello’s subordinates violated PCAOB rules and securities laws related to the preparation and issuance of audit reports and the obligations and liabilities of accountants, including Commission rules.

For those of you who aren’t familiar with the scandal, the PCAOB does a nice job summarizing it in its order. And as you read through it, it really makes you scratch your head why Marcello wasn’t among those indicted. First, the PCAOB sets the stage for the fraud, and it all started because of how badly KPMG was sucking at auditing:

Between 2010 and 2014, the rate of deficiencies that the Board identified in the KPMG audits that it reviewed increased each year. More specifically, the percentage of inspected audits in which the Board found that KPMG had failed to obtain sufficient evidence to support its audit opinions (or had failed to fulfill the objectives of its role when it was assigned work by another auditor) steadily increased, from 22 percent in the 2010 inspection to 54 percent in the 2014 inspection.

Many of the deficiencies the Board identified during its inspections concerned KPMG’s audits of banks and, in particular, the KPMG engagement teams’ evaluation of allowances, i.e., reserves, that KPMG’s banking clients had recorded for potential losses in their loan portfolios.

In light of this inspection history, KPMG determined to take various steps to attempt to improve its results in future PCAOB inspections. One of those steps was to recruit to the Firm personnel from DRI [PCAOB Division of Registration and Inspections], including individuals who had participated in inspections of KPMG and had identified deficiencies in certain of the Firm’s audit work. In May 2015, KPMG hired Brian Sweet as a partner. Immediately prior to joining KPMG, Sweet worked in DRI. While at the PCAOB, Sweet, who had experience auditing and inspecting the audits of banks, was part of the team that inspected KPMG.

Marcello, who was deputy leader of KPMG’s Financial Services practice, was appointed vice chair of audit in July 2015, two months after Sweet joined KPMG from the PCAOB. In his new role, Marcello supervised KPMG’s audit practice, which included the Department of Professional Practice (DPP), headed by Middendorf. DPP included an inspections group responsible for overseeing KPMG’s participation in PCAOB inspections. Thomas Whittle, who reported to Middendorf, headed this inspections group. David Britt, another partner in KPMG’s DPP and the co-leader of the firm’s Banking and Capital Markets group, reported to KPMG’s chief auditor, who, in turn, reported to Middendorf.

Sweet also became part of DPP’s inspections group, and he recruited Cynthia Holder, a former colleague from the PCAOB, to join him at KPMG. And so the malfeasance begins:

Between 2015 and February 2017 (both before and after Marcello became Vice Chair of Audit), Middendorf, Whittle, Britt, Sweet, and Holder obtained and used confidential PCAOB inspection information to improve KPMG’s inspection results, including for banking clients. The scheme included using an employee at the PCAOB to provide confidential lists of PCAOB inspection selections and inspection focus areas so that KPMG could target resources to those audits in advance of PCAOB inspections.

In March 2016, Holder obtained from a PCAOB inspector, Jeffrey Wada, a list of several KPMG issuer clients, mostly banks, whose audits the PCAOB intended to review as part of its 2016 inspection of the Firm. Holder shared the 2016 Inspection List with Sweet, who, in turn, informed Middendorf, Whittle, and Britt of it.

Upon receiving that confidential information, Middendorf, Whittle, and Britt instructed Sweet and others to perform examinations of the audit work papers for seven banking clients on the 2016 Inspections List outside of KPMG’s normal processes. The reviews consisted of partners outside of the engagement teams re-reviewing the audit work papers of the seven banking clients after KPMG’s audit reports had been issued for those clients, but before the respective documentation completion dates for the audits. The re-reviews uncovered problems with audit documentation as well as concerns about substantive audit issues, which Middendorf, Whittle, and the others attempted to have addressed in hopes of improving KPMG’s inspection results.

In early February 2017, Holder again received from Wada a confidential list, this time the entire list, of the KPMG audits that the PCAOB intended to review as part of its 2017 inspection of the Firm (the “2017 Inspections List”). Holder shared the 2017 Inspections List with Sweet, who promptly informed Middendorf, Whittle, and Britt of it.

Both times (2016 and 2017) Holder received the inspection lists from Wada, who also hoped at the time to be a KPMGer one day, Middendorf told Marcello about it. And both times Marcello turned a blind eye to what was going on, and what was about to happen, until people he confided with told him what they were doing was crazy and wrong:

In March 2016, Marcello learned from Middendorf that KPMG had obtained advance information about certain PCAOB inspection selections of KPMG audits. Specifically, Marcello understood that KPMG had obtained information about PCAOB inspection selections or potential selections through Sweet’s contacts at the PCAOB, which Marcello should have recognized was inappropriate. At the time, Marcello also understood that for all of the selections, which included the Firm’s audits of several banks, the documentation completion date for the final assembly of work papers had not passed. Marcello further understood that KPMG personnel intended to review the work papers for those audits and could enhance the documentation in an effort to improve inspection results.

Despite knowing that Middendorf and others had received advance notice of certain inspection selections and intended to review and could enhance work papers for those audits, Marcello failed to take appropriate action in response. Marcello did not report or escalate the matter, or instruct Middendorf and other subordinates to refrain from using the PCAOB’s confidential information. In failing to take action in response to learning about the receipt and intended use of confidential information in 2016, Marcello missed an opportunity to change the tone at the top of the Firm, which could have helped prevent further violations.

On February 7, 2017, Middendorf reported to Marcello that Sweet had obtained a list of 2017 PCAOB inspection selections. Marcello understood that the list had come from someone inside the PCAOB. Marcello, however, again failed to respond appropriately, including by failing to promptly report the receipt of that highly confidential information to anyone at KPMG or the PCAOB. Instead, over the course of a week, he and Middendorf had several conversations about the list and what to do with the information, though they agreed that no one should use the information while they decided what to do with it.

Marcello ultimately reported the receipt of the confidential information, but only after he learned of others’ negative reaction to KPMG having the information. First, Marcello learned from Middendorf that KPMG’s Chief Auditor had a very negative reaction to learning that Sweet had obtained the confidential inspection information. Second, Marcello also learned from Middendorf that a professional practice partner likewise had a very negative reaction to learning that KPMG had obtained confidential PCAOB inspection information. Finally, two partners who had learned of the issue from the professional practice partner informed Marcello of additional details concerning the situation and that they were troubled by KPMG having the list and would report the issue themselves if Marcello did not. After that meeting Marcello escalated the issue, reporting it to KPMG’s in-house counsel on February 14, 2017, a week after learning of KPMG’s receipt of the confidential 2017 Inspections List.

