KPMG has announced an overhaul of its UK governance structure in response to a recommendation by the competition watchdog for an operational split between the Big Four firms’ audit and consulting arms.
The firm will create a new audit executive committee in the UK with responsibility for managing the performance and risks of that part of the business, in response to the Competition and Markets Authority’s conclusion that audit arms should have a separate chief executive and board.
But the changes fall short of the regulator’s broader call for an operational split for the Big Four’s UK audit work.
“These changes do not mark the separation of KPMG UK’s Audit practice from the rest of the firm, but will deliver on many of the recommendations proposed by the CMA and the [House of Commons Business, Energy and Industrial Strategy] Select Committee,” the company said in a statement.
KPMG said last year it would stop offering consulting services to its largest UK audit customers in response to concerns over perceived conflicts of interest, and has introduced new performance management rules for its auditors with audit quality as the primary objective, another CMA recommendation.
The new audit executive committee will be led by Jon Holt, currently the firm’s head of financial services. Michelle Hinchcliffe, the firm’s current head of audit, will become chair of audit and join KPMG’s UK board. The audit committee will still report into the UK board.
Bill Michael, chairman at KPMG UK, said: “We’re serious about making changes to restore trust in audit. We understand concerns that the profession’s operating models have become too opaque and we are taking action to tackle these.”