Last updated 31 January 2023
Our Chair and Chief Executive
Bina Mehta, our Chair, is responsible for leading the Board, ensuring it fulfills its responsibilities to set the tone from the top, oversee strategy and hold leadership to account. The Chair is accountable to the partners in fulfilling these responsibilities.
Jon Holt, the Chief Executive, is responsible for leading the whole business of the multi-disciplinary firm and is accountable for the executive leadership’s execution of the firm’s Board-approved strategy. The Chief Executive is accountable to the Board and the partners in fulfilling these responsibilities.
Hear Bina and Jon’s reflections on 2022:
Independent oversight
Our Independent Non-Executives (INEs) and Audit Non-Executives (ANEs) remain in a position of independence from the leadership decision-making of the firm and outside its chain of command. As such, they do not carry votes on the Board or its other Committees. Notwithstanding this, the INEs and ANEs have access and a full opportunity to question and challenge KPMG in the UK at both the Board and Board Committee levels. They are also able to comment on the activities of KPMG in the UK to external stakeholders, including our regulators, in an objective and dispassionate way in furtherance of their public interest and audit oversight roles.
The Chair, upon recommendation of the Nominations Committee and approval by the Board, appoints the INEs and ANEs. They are chosen to provide specific insights considered to be relevant to the activities of the PIC and/or the Audit Board and the development of the firm, including expertise in financial and corporate matters, governance, culture, and investor needs. Their appointments are for a fixed term of either two or three years. This may be renewed up to a maximum of three terms, or nine years.
KPMG has six Non-Executives. Four are INEs and three are ANEs; one of the Non-Executives is both an INE and ANE.
The Public Interest Committee comprises the four INEs and is chaired by Jonathan Evans. The Audit Board comprises the three ANEs, and two partners, and is chaired by Claire Ighodaro.
Hear Jonathan and Claire’s reflections on 2022:
KPMG has considered the Audit Firm Governance Code and the FRC’s Ethical Standard in drawing up criteria for appointment of the members of the PIC (and Independent Audit Non-Executives (ANEs) – see Audit Board). Whilst our INEs and ANEs are not considered to be part of the chain of command for the purposes of auditor independence requirements they are required to comply with certain criteria which have been developed to reflect the need for INEs and ANEs to maintain appropriate independence from the firm and its Partners and to be free from actual or perceived conflicts of interest. These criteria include considering the impact of any financial, business, employment, or family relationships they have with the firm’s audited entities or KPMG itself:
- None of the INEs or ANEs are permitted to hold a director or key management position role at any entity where KPMG UK (or any KPMG network firm) is the statutory auditor.
- They are not permitted to be the beneficial owner of a financial interest in an entity where KPMG is the auditor if they have significant influence over that entity.
- They are required to notify the firm if (i) a member of their immediate or close family is a director, holds a key management position, or is in a financial reporting oversight role at an entity where KPMG is the auditor, (ii) if they intend to enter into any business relationship (including providing services) with an entity where KPMG is the auditor or (iii) if they hold any financial interests in any entity that is material to them. This notification is required to enable the firm to consider if any of these relationships could give rise to an actual or perceived conflict of interest that requires safeguarding.
- With respect to relationships with KPMG itself, if an immediate or close family member of an INE or ANE became a Partner (or equivalent) of KPMG UK then they would no longer be eligible to hold their role.
- The INEs and ANEs are required to notify KPMG if an immediate or close family member became one of our employees, again this is to enable the firm to consider the scope for conflicts with their role.
All INEs and ANEs are checked prior to their appointment to ensure that they meet these criteria. As a condition of their appointment, they are under a continuing obligation to disclose to KPMG any matters which may constitute a change to their roles or relationships as soon as they become aware of them. They are also required to make an annual declaration of their compliance with the independence criteria.
Our governance structure
We seek every opportunity to strengthen our governance arrangements and the transparency that goes with them. Our approach in both respects makes us easier to regulate.
During the course of 2022, we have implemented a number of important changes to our governance. These are driven by our ongoing desire to ensure that the firm’s leadership structure supports our public interest objectives effectively, combined with early adoption of the Financial Reporting Council’s (FRC) published Principles for Operational Separation of the Audit practice as well as some of the requirements of the Revised 2022 Audit Firm Governance Code (which is applicable for financial years beginning on or after 1 January 2023). We have also made changes following the completion of the Board’s Effectiveness Review which was tabled at the Board in September 2021. During the year, the Board had a separate independent review of its committees and the recommendations from that review were discussed with the Board in November 2022. Implementation of those recommendations has commenced and will continue during the course of 2023.