At that point, the whole scheme began to crumble. Before the confidential information from the 2017 inspections list could be used, one of the engagement partners, Diana Kunz, who had been informed by Sweet that the PCAOB was planning to review her audit, recognized that KPMG shouldn’t be in possession of this information. Kunz then contacted a supervisor, who told somebody else, and ultimately, KPMG’s Office of General Counsel was informed and began an internal investigation.

Marcello, Middendorf, Sweet, Holder, Whittle, and Britt were all fired from KPMG on April 11, 2017. Then on Jan. 22, 2017, everyone except Marcello, who we have nicknamed “the KPMG 5,” were indicted for their roles in the scandal. Wada, the leaker from the PCAOB, also was indicted.

Holder pleaded guilty to one count of conspiracy to defraud the United States, one count of conspiracy to commit wire fraud, and two counts of wire fraud on Oct. 16, 2018. She was sentenced to eight months in federal prison on Aug. 9, 2019 .Holder reported to jail on Oct. 15, 2019, and served her sentence at a minimum security federal prison camp for women in Bryan, TX. She was released from custody on June 13, 2020.

Middendorf was sentenced on Sept. 11, 2019, to one year and one day in federal prison, exactly six months after he was convicted by a jury on three counts of wire fraud and one count of conspiracy to commit wire fraud. Middendorf is currently appealing his conviction.

Whittle pleaded guilty to wire fraud and conspiracy charges on Oct. 29, 2018. He was sentenced in December 2020 to two years of supervised release.

Britt pleaded guilty to one count of conspiracy to commit wire fraud on Oct. 3, 2019. He was sentenced in October 2020 to six months of home confinement which was completed on June 6, 2021.

Sweet was sentenced on Nov. 20, 2020, to time served, three years of probation, and had to pay “significant” restitution of an unknown amount. He pleaded guilty in 2018 to conspiracy and wire fraud charges as part of a plea deal with the government.

Wada was given a nine-month jail sentence in October 2019 after he was found guilty by a jury in March 2019 of one count of conspiracy to commit wire fraud and two counts of wire fraud. He also appealed his conviction.

In June 2019, KPMG paid a $50 million penalty to the SEC for illegally using the PCAOB inspections information, as well as for auditors cheating on training exams, which was a whole separate mess. KPMG also had to pay a $1.3 million fine to the California Board of Accountancy for both of those transgressions.

So as you can see, Erica Williams has done more in her three months as PCAOB chair than William Duhnke did in three and a half years in that role.

The post Better Late Than Never: PCAOB Fines Ex-KPMG Vice Chair of Audit Scott Marcello $100,000 In Connection With Inspection Scandal appeared first on Going Concern.

PwC Ireland has hired Robert Costello from KPMG to lead its newly established capital projects and infrastructure team. PwC said Costello would scale up the firm’s offering in the area in Ireland, which includes recruiting a number of senior professionals with a broad range of financial and analytical skills. He started at KPMG Ireland in October 2006 as a manager and worked there for two years before transferring to KPMG in Australia, where he spent four and a half years as an associate director in the firm’s corporate finance team in Sydney. Costello rejoined KPMG in Dublin in 2013 as an associate director and moved his way up the ranks to director in 2014 and managing director in 2020. In a post on LinkedIn, Costello said he “had the privilege of working on some of the most significant infrastructure projects in Ireland and Australia and count myself very lucky to have been afforded the opportunity to join the corporate finance team back in 2006. I am very proud of the role we played in making projects happen over the years.” [Irish Times/LinkedIn]

Speaking of KPMG in Australia, Elizabeth Shaw just left there to become a partner at PwC’s office in Perth, where she will help grow P. Dubs’ diversity and inclusion consultancy business nationally and advise organizations on people, change, culture, diversity, and inclusion. Shaw has experience designing and implementing diversity, inclusion, and cultural change initiatives across resources, government, and corporate clients and leading several high-profile Australian non-government organizations. Shaw had been an associate director within KPMG’s management consulting practice where she led its D&I division. She worked at KPMG for seven years. [Consultancy.com.au/LinkedIn]

The post PwC Poaches Someone From KPMG and Issues a Press Release, Parts X and XI appeared first on Going Concern.

While we await KPMG’s punishment for that whole Carillion debacle, the Financial Reporting Council announced on March 8 that it had fined the House of Klynveld £1,250,000 and former KPMG audit director Michael Frankish £50,000 for mishaps in the 2015 and 2016 audits of Revolution Bars, a company that operates a chain of bars in the UK. Because KPMG and Frankish admitted to their failings and cooperated with the FRC investigation, their fines were reduced to £875,000 and £35,000, respectively.

With this latest punishment for shoddy auditing, KPMG has been fined a total of £18,550,000 (reduced to 16,875,000) by the FRC since last August (see Silentnight and Conviviality). You read that correctly: nearly £17 million IN THE LAST SIX MONTHS. Here’s what the FRC had to say about this most recent train wreck of an audit by KPMG:

The failings relate to three specific areas of the Audits: supplier rebates and listing fees; share-based payments; and (for FY2016 only) deferred taxation. The Company’s financial statements for FY2015 and FY2016 contained various misstatements which had to be corrected, some of which arose from the three areas mentioned, and some of which were material to the financial statements as a whole.

Consequently, the Audits failed to achieve their principal objective of providing reasonable assurance that the financial statements were free from material misstatement.

The failings in respect of supplier rebates and listing fees were aggravated by the fact that the FRC had made auditors aware, through publications in 2014 and 2015, that such complex supplier arrangements were an area of particular audit risk and would be a focus of its inspection activity.

In determining the sanctions to be imposed, Executive Counsel has taken into account that these were serious breaches but were not intentional, dishonest, deliberate or reckless, and that the Respondents provided a good level of cooperation during the investigation, including making early admissions in respect of the breaches. In addition, regard was had to Mr Frankish’s good prior disciplinary record and that he was a Director at the time of the work in question and not a partner.

