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KPMG hands UK partners biggest payday since 2014

KPMG’s UK partners were handed their biggest payday since 2014, when a booming bargaining market helped average salaries reach £ 688,000 last year.

Partners were paid 20 percent more than in 2020 by the scandal-ridden auditing firm, which has faced a management overhaul as well as fines and criticism for its audit and insolvency work in the past year.

The company said all of its key business areas had grown in the year to September 2021, led by a 31 percent increase in sales at its contract advisory unit.

Its 14,700 employees shared a £ 100m bonus pool as the professional services sector benefited from the growing demand for advice on mergers and acquisitions and on digital transformations as companies sought to transform their activities to adapt to serving customers online.

“This is a robust performance delivered against the backdrop of the pandemic’s challenging background,” said Jon Holt, CEO of KPMG in the UK.

Although higher than in 2020, payments to KPMG partners were lower than their peers at the other Big Four audit firms: Deloitte, EY and PwC.

KPMG’s pre – tax profit rose to £ 436m. for the year to September 2021, up from £ 288m. the year before. Revenue rose 10 per cent to £ 2.4 billion, excluding the company’s pension and restructuring divisions, which were sold off in 2020 and 2021 respectively.

The company’s 571 partners have backed a plan to keep £ 300m. of the proceeds from the sale that the company has earmarked for investments in its core business areas and in higher growth areas such as digital consulting and consulting companies on environmental, social and managerial issues.

The company is also facing additional fines and lawsuits for alleged audit errors at companies such as the collapsed outsourcer Carillion.

“We have embarked on the fundamental transformation of our UK business and our partners are united around our long-term vision for the company,” said Holt.

Holt has named Chris Hearld, head of KPMG’s UK regional business, as CFO as he aims to improve the company’s profitability, which has fallen out over the past decade.

KPMG has been going through a difficult year in which chairman and senior partner Bill Michael resigned after telling staff to “stop moaning” about pandemic working conditions and that unconscious bias was “complete and utter shit”.

His temporary successor, Mary O’Connor, who was actually the head of the non-audit firm, also left after she was not nominated as a candidate to become the firm’s permanent CEO. That role went instead to Holt, former chief auditor.

In August, KPMG was fined £ 13 million for its role in deliberately pushing client Silentnight into insolvency so that another potential customer, private equity firm HIG Capital, could buy the company without its £ 100 million pension obligations. The UK Accounting Standards Board has also criticized the quality of the company’s bank audits.

The Financial Times revealed in December that KPMG had withdrawn from bidding for British government contracts pending the outcome of a review by the Cabinet Office that could lead to a formal ban on the third-largest winner of public sector contracts.

KPMG’s enhanced payroll still lacks rivals at Deloitte, which received an average of £ 854,000 last year plus an extra £ 197,000 from the sale of its restructuring division. Rivals at EY and PwC achieved record highs of £ 749,000 and £ 868,000 respectively.

KPMG’s audit revenue increased 5 per cent to £ 634m. Sales from tax and law rose 8 per cent to £ 402 million, while consultancy revenue rose 13 per cent to £ 646 million.

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