December 2, 2020

KPMG U.K. Is Getting Stingy

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Today is New Year’s Eve in KPMG’s Universe, as fiscal year 2020 begins tomorrow. We won’t know KPMG’s global revenue for FY 2019 until mid-December, and the Queen’s KPMG doesn’t release its profit and revenue numbers until early December, but based on all this pound-pinching going on, we can speculate that KPMG U.K.’s 2019 results might be kinda shitty.

First, the Financial Times recently reported that between 200 and 250 of the U.K. firm’s 630 administrative support staff will be losing their jobs as part of the cost-saving purge. As a result, KPMG partners will have to put on their big boy or big girl pants and do their own expense reports.

Then over the weekend, FT reported on KPMG’s latest move to rein in some of its spending:

KPMG has told hundreds of its UK employees to hand in their work mobiles as part of a cost-saving drive ahead of its latest financial results.

The Big Four firm told staff in an internal memo that it would start collecting phones in October, the first month of its financial year. People working in non-client facing roles and junior staff in administrative jobs will be the most heavily affected.

FT said KPMG’s business services group, which includes its finance, IT, marketing and legal teams, will be giving up their phones first. That’s about 3,500 employees.

KPMG U.K. said last December that FY 2018 revenue increased by 8% from £2.17 billion to £2.34 billion, while profits went up 18% from 2017, totaling £356 million. But as FT pointed out, that was well below the £414 million in profits five years ago.

But these two graphs in the FT article lead me to believe that we won’t be seeing a press release titled, “KPMG UK records strongest growth in a decade” this year:

“To realise our growth ambition, we need to improve our profitability by building a leaner, more responsive cost base,” the staff memo said. “This will help free up funds to invest in the future of the firm.”

KPMG told staff the costs of the UK business were higher than any firm in its global network and the most expensive of the Big Four, which includes PwC, Deloitte, and EY, in the UK.

Why are the costs of the U.K. firm so much higher than the others? Did it overhire? Are salaries out of control? Is it because of all the fines KPMG has had to pay the Financial Reporting Council for bad auditing and misconduct? Does it cost a lot to keep Chairman Bill Michael fed and happy?

This doesn’t seem to bode well for Klynveldians in the U.K. If you have any more insight or concerns, drop us a line using the information at the bottom of this article or let us know what’s going on in the comment section.

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