Jamie Symington, Deputy Executive Counsel to the FRC, said:

“KPMG’s failings in this case persisted for two years and across multiple areas. They included complex supplier arrangements which the FRC had previously identified as an area of regulatory focus, albeit that in this case their impact on the financial statements was minor. The audit client was a newly listed and relatively small company, but the breaches were nevertheless serious, including lack of professional scepticism. The FRC has required KPMG and Mr Frankish to take action to mitigate or prevent breaches recurring. The package of financial and non-financial sanctions should help to improve the quality of future audits.”

Frankish, who was the engagement partner for the Revolution Bars audits, left KPMG after 20 years with the firm in 2017 for Grant Thornton where he is currently an audit partner. KPMG was told by the FRC to analyze the underlying causes of the breaches of relevant audit standards, identify and implement any remedial measures necessary to prevent a recurrence, and to update the FRC of its progress.

The post In Non-Russia-Ukraine War News, KPMG UK Screwed Up Another Audit appeared first on Going Concern.

“We believe we have a responsibility, along with other global businesses, to respond to the Russian government’s ongoing military attack on Ukraine. As a result, our Russia and Belarus firms will leave the KPMG network. KPMG has over 4,500 people in Russia and Belarus, and ending our working relationship with them, many of whom have been a part of KPMG for many decades, is incredibly difficult. This decision is not about them – it is a consequence of the actions of the Russian Government. We are a purpose-led and values-driven organization that believes in doing the right thing. We will seek to do all we can to ensure we provide transitional support for former colleagues impacted by this decision.”

Earlier today several news outlets broke the news that PwC is also cutting ties with its member firms in Russia and Belarus due to the war in Ukraine. PwC Global Chairman Bob Moritz confirmed in a statement late Sunday afternoon that PwC is pulling out of Russia, but he didn’t confirm a report by the Financial Times earlier today that PwC Belarus was also exiting PwC’s network of firms. It’s only a matter of time before Deloitte and EY make similar announcements.

Related articles:

Reports: PwC Is Withdrawing From Russia and Belarus
Big 4 Firms Condemn Russia’s Invasion of Ukraine, But Will They Sever Relationships With Any Russian Clients?
Grant Thornton Drops Its Russian Affiliate Over Conflict In Ukraine
Ex-Big 4 Partner On Why the Big 4 Firms Should Pull Out of Russia: ‘It’s the Right Thing to Do and You Know It’

The post KPMG Is Pulling the Plug On Its Operations In Russia and Belarus appeared first on Going Concern.

Because the first part of the document is a little blurry/difficult to read, I’ve transcribed it below:

Protecting our IT systems

Published: Thursday, 03/03/2022

As the Russia-Ukraine war continues, KPMG is staying vigilant and guarding against cyber threats while continuing to stand with and support the people of Ukraine. To help protect the firm and our clients, we are taking several steps to restrict non-business internet connectivity. These restrictions help reduce the firm’s cyber risk exposure and are not expected or intended to impact business functions.

This includes:

• Restricting access to certain higher-risk websites.
• Restricting emails to or from higher-risk email domains.
• Blocking access to personal email sites (e.g., mail.yahoo.com, gmail.com, etc.) from KPMG laptops.

— This will not impact use of your KPMG.com email address to communicate to individuals with these types of email accounts; it only blocks your ability to access your personal email accounts from your KPMG laptop.
— Personal email accounts can continue to be accessed from smart phones or personal computers.
— Please not that while we are making this change now given the events going on around the world, it is a best practice and a change that will be permanent.

Our tipster from KPMG is not happy about this new policy change. AT. ALL.

I’m absolutely boiling over KPMG’s latest kick in the ass: banning all employees from being able to access our personal emails on a permanent basis. And pretending like this has to do with cyber security and international warfare is gross and transparent. Everyone knows they have been foaming at the mouth like a rapid [I’m pretty sure she meant “rabid”]  dog, waiting to chomp at the first opportunity to do this.

Lucky me – now I get to buy a personal computer in order to deal with my most basic needs – medical forms, Amazon return labels, school forms, personal taxes, etc. Perhaps KPMG’s extremely generous $5,000 senior manager raise that was announced many months ago and garnered tons of press, but of course has not yet gone into effect yet, can cover the cost… after 5+ months. Lmao.

To the many, many partners I know that read this website: f u, f u, f u. Thank you for making it clear who you care least about – those most likely to not have working college computer… experienced workers. And dare I say females, who this policy disproportionately effects because of, well, life? Promise you this: I’ll be gone by the end of the year.

There’s a thread on Fishbowl about the Radio Station’s new personal email policy that has more than a dozen comments: some saying KPMG is ridiculous for doing this, others saying the people at KPMG complaining about this are ridiculous. Feel free to choose a side in the comment section below.

The post One KPMGer Is Livid That She Won’t Be Able to Check Her Personal Email On Her Firm-Issued Laptop Ever Again appeared first on Going Concern.

KPMG has had Mickelson’s back even when he was accused of being involved in an insider trading scheme, complained about having rich man tax problems, and fell short all those times at winning the US Open. But KPMG drew the line today after it was reported earlier this month that Phil would support and play in a proposed new Saudi Golf League, which would rival the PGA Tour and be ruled by former world No. 1 ranked golfer Greg Norman, even if the Saudis are “scary motherfuckers to get involved with.” In a soon-to-be-released unauthorized biography of Lefty written by Alan Shipnuck, Mickelson said (a blue KPMG hat tip to The Fire Pit Collective):

We know they killed [Washington Post reporter and US resident Jamal] Khashoggi and have a horrible record on human rights. They execute people over there for being gay. Knowing all of this, why would I even consider it? Because this is a once-in-a-lifetime opportunity to reshape how the PGA Tour operates. They’ve been able to get by with manipulative, coercive, strong-arm tactics because we, the players, had no recourse. As nice a guy as [PGA Tour commissioner Jay Monahan] comes across as, unless you have leverage, he won’t do what’s right. And the Saudi money has finally given us that leverage. I’m not sure I even want [the SGL] to succeed, but just the idea of it is allowing us to get things done with the [PGA] Tour.

