Who we are
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services.
KPMG International is a Swiss cooperative formed under Swiss law. It licenses the KPMG trademark and conducts activities for the overall benefit of the KPMG network. It facilitates audit quality across the network by establishing common policies, processes and standards to be applied by member firms. It does not provide professional services to clients itself. KPMG member firms — all of which are affiliated with KPMG International — provide professional services to clients and their Heads of Audit have direct responsibility for audit quality.
The Global Board is supported by a number of committees, including an Executive Committee. A number of global steering groups support and drive the execution of strategy with a focus on audit quality including the Global Audit Steering Group (GASG) and the Global Quality & Risk Management Steering Group (GQRMSG).
KPMG legal structure and governance
KPMG International Cooperative (KPMG International) is a Swiss cooperative, which is a legal entity formed under Swiss law. It is the entity with which all the member firms of the KPMG network are affiliated.
KPMG International carries on business activities for the overall benefit of the KPMG network of member firms but does not provide professional services to clients. Professional services to clients are exclusively provided by member firms.
One of the main purposes of KPMG International is to facilitate the provision by member firms of high-quality Audit, Tax and Advisory services to their clients. For example, KPMG International establishes and facilitates the implementation and maintenance of uniform policies, standards of work and conduct by member firms, and protects and enhances the use of the KPMG name and brand.
KPMG International is an entity that is legally separate from each member firm. KPMG International and the member firms are not a global partnership, joint venture, or in a principal or agent relationship or partnership with each other. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Legal structure of the KPMG network
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services to a wide variety of public and private sector organizations.
KPMG's structure is designed to support consistency of service quality and adherence to agreed values wherever the member firms operate.
Unless otherwise stated, the words 'member firm' or 'KPMG member firm' when used in this Transparency Report include the following:
- Those entities that are members of KPMG International as a matter of Swiss law because KPMG International is a Swiss cooperative (i.e. similar to shareholders, albeit KPMG International has no share capital and, therefore, only has members, not shareholders).
- Those entities ('sublicensees') that are not members of KPMG International as a matter of Swiss law but have still entered into legal agreements with KPMG International and also an entity that is a `member'.
- Such agreements mean that sublicensees are member firms of the KPMG network. Generally, the rights and obligations of a sublicensee as a KPMG member firm are exactly the same as if it had been a member. In particular, all rights and obligations of member firms that are described in this document are rights and obligations of sublicensees unless otherwise specifically stated. In addition, the member that is party to the sublicensee's agreement with KPMG International is also responsible to KPMG International (but not to any other person or entity) for the sublicensee's compliance with its obligations as a KPMG member firm.
- Those entities that are owned, managed and controlled by an entity that is a member or a sublicensee. The respective member or sublicensee is responsible to KPMG International for such controlled entity's compliance with obligations to KPMG International as if it were a member or sublicensee.
Legal relationship between KPMG International and each member firm
KPMG is the registered trademark of KPMG International and is the name by which the member firms are commonly known. The rights of member firms to use the KPMG name and marks are contained within agreements with KPMG International.
Member firms are generally locally owned and managed. Each member firm is responsible for its own obligations and liabilities. KPMG International and other member firms are not responsible for a member firm's obligations or liabilities.
Member firms may consist of more than one separate legal entity. If this is the case, each separate legal entity will be responsible only for its own obligations and liabilities, unless it has expressly agreed otherwise.
Responsibilities and obligations of member firms
Under agreements with KPMG International, member firms are required to comply with KPMG International's policies and regulations including quality standards governing how they operate and how they provide services to clients to compete effectively. This includes having a firm structure that facilitates continuity and stability and being able to adopt global strategies, share resources (incoming and outgoing), service multinational clients, manage risk, and deploy global methodologies and tools.
Each member firm takes responsibility for its management and the quality of its work. Member firms commit to a common set of KPMG values.
KPMG International's activities are funded by amounts paid by member firms. The basis for calculating such amounts is approved by the Global Board and consistently applied to the member firms. A firm's status as a KPMG member firm and its participation in the KPMG network may be terminated if, among other things, it has not complied with the policies and regulations set by KPMG International or any of its other obligations owed to KPMG International.
