KPMG

KPMG
Type Swiss Cooperative
Industry Professional services
Founded 1987; merger of Peat Marwick International and Klynveld Main Goerdeler
Headquarters Amstelveen, Netherlands (global)[1]
Area served Worldwide
Key people Timothy P. Flynn(Chairman)[2]
Services Audit
Tax
Advisory
Revenue increaseUS$20.1 billion (2009)[3]
Employees 136,000
Website KPMG.com

KPMG is one of the largest professional services firms in the world and one of the Big Four auditors, along with PricewaterhouseCoopers (PwC), Deloitte Touche Tohmatsu (Deloitte) and Ernst & Young (EY). Its global headquarters are located in Amstelveen, Netherlands.[1]

KPMG employs over 135,000 people[3] in a global network of professional services firms spanning over 140 countries.[4] KPMG has three lines of services: audit, tax, and advisory.

Contents

History

Early years and mergers

Headquarters of KPMG LLP, the United States-based member firm of KPMG International, at 345 Park Avenue, New York City, New York.
The 34-story KPMG Tower on De Maisonneuve Boulevard in Montreal.
KPMG offices at 150 West Jefferson in Detroit.

The firm was established in 1870 when William Barclay Peat formed an accounting firm in London.[5] In 1877 accountancy firm Thomson McLintock opened an office in Glasgow[5] and in 1911 William Barclay Peat & Co. and Marwick Mitchell & Co. merged to form Peat Marwick Mitchell & Co, later known as Peat Marwick.

Meanwhile in 1917 Piet Klynveld opened his accounting-firm in Amsterdam. Later he merged with Kraayenhof to form Klynveld Kraayenhof & Co.

In 1979 Klynveld Kraayenhof & Co. (Netherlands), Thomson McLintock (United States) and Deutsche Treuhandgesellschaft (Germany) formed KMG (Klynveld Main Goerdeler) as a grouping of independent national practices to create a strong European-based international firm.[5] Then in 1987 KMG and Peat Marwick joined forces in the first mega-merger of large accounting firms and formed a firm called KPMG in the US, and most of the rest of the world, and Peat Marwick McLintock in the UK.[5]

In 1990 the two firms settled on the common name of KPMG Peat Marwick McLintock but in 1991 the firm was renamed KPMG Peat Marwick and in 1999 the name was reduced again to KPMG.

In 1997 KPMG and Ernst & Young announced that they were to merge, in a manoeuvre largely seen as a spoiling tactic over the merger of Price Waterhouse and Coopers & Lybrand. However that merger, to form PricewaterhouseCoopers, was granted regulatory approval while the KPMG/Ernst & Young tie-up was later abandoned.[6]

Recent history

In 2001 KPMG divested its U.S. consulting firm through an initial public offering of KPMG Consulting Inc, which is now called BearingPoint, Inc.[7] In early 2009, BearingPoint filed for Chapter 11 bankruptcy protection and proceeded to sell portions of the firm to Deloitte, PricewaterhouseCoopers, and other parties.[8]

The UK and Dutch consulting arms were sold to Atos Origin in 2002.[9]

In 2003 KPMG divested itself of its legal arm, Klegal[10] and KPMG LLP sold its Dispute Advisory Services to FTI Consulting.[11]

KPMG's member firms in the UK, Germany, Switzerland and Liechtenstein merged to form KPMG Europe LLP in October 2007. They appointed joint Chairmen, John Griffith-Jones and Ralf Nonnenmacher.[5]

It was announced in December 2008 that two of Tremont Group’s Rye Select funds, audited by KPMG, had $2.37 billion invested with the Madoff "Ponzi scheme."[12] Class action suits were filed.[13]

Global structure

Each national KPMG firm is an independent legal entity and is a member of KPMG International Cooperative, a Swiss entity registered in the Swiss Canton of Zug. KPMG International changed its legal structure from a Swiss Verein to a co-operative under Swiss law in 2003.[14]

KPMG International is led by:[15]

Services

KPMG offers the following services:[16]

Major clients

The 34-story KPMG Centre in Dallas, Texas.