Phil said aligning with the Saudis would be worth the risk if such an allegiance would force the PGA Tour into making financial changes beneficial to him and others. But a bunch of the PGA Tour’s biggest names, including Justin Thomas, Rory McIlroy, Dustin Johnson, and Bryson DeChambeau, pledged their allegiance to the Tour and said if Phil wants to golf in Saudi Arabia so bad, he can take his clubs and KPMG hat and go golf there. But the SGL is now dead, and so is Mickelson’s sponsorship with KPMG, which began in 2008. In a L-O-N-G statement released today, Mickelson apologized for his “reckless” comments. He also said:

I have incredible partners, and these relationships mean so much more to me than a contract. Many have been my most influential mentors and I consider all of them lifelong friends. The last thing I would ever want to do is compromise them or their business in any way, and I have given all of them the option to pause or end the relationship as I understand it might be necessary given the current circumstances.

A Statement from Phil Mickelson pic.twitter.com/2saaXIxhpu

— Phil Mickelson (@PhilMickelson) February 22, 2022

That was all KPMG needed to cut off Phil’s supply of blue, black, and white KPMG hats permanently. According to Golf Channel, KPMG said in a statement this afternoon:

KPMG U.S. and Phil Mickelson have mutually agreed to end our sponsorship effective immediately. We wish him the best.

Phil’s old KPMG hats were not available for comment. And @MickelsonHat is no more:

Oh well. Good luck, Phil. We enjoyed our time writing about your antics in all of their KPMG gloriousness through the years.

The post You Won’t Be Seeing Phil Mickelson Wearing a KPMG Hat Ever Again appeared first on Going Concern.

From Reddit (of course):

The screenshot reads:

A message from [redacted] and [redacted] | February 9, 2022

On behalf of the NYFS Audit partners and MDs, we would like to thank you for all your efforts and perseverance. This Sunday, in honor of the Super Bowl, please take a pause and treat yourself to a beverage or a snack — you deserve it!

• The budget is $10 per person (no receipt required)
• Please use the charge code [charge code] and note Audit Busy Season Thank You as the business purpose

***Please also be sure to take fun photos during your Super Bowl celebration and submit them to the Talent Energy Team by February 18th. We will be awarding prizes to the top three submissions.***

We thank you for your hard work!

Regards,
[redacted]
New York Financial Services Audit
Business Unit Partner in Charge

Soooo ten bucks in the costliest city in the United States? Wow. Don’t spend it all in one place now! Here are some ideas for those lucky KPMGers with a whole Hamilton burning a hole in their pocket:

This comment pretty much sums up the expected reaction to this generous endowment:

wE tHAnK yOU fOr yOuR hArd WoRK!

The post Bonus Watch ’22: KPMG Generously Gifted 1/5th of a Grubhub Order to Industrious Staff Working Through the Super Bowl appeared first on Going Concern.

We’ll help you mine (see what I did there) through all the clutter by presenting links to some of the articles about the big KPMG news. But we’ll start with this tweet from KPMG of the Canadian variety:

We have just completed an allocation of cryptoassets to our corporate treasury, our firm’s first of its kind investment in the asset class. This includes Bitcoin and Ethereum tokens, and carbon offsets to maintain a net-zero carbon transaction: https://t.co/32hsKbnGuC

— KPMG Canada (@KPMG_Canada) February 7, 2022

Crypto is volatile, but KPMG Canada just added bitcoin and ether to its balance sheet. Here’s why [Marketwatch] “We believe in the long term value of crypto assets,” Kunal Bhasin, blockchain co-lead at KPMG in Canada, said. “We’ve been advising a lot of our clients in terms of how they should be thinking about it. And this is just us putting our skin in the game.”

KPMG Canada Adds Bitcoin, Ethereum to Corporate Balance Sheet [Bloomberg] “[W]e’re confident we can guide clients and prospective clients through the process of cryptoasset treasury allocation,” KPMG said in the email. “Our investment allows us to share our journey, our experiences, our challenges with them so that we can help them navigate the cryptoasset world.”

KPMG Canada Adds Crypto to Its Balance Sheet [CoinDesk] In a press release, Kareem Sadek, advisory partner of cyprotassets and blockchain services at KPMG Canada, noted that “we’ve invested in a strong cryptoassets practice and we will continue to enhance and build on our capabilities across decentralized finance (DeFi), non-fungible tokens (NFTs) and the metaverse, to name a few.”

KPMG in Canada Adds Bitcoin and Ethereum to Its Corporate Treasury [Coinspeaker] KPMG Canada acquired the digital assets through Gemini Trust Company’s execution and custody services. Before approving the treasury allocation, the Toronto-based firm formed a governance committee to review the regulatory, reputational, and custodial risks. The committee included stakeholders from finance, risk management, advisory, audit, and tax. Furthermore, KPMG specialists assessed the tax and accounting implications of the digital currency transaction.

Bitcoin leads crypto market bounce back as major firms Tesla and KPMG confirm holding [Express] Bitcoin has risen over 17 percent in the last five days to break back past the key $40k threshold. The digital coin now stands at £32,210 ($43,544). Ethereum meanwhile, which remains the second biggest cryptocurrency, has seen its price recover back past $3k to reach £2,242 ($3,075). Both currencies have benefited from a number of companies revealing their investments recently in a growing sign of digital assets becoming more mainstream.

And then there was this funny tweet about it earlier today (h/t @TheBig4Tweets):

So KPMG, one of the 'big three' global accounting firms, has #Bitcoin on its balance sheet now & people still think it won't catch on as part of corporate reserves?

HFSP

— Alistair Milne (@alistairmilne) February 7, 2022

So which firm got kicked out of the Big 4? EY? Yeah, probably EY.

The post Soooo KPMG Canada Did a Thing Yesterday appeared first on Going Concern.

In the UK, Serdar Cabuk joined KPMG as a partner in the firm’s Cyber and Technology Risk business. He will mostly be serving clients in the consumer and energy sectors, “where his expertise in technology and risk transformations will help clients better manage their cyber and digital risks,” the firm said.

Prior to joining KPMG, Cabuk was a risk advisory partner at Deloitte who led the Cyber Risk practice in the Nordics. He joined Deloitte in 2018 after spending the previous three years at IBM, where he built and led the company’s European Security Strategy and Risk practice. Cabuk also spent two years at EY, where he was a cybersecurity director from 2013 to 2015, according to his LinkedIn profile. [KPMG/LinkedIn]

Our final stop is Switzerland where KPMG nabbed two Deloitte directors—Taher Balafrej and Miles Underwood—and gave them keys to the partnership.