KPMG International governance bodies
The Global Council focuses on high-level governance tasks and provides a forum for open discussion and communication among member firms.
It performs functions equivalent to a shareholders' meeting (albeit KPMG International has no share capital and, therefore, only has members, not shareholders).
Among other things, the Global Council elects the Global Chairman and also approves the appointment of Global Board members. It includes representation from 58 member firms that are 'members' of KPMG International as a matter of Swiss law. Sublicensees are generally indirectly represented by a member.
The Global Board is the principal governance and oversight body of KPMG International. The key responsibilities of the Global Board include approving strategy, protecting and enhancing the KPMG brand, overseeing management of KPMG International and approving policies and regulations. It also admits member firms.
The Global Board includes the Global Chairman, the Chairman of each of the three regions (the Americas; Asia Pacific (ASPAC); and Europe, the Middle East and Africa (EMA)) and a number of senior partners of member firms. It is led by the Global Chairman, who is supported by the Executive Committee, consisting of the Global Chairman, the Chairman of each of the regions and currently three other senior partners of member firms. The list of Global Board members, as at 1 October 2018, is available in the KPMG Global Review.
One of the other Global Board members is elected as the lead director by those Global Board members who are not also members of the Executive Committee of the Global Board ('non-executive' members). A key role of the lead director is to act as liaison between the Global Chairman and the 'non- executive' Global Board members.
KPMG International committees
The Global Board is supported in its oversight and governance responsibilities by several other committees. The lead director nominates the chairs and members of certain Global Board committees for approval by the Global Board. The roles of a number of these committees are summarized below.
The Executive Committee's role includes recommending global strategy and priorities to the Global Board for its approval, including in relation to:
- KPMG's vision and purpose
- the KPMG brand
- strategy and strategic alignment
- coordinated go-to-market and service-delivery programs.
It also supports and holds accountable the Global Management Team in driving and promoting the execution of the global strategy and priorities.
The Governance Committee's role is:
- assessing, and making recommendations to improve, the governance and management structure of KPMG International
- recommending policies and regulations in respect of member firm governance to the Global Board for approval
- developing and implementing the biennial Global Board evaluation process
- overseeing succession planning, recommending Global Board nominees and the process for the appointment of a Global Chairman
- approving the remuneration of the Global Chairman and members of the Global Management Team, and overseeing their annual performance reviews.
The Investments Committee's role is:
- overseeing strategic investments
- promoting and overseeing the coordination of external alliances that are anticipated to have an impact in more than one country.
The Operations Committee's role is:
- overseeing KPMG International's financial reporting, budget and business planning process
- recommending and overseeing operational investments
- promoting the implementation of the high growth markets strategy.
Global Quality & Risk Management Committee
The Global Quality & Risk Management Committee oversees those operations, resources and policies and regulations of KPMG International that are intended to improve and facilitate risk management decisions by KPMG member firms and to improve and maintain the consistency and quality of services and products provided by the KPMG member firms to their clients.
Global Audit Quality Committee
The overarching responsibility of the Global Audit Quality Committee is to strive for globally consistent audit quality across the KPMG network and to oversee those activities by KPMG International that relate to improving and maintaining the consistency and quality of audits provided by the KPMG member firms.
Professional Indemnity Insurance (PII) Committee
The PII Committee recommends the professional indemnity insurance program, in which member firms are obliged to participate, to the Global Board for approval.
Global Management Team
The Global Board has delegated certain responsibilities to the Global Management Team. These responsibilities include developing global strategy by working together with the Executive Committee. The Global Management Team also supports the member firms in their execution of the global strategy and is responsible for holding them accountable for commitments.
It is led by the Global Chairman and includes the Global Chief Operating Officer, the Global Chief Administrative Officer, global function and infrastructure heads, and the General Counsel.
Global Head of Quality, Risk and Regulatory
The Global Head of Quality, Risk and Regulatory serves as an executive member of the senior leadership team, and has global responsibility for KPMG's system of quality controls, risk management, and ethics and compliance programs.