The most important changes made during the year were:
- Establishment of a Nominations Committee. The Nominations Committee oversees appointments to the Board, Public Interest Committee, and Audit Board.
- Establishment of a Board skills matrix aligned to the firm’s strategy.
- Updating the terms of reference of our Board and Committees to avoid duplication and ensure effective liaison between the various governance bodies.
Governance structure as at January 2023
Role
The main governance body of the firm is the Board, chaired by Bina Mehta. The Board is responsible for the growth and long-term prosperity of the firm, ensuring it stays true to its purpose and vision. It provides oversight of the organisation, approves the firm’s strategy and oversees its implementation by the Executive Committee, by monitoring performance against the business plan. The Board is the ultimate governance body overseeing the consistent provision by the Audit practice of high-quality audits. The Board also ensures that there is a satisfactory process for managing cultural, ethical, risk and reputational matters affecting the firm including compliance with laws, other regulations relevant to our business and KPMG International’s policies.
As at January 2023, our UK Board is made up of 9 members:
- The Chair, who is also the Senior Elected Member
- The Chief Executive
- Five additional Elected Board Members, who are elected by the Partners
- One Nominated Board Member, who is nominated by the Chair
- An additional Executive Board Member, who is nominated by the Chief Executive
The Elected and Nominated Board Members, including the Senior Elected Board Member, are drawn from the partnership with a sufficient mix of competency, experience and independence of the day-to-day running of the firm. The Elected Members serve three-year terms, extendable up to a maximum of five years, to maintain relevant skills and breadth of experience. Nominated members of the Board are appointed following their nomination by the Chair and approval by Partner vote, for a fixed term.
The Board is attended by the Chair of the Public Interest Committee, the Chair of the Audit Board and by other Independent Non-Executives (INEs).
% Female Board members
44%
Jan 23
(Dec 21: 56%)
% Ethnic minority Board members
22%
Jan 23
(Dec 21: 22%)
% Lower socio-economic background Board members
22%
Jan 23
(Dec 21: 22%)
Role
In accordance with the Audit Firm Governance Code (AFGC), the firm has a Public Interest Committee (PIC). This PIC comprises entirely of Independent Non-Executives (INEs).
The key responsibilities of the PIC are to provide comment, challenge and recommendations relevant to the public interest in the context of KPMG’s UK business. Specifically, they provide independent oversight of the firm’s policies and processes for the core objectives defined within the AFGC:
- Promoting Audit Quality (in liaison with the Audit Board)
- Securing the firm’s reputation more broadly (including its non-audit business)
- Reducing the risk of firm failure
- Fulfilling the multi-disciplinary firm’s public interest responsibilities
Within the governance of KPMG in the UK, it is important for the INEs to remain in a position of independence from the leadership decision-making of the firm and outside its chain of command. As such, although they may vote on recommendations as a PIC, they do not carry votes on the Board or its other Committees. Notwithstanding this, the INEs have access and a full opportunity to question and challenge KPMG in the UK at both the Board and Board Committee level. They are also able to comment on the activities of KPMG in the UK to external stakeholders, including our regulators, in an objective and dispassionate way in furtherance of their public interest role.
Members of the PIC attended the Board and the Board Committees during the year, including the Risk Committee, People Committee, Nominations Committee and Audit Committee, as well as the Audit Board, in order to have greater visibility into the operations of KPMG in the UK and to share perspectives gained with fellow members of the PIC.
The Public Interest Committee comprises at least three INEs – as at January 2023, the PIC comprised of four INEs. The Chair of the PIC is an INE appointed by the Chair and approved by the Board. The INEs of the PIC are appointed for a term of up to three years, with the option for this to be renewed by the Board for an additional two terms of three years each, subject to a maximum of nine years in aggregate.
Role
The Audit Board oversees the Audit practice, in terms of its operations, processes and controls. This includes overseeing the strategy and internal investment needs of the Audit practice in furtherance of audit quality, inputting to the firm’s response to audit-related regulation and monitoring the discharge of KPMG’s public interest obligations to investors and other key stakeholders, such as regulators and audited entities.
