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A yearslong push to get partners to voluntarily step down fell short at KPMG, and the Big Four firm has now moved to remove roughly 10% of its U.S. audit partners — around 100 people — according to The Wall Street Journal.
Not all of the exits were voluntary — while some partners chose early retirement, others are being pushed out by the firm. The firm characterized the move as a structural adjustment to match its partner ranks to the scale of its audit practice, rather than a response to individual underperformance.
“This action is connected to a multiyear 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,” the firm said in a statement. Affected partners will receive financial packages and placement support, KPMG said.
A January audit-quality report put the combined total of partners and managing directors across KPMG’s U.S. audit practice at roughly 1,400; the reductions do not extend to managing directors.
Despite the partner reductions, KPMG says its U.S. audit business is on a growth trajectory. An Ideagen Audit Analytics report from March found the firm covers roughly one in ten SEC-registered companies — a smaller share than its Big Four peers, which ranged from 12% at PricewaterhouseCoopers to 15% at Deloitte, with Ernst & Young at 13%.
Removing partners is a far more complicated and costly proposition than cutting staff. When a partner departs, the firm faces obligations that include buying out that person’s equity stake and issuing a separate payment tied to how long and at what level they served.
The move fits a wider trend in the industry: major accounting firms have been grappling with the consequences of aggressive pandemic-era hiring, and voluntary departures have not thinned the ranks fast enough to compensate, according to The Journal. The pressure has extended to the partner level at multiple firms, with EY among those that have also made partner-level reductions in recent years.