Balafrej specializes in IT strategy, digital transformation, IT outsourcing, and IT cost optimization, according to his LinkedIn profile. After spending four years at IBM, Balafrej joined Deloitte Consulting in 2011 where he was a manager in the firm’s IT Strategy and Governance business. He left Deloitte in 2013 for Novartis but rejoined Big D in 2016 as a senior manager and then as a director in the firm’s Technology Strategy and Transformation business.

Underwood spent 14 years at Deloitte Switzerland before being hired by KPMG, working his way up from senior consultant to director, according to his LinkedIn profile. His still active Deloitte Switzerland website bio (lol) says he leads Deloitte EMEA (Europe, Middle East, Africa) Community of Practice on IT Outsourcing, helping clients “realize the transformational benefits of outsourcing by navigating the entire end-to-end sourcing process, from initial sourcing strategy and analysis, through to deal execution to transition.”

Before Deloitte, Underwood spent time at Bank of America and Sony.

The post KPMG Poaches Someone From Deloitte and Issues a Press Release, Parts IV, V, and VI appeared first on Going Concern.

Akif Jawaid joined EY-Parthenon in the UK as a partner on EY-P’s private equity team. He previously was a partner and global head of private equity (Strategy Group) and the UK head of deal value creation at KPMG, where he worked for three years. Before joining the House of Klynveld, Jawaid held senior roles at Boston Consulting Group and McKinsey & Co. [Consultancy.uk/LinkedIn]

Another ex-KPMGer joined EY-Parthenon in the UK at the end of last year. Olga Bandini, who has more than 16 years of management consulting and deal advisory experience in the energy sector, joined EY-P as a director on its transaction strategy and execution team. Bandini said she will work closely with clients to deliver deal value and help them navigate the challenges and opportunities presented by energy transition. Before joining EY, she spent 11 years at KPMG UK, first as a manager, then as an associate director, and finally as a director in integration and separation advisory, transaction services for the past four years. Prior to EY, Bandini worked at Deloitte for four years as a senior consultant and as a manager. [EY/LinkedIn]

KPMG UK got raided again by EY-Parthenon a few months ago, this time luring away Anu Bhambi and adding him to the partnership. As an energy sector partner, Bhambi will support clients in their transition toward sustainable and green energy. After working for Shell, Cargill, and Boston Consulting Group, Bhambi joined KPMG in March 2019 as a partner and was a Klynveldian for two years. [EY/LinkedIn]

And finally, Laura Higgins is one of the newest EY-Parthenon partners, as she left KPMG UK after a two-year stint as a director in the firm’s commercial strategy business. As a partner she will focus on expanding EY-Parthenon’s Demand Strategy practice, a new pan-sector team whose goal is to maximize profitable growth for clients, the firm said. Her team will “provide clients with an end-to-end transformation solution, covering go-to-market strategy, pricing and profit optimisation, sales effectiveness, brand valuation, marketing, digital and customer-centric transformation,” EY-Parthenon added. Before joining KPMG in 2019, Higgins spent 10 years at Accenture as the firm’s head of pricing and commercial strategy for the UK and Ireland. [EY/LinkedIn]

The post EY Poaches Someone From KPMG and Issues a Press Release, Parts IV, V, VI, and VII appeared first on Going Concern.

KPMG US just announced firmwide mid-year raises effective 4/1. $5k for SM, $7k for manager and senior, $3k for staff.

According to an internal document posted on Fishbowl yesterday, here’s the full rundown on raises per level:

These pay increases are on top of the raises and bonuses KPMGers got at the beginning of October, when KPMG’s fiscal year began.

Given the date these mid-year raises kick in, there were probably some first-year Klynveldians who questioned whether this was actually happening or some cruel joke. Although telling its employees they are getting salary adjustments on April 1 and then sending them an email on that day saying “April Fools!” and them getting nothing would be something EY would do. And that’s unfortunately what EYers have gotten so far—nothing—unlike the mid-year raises their counterparts at Deloitte, PwC, and now KPMG have received.

The mid-year pay increases are part of a “nearly $160 million additional investment in our people” that Chair and CEO Paul Knopp announced in a post on LinkedIn today. Here’s what PK wrote:

Today, I was incredibly proud to announce a nearly $160M additional investment in our people with across-the-board salary adjustments for all KPMG professionals. This increase in salaries embodies our commitment to quickly recognize the value our people create for our clients and firm in times of change. Moreover, it reflects our appreciation for their resilience and consistent dedication to serving our clients and the capital markets with quality.

A central lesson of the past two years for leaders is the need to be flexible and agile – without hesitation – in making bold changes. Organizations are in competition for business, capital, technology, and the hearts and minds of the communities in which they operate.

We know from our research that CEOs across the U.S. are focused on their employee value proposition and view it as the top operational priority to achieve growth objectives. We agree, and, in fact, our compensation announcement comes just months after historic fiscal year-end raises and bonuses, and a refreshed Total Rewards benefits package that empowers our people to navigate the challenges of work and life.

Stepping back, we remain focused on prioritizing our people across all our key initiatives so they can best harness their passion and talent to grow as professionals and deliver unparalleled client service.

• Our diversity, equity, and inclusion ambition defined by Accelerate 2025 sets our plan to make measurable progress and make sure all our people thrive.
• Our $1.5B global investment in expanding our ESG capabilities focuses on training each and every one of our professionals to enable our clients and our business to fully embed ESG into our strategy and day-to-day.
• Our hybrid future reflects hundreds of conversations with employees and focuses on a bottom-up approach to define how an individual, a team, and a business works.

Our people’s response to the pandemic showed their power, and as we move forward, we will continue to invest in their ability to drive our business forward.

I continue to be inspired and humbled to lead this amazing team of 35,000 people, and look forward to seeing how all of you – and the many that will join our firm in the years to come – continue to put people first and grow on our journey Together, For Better.

Firms (except EY) are pulling out all the stops these days to keep people from walking out the door and joining the Great Resignation. So how ya feeling about these raises and other “investments,” KPMGers?

Related articles:

Changes to KPMG’s 401(k) Contribution Policy Seem to Be Getting Positive Reviews
One KPMGer ‘Annoyed’ By New Enhancements to 401(k) Match and Pension Programs

The post Compensation Watch ’22: KPMG Employees Are Getting Richer on April 1 (Not An April Fools’ Joke) appeared first on Going Concern.