The Audit Board also makes recommendations to the Board on the adequacy of the firm’s approach for meeting the principal objectives in the Audit Firm Governance Code as they relate to the Audit practice. It reviews the firm’s responsiveness to challenges in the audit profession specifically in relation to audit quality, actual or perceived conflicts of interest, independence, the attractiveness of the Audit profession, and regulatory objectives including the Principles for Operational Separation.
The Chair of the Audit Board also attends meetings of the Board.
The Audit Board comprises five members. Three of these are independent Audit Non-Executives providing independent objectivity and challenge in the same way as INEs on the Public Interest Committee. One of the ANEs is also an INE. The other two members are Partners and also Elected or Nominated Members of the Board. The number of independent Audit Non-Executives shall always exceed the number of Elected and Nominated Board Members on the Audit Board.
Unless otherwise determined by the Board, the duration of appointments of independent Audit Non-Executives as members of the Audit Board shall be for a period of three years which may be extended by the Board for an additional two terms of three years each, subject to a maximum nine years in aggregate.
Unless otherwise determined by the Board, the duration of appointments to the Audit Board of Elected and Nominated Members of the Board and any co-opted members shall be for a period of up to three years which may be extended by the Board for an additional period of two years.
The Audit Board Remuneration Committee
The Audit Board Remuneration Committee comprises the three ANEs only. Their role is to oversee the policy and processes for Audit Partner remuneration and their implementation, in particular to ensure their consistency with regulatory objectives and requirements, as well as their effectiveness in supporting audit quality. The Committee also oversees the criteria and selection processes for both Audit Partner promotion and designation of Responsible Individual status.
Role
The Risk Committee assists the Board in its oversight of current risk exposures and determination of risk appetite and strategy.
The Committee also oversees the effectiveness of the firm’s Enterprise-Wide Risk Management (ERM) Framework, the prevailing risk culture in the organisation, the firm’s capability to identify and manage new risk types, and the adequacy of risk and assurance resources for first, second and third lines of defence.
The Risk Committee comprises four members. In addition to the Chair the membership comprises a member of the People Committee and an additional Elected or Nominated Board Member.
Additional members can be co-opted on to the Committee as the need arises, to help fulfil the duties and obligations of the Committee. These appointments are made by the Board on the recommendation of the Chair of the Committee.
Unless otherwise determined by the Board, the duration of appointments of members of the Committee and of co-opted members shall be for a period of up to three years, which may be extended by the Board for an additional period of two years.
Role
The People Committee provides oversight of the processes for the appointment of senior leadership positions, oversees leadership succession planning; reviews remuneration policies for Partners and senior leadership; assists the Board in its oversight of the effective execution of the People Strategy by the Executive; and oversees the effectiveness of the firm’s programmes relating to culture and ethics.
The People Committee comprises four members. In addition to the Chair of the Committee the membership comprises two Elected or Nominated Board members. Additional members can be co-opted onto the Committee as the need arises to help fulfil the duties and obligations of the Committee.
Members of the Committee shall be appointed by the Board on the recommendation of the Chair in consultation with the Senior Elected Board Member.
Unless otherwise determined by the Board, the duration of appointments of Elected and Nominated members of the Committee and of co-opted members shall be for a period of up to three years which may be extended by the Board for an additional period of two years.
Elected and Nominated Members shall comprise a majority of the Committee at all times and the members may be removed from the Committee at any time by the Board.
Role
The Audit Committee oversees financial reporting and control matters on behalf of the Board. This includes reviewing internal controls, overseeing the relationship with our statutory auditors (including recommending their appointment, removal and remuneration as well as monitoring their independence and effectiveness) and reviewing the effectiveness of the firm’s Internal Audit function. From 1 October 2022, the Audit Committee also became responsible for overseeing the firm’s compliance with ISQM1.
The Audit Committee comprises three members. In addition to the Chair of the Committee, the membership comprises two Elected or Nominated Board members, including at least one member with recent and relevant audit financial experience. Additional members of the Committee shall be appointed by the Board on the recommendation of the Chair in consultation with the Senior Elected Board Member.
Members can be co-opted onto the Committee as the need arises to help fulfil the duties and obligations of the Committee. These appointments shall be made by the Board on the recommendation of the Chair of the Committee.
Unless otherwise determined by the Board, the duration of appointments of Elected and Nominated members of the Committee and of co-opted members shall be for a period of up to three years which may be extended by the Board for an additional period of two years.