KPMG member firms serve as the independent auditors for a large number of major corporations:

Name and branding

KPMG building in Kamloops, British Columbia.

Roots for the name KPMG stem from the names of four partners who merged their own independent accounting firms:

Staff

The US branch of KPMG was rated one of the top 10 companies for working mothers.[17] It is also ranked No. 56 on Fortune Magazine's list of 100 Best Companies to Work For, voted for by employees.[18]

KPMG ranks No. 5 out of 125 among companies with the best training programmes according to "Training Magazine".[19]

KPMG was the preferred employer among the Big Four accounting firms according to College Grad.com.[20] It was also ranked No.4 on the list of "50 Best Places to Launch a Career" in 2009 according to BusinessWeek.[21]

In 2008 KPMG in the UK was named the best big company to work for by The Times. This was the fourth consecutive year that KPMG has made the top three winning three times in that four years. If a good position is obtained in the survey staff receive an extra days holiday, some have suggested that this could influence how staff fill in the survey thus putting the validity of the award in doubt.[22]

In 2009 in the UK, KPMG introduced programme known as 'Flexible Futures'. This allowed staff to volunteer to give the firm the option to either send them on a sabbatical at 30% pay for up to 12 weeks, or to reduce their working hours to 4 days a week. The option remains open to the firm until October 2010. This facility has been invoked by the firm in some departments. KPMG publicised this as innovative and an alternative approach to redundancies. Reaction within the firm was generally positive, with over 75% of staff volunteering. However over 100 staff had been made redundant prior to this announcement, leading some to accuse KPMG of being hypocritical in the message that they were given.[23]

In October 2008, KPMG was named one of "Canada's Top 100 Employers" by Mediacorp Canada Inc., and was featured in Maclean's newsmagazine. Later that month, KPMG was also named one of Greater Toronto's Top Employers, which was announced by the Toronto Star newspaper.[24]

KPMG in Leeds, West Yorkshire.

Criticisms

Rite Aid

In 2003, KPMG agreed to pay $125 million to settle a lawsuit stemming from the firm's audits of the drug chain Rite Aid.[25]

Lernout & Hauspie

In 2004, KPMG agreed to pay $115 million to settle lawsuits stemming from the collapse of software company Lernout & Hauspie Speech Products NV.[26]

Tax shelter fraud

In early 2005, the United States member firm, KPMG LLP, was accused by the United States Department of Justice of fraud in marketing abusive tax shelters. KPMG LLP admitted criminal wrongdoing in creating fraudulent tax shelters to help wealthy clients avoid $2.5 billion in taxes and agreed to pay $456 million in penalties in exchange for a deferred prosecution agreement. KPMG LLP would not face criminal prosecution if it complied with the terms of its agreement with the government. On January 3, 2007, the criminal conspiracy charges against KPMG were dropped.[27]

Before the settlement, the firm, on the advice of its counsel Skadden, Arps, Slate, Meagher & Flom LLP, removed several tax partners and admitted "unlawful conduct" by those partners. The firm agreed to cooperate with the U.S. Department of Justice's investigation and help prosecute former partners who had devised and sold the tax shelters. Additionally, the firm hired former U.S. district judge Sven Erik Holmes to monitor its legal and regulatory affairs.

Siemens

In February 2007, KPMG Germany was investigated for ignoring questionable payments in the Siemens bribery case.[28] In November 2008, the Siemens Supervisory Board recommended changing auditors from KPMG to Ernst & Young.[29]

Others

In 2006, Fannie Mae sued KPMG for malpractice for approving years of erroneous financial statements.[30]

In March 2008 KPMG was accused of enabling “improper and imprudent practices” at New Century Financial, a failed mortgage company[31] and KPMG agreed to pay $80 million to settle suits from Xerox shareholders over manipulated earnings reports.[32]

Sponsorship

The Swedish member firm was main sponsor for Swedish biathlete Magdalena Forsberg, six times world champion and twice olympic medalist. Forsberg was working as a tax consultant at the KPMG Sundsvall office parallel with her athletic career[33].