The hearing, which began last week and is expected to last through the end of the month, is not only detailing the major screw-ups and misconduct by KPMG and its auditors during the firm’s 2016 audit of Carillion, the construction and services company that collapsed nearly four years ago, but also failures in KPMG’s 2014 audit of Regenersis, an IT software company.

Stuart Smith, who was the audit engagement partner for Regenersis, was supposed to be one of six ex-KPMG auditors who would testify during the course of the hearing. But Smith recently reached a settlement with the FRC. The audit cops issued this statement on Smith’s punishment on Tuesday:

The Executive Counsel to the Financial Reporting Council (FRC) has agreed terms of settlement with KPMG and Stuart Smith following their admissions of Misconduct in relation to the FRC’s Audit Quality Review (AQR) inspection of the audit of the financial statements of Regenersis plc for the financial year ended 30 June 2014 (“Regenersis 2014 Audit”).

Mr Smith has admitted that he made, or was responsible for, representations to the FRC’s AQR inspectors which were misleading and that he was reckless as to whether those representations were misleading and whether the inspectors would be misled by them.

Mr Smith has admitted that his conduct in making or being responsible for the representations fell significantly short of the standards reasonably to be expected of a Member and was contrary to the ICAEW’s Code of Ethics Fundamental Principle of Integrity.

KPMG has admitted that Mr Smith’s conduct amounted to Misconduct, and that the firm is liable to be sanctioned in this respect.

Sanctions imposed on Mr Smith are as follows:

a. Exclusion from the ICAEW for a recommended period of three years; and
b. A financial sanction of £150,000

In the settlement agreement, the FRC said the misconduct “put at risk the regulator’s ability to protect the public, maintain public and market confidence in the regulatory regime and in the standards and conduct of members, and deter breaches;” that is was “plainly very serious;” and that it “involved a breach of the fundamental principle of integrity and was reckless.” However, the FRC also said Smith’s misconduct “was not dishonest;” that it “was isolated, not repeated, and took place over a short period of a matter of days;” and that it “did not involve or cause or put at risk the loss of money.”

Then earlier today, the FRC put out a news release announcing it was taking KPMG and a different audit engagement partner to the woodshed, this time for botching the audit of failed British beverage wholesaler Conviviality, which is unrelated to what is being discussed at the tribunal hearing. Here’s what we wrote in July 2018 when the FRC announced it had started a probe regarding KPMG’s auditing of Conviviality:

[T]he FRC is probing KPMG’s audit work for Conviviality for the year ended April 2017, even though the accounting irregularities that the beverage company admitted to occurred in its 2018 financial year, the Financial Times wrote.

The FRC said it also was investigating an unnamed member of the Institute of Chartered Accountants in England and Wales over the “preparation and approval of Conviviality’s financial statements and other financial information.”

We’re not sure if that unnamed member of the ICAEW was Nicola Quayle, but Quayle was the KPMG audit engagement partner for the Conviviality audit, and she got reprimanded and fined £80,850 by the FRC today. KPMG was fined £3 million by the FRC after admitting to a slew of failures in the 2017 Conviviality audit, including:

1. A failure to revise, in light of information obtained during the 2017 Audit, their initial assessment of the risks of material misstatement to the financial statements, to design and perform audit procedures responsive to the risks of material misstatement due to fraud, and adequately to document their audit procedures in respect of the risk assessment and fraud risk assessment.

2. A failure to obtain sufficient appropriate audit evidence:

a. relation to the recognition by Conviviality of £5.9m as accrued franchise licence revenue in FY17;
b. in relation to the accounting treatment adopted in respect of a third-party contract for the supply of wine;
c. in relation to the capitalisation of certain costs and the classification of certain items as exceptional, in accordance with the Company’s accounting policy;
d. in relation to several items of accrued supplier income; and
e. in order to gain reasonable assurance that the carrying value of the goodwill of each cash-generating unit in the Conviviality group had not been impaired.

3. A failure to apply sufficient professional scepticism in relation to the recognition of accrued franchise licence revenue, the accounting treatment adopted in relation to the third-party wine supply contract, and in the course of performing their audit procedures in relation to goodwill impairment.

4. A failure adequately to document their audit procedures in a number of these areas.

The fines for KPMG and Quayle were reduced from £4.3 million and £110,000, respectively, because they admitted their wrongdoings.

Quayle has gotten her wrist slapped by the FRC before. When KPMG was fined £455,000 in April 2020 for failing to obtain and document sufficient audit evidence in relation to supplier-funded rebates during the audit of an unnamed client, she was fined £29,000 for her failure to apply sufficient professional skepticism or obtain and document sufficient appropriate audit evidence. Quayle, who was a senior partner at KPMG’s Manchester office, retired from the firm last November but continues to work on internal projects for the firm on a contract basis, the Financial Times reported.

Related articles:

KPMG UK Already Gearing Up For Massive Punishment Over Carillion Audit Failures
Does the ‘P’ in KPMG Stand For ‘Probes?’

The post KPMG UK’s Piss-Poor Auditing Is Once Again Coming Back to Bite Them In the Ass appeared first on Going Concern.

From the Ministry of Finance in Malaysia on June 3:

The Government has received a settlement payment of RM336 million (US $80 million) related to 1Malaysia Development Bhd (1MDB) from Deloitte PLT.

In a statement today, the Ministry of Finance (MoF) said the money had been deposited into the Assets Recovery Trust Account.

“To date, the Trust Account – under the supervision of the Accountant General’s Department – has received a total of RM16.386 billion of funds seized and returned in connection with 1MDB.

“The amount in the Trust Account will be used to settle the remaining debts of 1MDB and SRC International Sdn Bhd (SRC),” he said.

However, the ministry added that this balance did not include the total settlement of RM2.83 billion that would be received from the Ambank Group in the near future.

“In addition, negotiations are also underway with KPMG,” he said.

The Finance Ministry said to date, the government had paid off RM12.54 billion of 1MDB’s debt and RM3.1 billion of SRC’s debt.

As at May 31, 2021, the outstanding debt comprising principal and coupons/ profit/ interest for bonds, Sukuk and term loans, amounted to RM39.66 billion (1MDB) and RM2.57 billion (SRC).