Role
The Nominations Committee was established as a Committee of the Board in May 2022.
The Nominations Committee assists the Board in ensuring that the size and composition of the Board is appropriate to support executive oversight of the firm and oversees the processes for appointment of Chair, Chief Executive and Board members, as well as the independent non-executive members of the Audit Board and Public Interest Committee.
The Nominations Committee is chaired by the Chair of KPMG in the UK, Bina Mehta. In addition to the Chair, the membership comprises the Senior Elected Member, the Chair of the People Committee and two other elected members of the Board.
Members of the Committee are appointed by the Board, on the recommendation of the Chair in consultation with the Senior Elected Member.
Members can be co-opted onto the Committee as the need arises to help fulfil the duties and obligations of the Committee. These appointments shall be made by the Board on the recommendation of the Chair (or, where relevant with regard to matters related to the appointment of the Chair, on the recommendation of the Senior Elected Member).
Unless otherwise determined by the Board, the duration of appointments of Elected and Nominated members of the Committee and of co-opted members shall be for a period of up to three years which may be extended by the Board for an additional period of two years.
Role
The purpose of the Executive Committee is to manage the day-to-day activities of KPMG LLP’s business through:
- Developing and implementing strategy, operational plans, policies, procedures and budgets
- Driving and monitoring operating and financial performance
- Assessing and controlling risk
- Prioritising and allocating resources
The committees of the Executive comprise: Operations Executive, Investment Committee, Risk Executive and Audit Executive. Together, the Executive Committee and its sub-groups manage the day-to-day activities of the firm.
The Chair of the Executive Committee is the Chief Executive. The Executive Committee comprises those senior executives as the Chief Executive may determine as ratified by the Board (and who shall be appointed with the endorsement of the People Committee). Unless otherwise determined by the Board, the duration of appointments will be for a continuous term at the discretion of the Chief Executive.
Executive Committee Members’ roles, duties, responsibilities, goals, delegations and key accountabilities are set by the Chief Executive with consideration of the firm’s strategic goals, performance (including financial, operations and technology), people, culture ambition and risk. Reporting on the performance against these objectives is provided to the Executive Committee on approximately a monthly basis.
% Female Executive Committee members
55%
Jan 23
(Sep 21: 43%)
% Lower socio-economic background Executive Committee members
20%
Jan 23
(Sep 21: 14%)
Role
The Risk Executive provides the Executive Committee with appropriate oversight, governance and outcomes in relation to (i) risk management and (ii) reputation issues (including, but not limited to, legal, regulatory and conduct issues). The Risk Executive also supports the Operations Executive to manage operational, financial and people risk by providing oversight of the key risks in those areas.
The Risk Executive makes decisions, oversees implementation and provides guidance, and assurance to the Executive Committee and the Board that the firm is acting within its agreed risk appetite and is achieving its strategic outcomes in relation to the following matters:
- Meeting or exceeding all relevant legal, regulatory, ethics and independence and compliance requirements.
- Improving relationships and building trust with regulators, clients and other stakeholders.
- Effectively monitoring and addressing threats and challenges to the Firm’s brand and reputation.
Unless otherwise determined by the Executive Committee, the duration of appointments of members of the Committee will be for a continuous term.
Role
The Operations Executive provides the Executive Committee with appropriate oversight and outcomes in relation to delivery of the UK firm’s operations and technology strategy in support of the three year business plan, and vision to be the ‘Fastest Growing, Most Connected, Most Trusted professional services firm’.
Unless otherwise determined by the Executive Committee, the duration of appointments of members of the Committee will be for a continuous term.
Role
The Audit Executive manages the day-to-day activities of the Audit practice of the firm through developing and implementing strategy, operational plans, policies, procedures and budgets; driving and monitoring operating and financial performance; promoting and role-modelling a strong culture that supports audit quality; assessing and controlling risk; and prioritising and allocating resources.
The Audit Executive makes decisions, oversees implementation and reports to the Board (through the Executive Committee) and to the Audit Board, providing assurance that the firm is acting within its agreed risk appetite and is achieving its strategic outcomes in relation to Audit.
Unless otherwise determined by the Executive Committee, the duration of appointments will be for a continuous term.
Further information
UK Transparency Report
Our annual Transparency Report shares further information on our UK structure and governance, including on our governance KPIs, annual meeting attendance, network arrangements, and legal structure.