KPMG trims US advisory business and audit partners

Dive Brief:

KPMG is laying off about 4% of its U.S. advisory business workforce, or approximately 400 people, the Big Four firm told workers this week, according to a person familiar with the matter. The action comes about one week after the company informed workers that 10% of its U.S. audit partners, or about 100 people, would be “separated from the company” either through layoffs or voluntary early retirements, the person said.
The company in a statement emailed Friday to CFO Dive confirmed other media reports that it is “transitioning out” of U.S. federal audit roles through an “orderly, multi-year process, meeting all client and regulatory obligations,” and redeploying professions from that business to other areas of the company. About 450 professionals will be impacted by the exit from the government business, according to the person familiar with the matter.
“All three businesses at KPMG are growing. We are going to be very agile and take strategic, decisive actions to best deploy our talent and capital to innovate and best serve our clients,” the company said in the statement. The company employs about 276,000 people worldwide, including about 35,000 in the U.S., with its three business segments composed of advisory, audit and assurance, and tax.

Dive Insight:

The moves come as recent changes in the regulatory environment have reduced the demand for some consulting work in financial services and other areas, the person familiar said. At the same time, demand for advisory services from tech and telecom companies related to AI and cybersecurity issues is strong, the person said.

In its statement, KPMG also emphasized its continued strength in auditing. “Our audit business is strong, and this action reflects our ongoing commitment to sustaining audit quality and leading the profession into the future,” the company said. “This action is connected to a multi-year strategy to align the size, shape and skills of our team to the power of our audit platform to best serve our clients and protect the capital markets.”

A KPMG spokesperson declined to comment beyond the statement.

KPMG is not alone in the industry cutting staff. Last month, The Wall Street Journal reported that accounting firm Forvis Mazars cut about 3% of its U.S. audit tax workforce. Last year, Business Insider reported PwC planned to cut college graduate entry-level hiring of tax and assurance associates.

While all staff at Big Four firms are not CPAs or accountants, the KPMG audit layoffs are the latest signal that the accounting labor shortage has begun to ease. The shortage has been particularly painful for small and medium firms, as well as for some finance chiefs who struggled to staff finance teams. However, outsourced labor and the rising use of automation and AI that enable smaller finance teams to complete work faster are reshaping the accounting labor landscape, CFO Dive previously reported.

The Financial Times first reported that KPMG was closing its U.S. federal government audit operations in the wake of losing a Pentagon contract valued at $60 million and The Wall Street Journal first reported the audit partner and advisory business cuts.