Meanwhile, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said the current balance of the Trust Account was only enough to pay off the principal and interest of 1MDB’s debt for 2021 and 2022 only.

“Once all the Trust Account funds are used up, the government will still have to bear the obligation to pay the balance of 1MDB’s debts as the debts are supported by the government through government guarantees and letters of support when these debts are issued,” he said.

Deloitte agreed to the $80 million settlement with Malaysia in early March.

Authorities in at least six countries are investigating alleged graft and money laundering at 1MDB, set up by former Malaysian Prime Minister Najib Razak in 2009. Najib, who was ousted in an election in 2018, was found guilty last year and sentenced to 12 years in jail in the first of several corruption trials linked to the 1MDB scandal. He is appealing the sentence.

KPMG may have to pony up some money to the Malaysian government too because it used to audit 1MDB. According to the website The Edge Markets:

Ernst & Young (EY) — was terminated before it completed the audit of 1MDB’s accounts for the financial year ended March 2010 (FY10).

According to the Auditor-General’s Report declassified in 2018, EY was sacked on Sept 15, 2010 as it declined to sign off on the FY10 accounts of 1MDB, unless it was provided with certain documents on the US$1 billion joint venture with PetroSaudi International.

KPMG, which took over in September 2010, signed off the FY10 accounts one month after it was appointed as well as those for FY11 and FY12. However, the audit firm refused to sign off the accounts for FY13 because it was unable to verify the authenticity of 1MDB’s US$2.318 billion investment in a Cayman Islands’ investment fund.

Deloitte was then appointed to replace KPMG. The third auditor quit in 2016 after the US Department of Justice filed lawsuits to recover assets acquired with misappropriated 1MDB funds.

[UPDATE] KPMG did in fact have to shell out a shit-ton of money to the Malaysian government for its shoddy auditing of 1MDB, according to Reuters on Jan. 13, 2022.

Malaysia said on Thursday audit firm KPMG has agreed to pay a 333 million ringgit ($80.11 million) settlement to resolve all claims related to their fiduciary duties on auditing of 1Malaysia Development Berhad (1MDB) accounts from 2010 to 2012.

The finance ministry said in a statement that the settlement will conclude a lawsuit filed against the auditor in July, and that KPMG will expedite the payment.

The Malaysian government, 1MDB, and its subsidiaries filed a $5.6 billion lawsuit against 44 current and former partners at KPMG on July 6, 2021, alleging breaches and negligence linked to the corruption scandal at 1MDB. KPMG pledged to “vigorously” contest the lawsuit but ultimately decided it wasn’t a battle worth fighting.

The post Deloitte Just Gave the Malaysian Government Several Wheelbarrows Full of Ringgit (UPDATE: KPMG Pays Up Too) appeared first on Going Concern.

“It is of course for the tribunal to reach a conclusion on the allegations as they relate to the individuals concerned. Nevertheless, it is clear to me that misconduct has occurred and that our regulator was misled. The misconduct that this tribunal will hear about over the coming weeks is disturbing and upsetting for me and for my colleagues, who are committed to serving the public interest with honesty and integrity. This misconduct is a violation of our processes and clearly against our values. It is unacceptable, we do not tolerate or condone it in any way, and I am very sorry that it occurred in our firm.”

— Jon Holt, CEO of KPMG UK, said in a statement today during the start of a disciplinary tribunal hearing on KPMG being accused of providing the Financial Reporting Council with false and/or misleading information on the firm’s audits of Carillion, the construction and services company that collapsed nearly four years ago, and Regenersis, an IT software company.

KPMG and six of its former auditors have been accused of participating in a scheme in which forged documents were created to mislead inspectors reviewing the firm’s audits of Carillion and Regenersis. The Guardian reported:

The tribunal on Monday heard via a public video call allegations of “forgery” by KPMG’s auditors, including the “fabrication” of documents. The FRC’s counsel, Mark Ellison, told the tribunal that auditors manufactured a spreadsheet and minutes of meetings to appear as if they were created during the audits, when in fact they were created months later and presented to inspectors.

The tribunal is expected to hear evidence over the next several weeks from the FRC and the respondents, which include KPMG, a former KPMG partner, and certain current and former KPMG employees.

The current record-holder for Big 4 firm with the largest fine ever received from the FRC is Deloitte at £15 million, which didn’t include an additional £5.6 million to cover the costs of the FRC’s investigation and the costs of a disciplinary tribunal, over its shoddy auditing of Autonomy, the UK-based software company that was acquired by Hewlett-Packard in 2011 and was involved in an epic accounting fraud. Some longtime Big 4 UK observers think KPMG will overtake Deloitte for No. 1 once this hearing is all said and done.

KPMG says accounting regulator ‘was misled’ over Carillion audits [The Guardian]
KPMG boss ‘clear’ regulator was misled as Carillion forgery tribunal kicks off [Financial News]

The post KPMG UK Already Gearing Up For Massive Punishment Over Carillion Audit Failures appeared first on Going Concern.

According to The Courier Mail, this all started after some lady started sweating him post-promotion for no reason whatsoever:

Mr Eldridge alleges in court documents that he started to clash with new colleague Linda Blore soon after he was promoted to the position of principal director of the “debt advisory services team’’ in April.

Mr Eldridge maintains he was kept “out of the loop’’ in a key communication with clients and subjected to unreasonable interrogation about fees on a deal.

There are three sides to every story of course and in this case Ms. Blore — a partner with 20 years’ experience herself — says it was in fact Mr. Eldridge who was being a white-collar cockblock.

Ms Blore also alleges she had been frozen out by Mr Eldridge, according to the text of multiple emails included in the pleading.

“I’m not putting up with being excluded and undermined internally and externally, and that negatively impacting my ability to deliver into my mandate to the best of my ability,’’ Ms Blore wrote in a July 23 email to Mr Eldridge and copied to their superior, Scott Mesley.

“Not to mention how it makes me feel personally from an inclusion perspective. The ongoing excuses of it just ‘being an accident’ don’t wash. It’s pretty simple.’’