Global Steering Groups
The Global Steering Groups work closely with regional and member firm leadership to:
- establish and communicate appropriate audit and quality/risk management policies
- enable effective and efficient risk processes to promote audit quality
- proactively identify and mitigate critical risks to the network.
The Global Steering Groups act under the oversight of the Global Management Team.
Global Audit Steering Group (GASG)
The GASG is responsible for driving the member firms' implementation of KPMG's audit strategy, including standards of audit quality. The GASG works closely with the GQRMSG in relation to quality and risk matters related to audit.
The GASG is chaired by the Global Head of Audit, and includes the Heads of Audit from the 10 larger member firms, the Regional Heads of Audit, the Chief Operating Officer for Global Audit and the Global Audit Quality & Risk Management Partner.
Global Audit Quality Steering Committee (GAQSC)
The GAQSC is chaired by the Global Head of Audit Quality and includes: the Global Head of Audit, Global Head of Quality, Risk & Regulatory, Regional Audit Quality Leaders, country Heads of Audit Quality from the 10 larger member firms, Global Services Centre Leadership, International Standards Group Leadership and the Head of the Global Audit Quality Monitoring Group.
The GAQSC is responsible for:
- monitoring and driving progress in global audit quality initiatives to improve the consistency and quality of audit execution throughout the network, including the system of quality control
- considering audit quality matters on a network-wide basis (including issues arising through quality performance and regulatory reviews as well as root cause analysis), with a specific focus on those issues arising from the 10 larger member firms
- assessing and monitoring network progress on how audit quality issues are being addressed by member firms and the network as a whole
- making recommendations to the GASG on policy changes related to audit quality issues.
Global Quality & Risk Management Steering Group (GQRMSG)
The GQRMSG is chaired by the Global Head of Quality, Risk and Regulatory and includes the Global Head of Audit Quality; the Chief Operating Officer for Global Quality & Risk Management; the Global Heads of Audit, Tax and Advisory; the Global Quality & Risk Management Partners for Audit, Tax, and Advisory; the Global Head of Independence; the Global Head of People; the General Counsel; and the Risk Management Partners for each of the three regions and for certain Global Board Member Firms.
The GQRMSG is responsible for setting quality and risk management policies and procedures for the network and for providing associated guidance. These are documented in the Global Quality & Risk Management Manual (GQ&RM Manual) available to all member firms and their personnel on a web-based platform. The GQRMSG is responsible — through the Quality Performance Review (QPR), the Risk Compliance Program (RCP), Global Compliance Reviews (GCR) and Area Quality and Risk Management Leaders (ARLs) — for monitoring:
- member firm compliance with global quality and risk management policies, processes and system
- proactive identification and mitigation of significant professional services risks faced by member firms
- performance of member firm professional services to drive and help ensure consistent high-quality work globally.
Area Quality & Risk Management Leaders
The Global Head of Quality, Risk and Regulatory appoints Area Quality & Risk Management Leaders who serve a regular and ongoing monitoring and consultation function to assess the effectiveness of a member firm's efforts and processes to identify, manage and report significant risks that have the potential to damage the KPMG brand. Significant activities of the ARL, including member firm issues identified and related member firm response/ remediation, are reported to GQ&RM leadership.
The objectives of the ARL role are to:
- assist GQ&RM leadership in the monitoring of member firms' quality and risk activities
- work with GQ&RM leadership and the International Office of General Counsel (IOGC) when significant brand and legal risk issues occur to assist in ensuring that matters are properly handled
- monitor the effectiveness of member firm remediation of significant issues, including identification of the root cause(s) of serious quality incidents.
Total turnover achieved by EU/EEA audit firms resulting from the statutory audit of annual and consolidated financial statements
Aggregated revenues generated by KPMG audit firms from EU and EEA Member States resulting from the statutory audit of annual and consolidated financial statements was EUR2.8 billion during the fiscal year ending 30 September 2018. The EU/EEA aggregated statutory audit revenue figures are presented to the best extent currently calculable and translated at the average exchange rate prevailing in the 12 months ended 30 September 2018.