In February 2008, Phil Mickelson, ranked one of the best golfers in the world, signed a three-year global sponsorship deal with KPMG. As part of the agreement, Mickelson will wear the KPMG logo on his headwear during all golf related appearances.[34]

The Canadian member firm sponsored Alexandre Bilodeau, who won the first gold medal for Canada on home-soil in the 2010 Vancouver Olympics. Alexandre's father is a tax partner in the Montreal office.[35][36]

Notable current and former employees

Business

Politics and public service

Other

References

  1. ↑ 1.0 1.1 KPMG International: HQ
  2. ↑ KPMG International names new Chairman
  3. ↑ 3.0 3.1 "Who are we". KPMG. http://www.kpmg.com/Global/en/WhoWeAre/Pages/default.aspx. Retrieved March 20, 2010. 
  4. ↑ About KPMG
  5. ↑ 5.0 5.1 5.2 5.3 5.4 KPMG - History
  6. ↑ Ernst & Young, KPMG merger to create US juggernaut
  7. ↑ KPMG Consulting becomes Bearing Point
  8. ↑ BearingPoint Seeks Bankruptcy Protection
  9. ↑ French Atos buys two KPMG consulting units
  10. ↑ Are they off their trollies? New Statesman article
  11. ↑ FTI Consulting Completes Acquisition of Dispute Advisory Services Business Of KPMG
  12. ↑ Accounting firms drawn into Madoff scandal
  13. ↑ Madoff-related class action filed in SDNY against Tremont Group, KPMG, others
  14. ↑ Handelsregister des Kantons Zug (Registration Number CH-020.6.900.276-5)
  15. ↑ KPMG: Leadership
  16. ↑ KPMG Global Services
  17. ↑ Working Mother
  18. ↑ 100 Best Companies to work for
  19. ↑ Extract from Training Magazine
  20. ↑ College Grad.com
  21. ↑ Best Places to Launch a Career
  22. ↑ Best 100 Companies
  23. ↑ Four day week as work dries up: KPMG offers 11,000 staff dramatic cut in hours to save jobs
  24. ↑ "Reasons for Selection, 2009 Canada's Top 100 Employers Competition". http://www.eluta.ca/top-employer-kpmg. 
  25. ↑ KPMG agrees to settle Rite Aid suit.
  26. ↑ KPMG Pays $115 Million to Settle Suit
  27. ↑ Charge Against KPMG Dropped Carrie Johnson, January 4, 2007, Washington Post
  28. ↑ KPMG Germany's Failure to Spot Siemens Problems Raises Questions
  29. ↑ Siemens Supervisory Board Proposes Ernst & Young As Auditors
  30. ↑ Fannie Sues KPMG for Approving Bad Numbers
  31. ↑ Report Assails Auditor for Work at Failed Home Lender
  32. ↑ KPMG and Xerox Settle Securities Lawsuit
  33. ↑ Aftonbladet.se Från skott till skatt, March 23 2002
  34. ↑ Mickelson signs agreement with KPMG LLP
  35. ↑ Bouw, Brenda (17 February 2010). "Golden boy Bilodeau weighs new offers". The Globe and Mail. http://www.ctvolympics.ca/freestyle-skiing/news/newsid=44879.html. Retrieved 16 March 2010. 
  36. ↑ Newquist, Caleb (18 February 2010). "Alexandre Bilodeau Is KPMG Canada’s Phil Mickelson". The Going Concern. http://goingconcern.com/2010/02/alexandre-bilodeau-kpmg-canadas-phil-mickelson/. Retrieved 16 March 2010. 
  37. ↑ SEC News Digest, September 23, 1984

External links

Big Four auditors
Deloitte · Ernst & Young · KPMG · PwC