So of course all this led to their boss Mr. Mesley having to take a break from solitaire and mediate whatever communication problem these two chuckleheads seemed to be having. Mr. Eldridge denied being mean to Ms. Blore at all, saying that he gave her “a far greater degree of inclusion than any other partner” and to prove his commitment to communicating with her he told his boss he sent her “hundreds of emails” and also defended her with clients, both of which are pretty much pinnacles of solid, friendly relationships in public accounting.

Unsatisfied by this otherwise impressive inventory of emails, Mr. Mesley told Eldridge to get over it and figure out how to work with Ms. Blore. The situation sadly did not resolve, and Eldridge went on stress leave shortly after the discussion with his superior on July 28. Two doctors vouched that he was experiencing “depression, anxiety and stress in the extremely severe range.” He has not returned to work.

In September, no doubt expecting a glowing review and a nice fat bonus when his year-end review rolled around, Mr. Eldridge received a rating of “effective performance” and no raise. Prior to the beef with Ms. Blore, he seemed to be doing well at the firm and clients liked him.

So now he’s suing, alleging breach of contract. “Mr Mesley took no, or no adequate, steps to address Ms Blore’s conduct,” reads the lawsuit.

He is seeking $100,000 in general damages, $30,000 for past economic loss, some more for future loss of earnings though he didn’t throw out a number, and $2400 for past and future medical expenses. Our American readers will remind themselves this is Australia where you can see TWO whole doctors for less than the price two to three questionably obtained PlayStation 5s.

The first hearing will take place January 25.

The post Guy Sues KPMG Over Getting Left Out of the Team Group Chat appeared first on Going Concern.

Things could only get better for the House of Klynveld in 2021, as KPMG was the only Big 4 firm in 2020 that saw its revenue decrease from the previous year (-1.8%) because of the economic strife caused by the COVID-19 pandemic. KPMG was the first Big 4 firm since EY in 2010 that had a year-over-year decline in global revenue. And the last time KPMG had a year-over-year decrease in revenue was in 2009, when it fell 11% from 2008 during the global financial crisis.

But 2021 was a bounce-back year for KPMG, as its 10% year-over-year increase in global revenue for the fiscal year ending Sept. 30 was higher than Deloitte (5.5%), PwC (4.9%), and EY (7.3%). Bill Thomas, global chairman and CEO for KPMG, said about 2021’s results:

“2021 was a strong year for KPMG. We achieved outstanding growth in a challenging business climate, unveiled KPMG: Our Impact Plan to help drive sustainable change across our organization, and launched a new global ESG plan to support our clients in achieving their goals of addressing the most existential challenges—while making a difference in the world.

“I am thankful to our talented teams who have worked tirelessly, in difficult circumstances, to ensure we met the rapidly evolving needs of our clients. We have focused first and foremost on enhancing quality and building trust. We have also worked with our leading ecosystem of alliances to support business and technology transformation. This year’s financial success is the result of KPMG firms coming together to chart a new trajectory for the global organization with a commitment to a bold ambition to become the most trusted and trustworthy professional services firm.”

Once again, the firm’s Europe, Middle East and Africa (EMA) region led the way with $14.3 billion in revenue, up 12.1% over last year. Next was the Americas region, which brought in $11.9 billion, up 5.9% over 2020. Lastly, Asia-Pacific finished up the year with nearly $6 billion in revenue, an increase of 13.5% over last year.

All three of KPMG’s core service lines brought in significantly more revenue than in 2020:

Advisory’s revenue increased about 17%, audit’s rose 3.5%, and tax and legal saw a 8.3% increase in revenue. And there are now 236,257 Klynveldians around the world, up 4.1% over 2020.

As the Financial Times noted today, the Big 4 firms totaled $167.3 billion in revenue for the financial year ended 2021, a 7% increase. That is the strongest collective result since the Enron scandal led to the collapse of Arthur Andersen in 2002 and reduced the Big 5 to the Big 4.

Great job, everyone.

The post KPMG Got Dibs On Being the Big 4 Firm With the Biggest Year-Over-Year Revenue Increase In FY 2021 appeared first on Going Concern.

But from our perch on the fringes of the accounting profession, what we were waiting for was how the largest public accounting firms in the land would address Rona vaccines and whether they would put any type of mandate in place for employees to go back into the office or to client sites.

Sure enough, starting in late August, new vaccine policies starting trickling out at the Big 4—first at Deloitte, then at KPMG, PwC, and EY. At KPMG, management told employees that the firm would require proof of vaccination or a negative COVID-19 PCR test administered within 72 hours prior in order to enter a KPMG US office, effective Oct. 4.

Then the Biden administration yelled from the mountaintops that businesses with 100 or more employees had until Jan. 4, 2022 to make sure their staff are either vaccinated against COVID, or submit a negative test weekly before entering the workplace, according to CNBC. Unvaccinated employees were supposed to begin wearing masks indoors at the workplace on Dec. 5.

But OSHA put the breaks on enforcement and implementation of the requirements last month, after the US Court of Appeals for the 5th Circuit halted the policy pending review, according to CNBC. Judge Kurt D. Engelhardt, in an opinion for a three-judge panel, said the requirements were “fatally flawed” and raise “serious constitutional concerns.”

While this all plays out in court, one KPMG director in Houston had to get something off his chest about the firm’s vaccine policy. In a post on LinkedIn Dec. 3, Casey Hinson wrote that during a recent webcast, “our CEO [Paul Knopp] said that our firm wants to be the most inclusive place to work, where everyone feels welcome. He then explained (and I am paraphrasing) that we have to discriminate against certain people because the federal government told us to, implying that we make too much money from them to not comply.”

He also wrote that “my firm has instructed me (through countless hours of ethics and integrity training) to speak up with courage when something does not align to our values.” The vaccine policy obviously isn’t something Hinson agrees with, as he continued: “My advice to my leadership is to follow the values you state you have. Do not comply or even say you will comply. Maybe you are playing a game of chicken, thinking the rules will die out in the courts, but in the meantime you are causing people duress and hardship in their personal lives and sending a message to younger generations that it is ok to be unethical if you make enough money and you can blame it on someone else.”

Hinson’s full post is below. And he hasn’t deleted it:

Whether you like or don’t like what he wrote, I think we can all agree that the dude’s got some balls calling out his employer in a public forum like LinkedIn.

The post KPMG Director’s Thoughts On Firm’s ‘Unethical’ Vaccine Policy Will Be Loved By Some and Hated By Others appeared first on Going Concern.