Category: KPMG

KPMG Australia Clients

by enthusiastKPMG

KPMG Australia is led by its CEO Andrew Yates who took over in July, 2021. KPMG Revenues were 1.9 billion AUD up 7% when compared with FY 19. Audit, Assurance & Risk Consulting (AARC) revenues was up 9%, Deals, Tax & Legal was up 8.1%, Enterprise was up 5.8%, Management Consulting was up 4.6%, and KPMG Strategy was up 13.5%.

The break-out of KPMG’s revenues across the various service lines are as follows.

KPMG’s non-audit services to non-audit clients increased on an average by 12% each year over the past 5 years. Audit services increased on an average by 5% while non-audit services to audit clients has remained fairly consistent.

Number of KPMG partners in the audit practice declined by 2% each year over the past 5 years. The audit staff personnel has remained consistent over the past five years. There was a 20% increase in 2016 followed by a 9% and 5% decline in 2018 and 2019.

KPMG audits 40 of the 200 Companies in the ASX200 Index, a healthy 20% audit market share. Among companies in the ASX 200 Index, KPMG leads other big4 firms in the materials sectors. Of the 37 Materials Companies in ASX 200, KPMG audits 11 of them. Refer to the other posts on the distribution of ASX 200 clients among the other three big4 firms.

Top 25 KPMG audit clients in the order of the clients market capitalization are as follows:

CompanySector
BHP Group LtdMaterials
Australia and New Zealand Banking Group LtdFinancials
RIO Tinto LtdMaterials
Goodman GroupReal Estate
Insurance Australia Group LtdFinancials
Sydney AirportIndustrials
Cochlear LtdHealth Care
Suncorp Group LtdFinancials
SOUTH32 LtdMaterials
Lendlease GroupReal Estate
Resmed IncHealth Care
Orica LtdMaterials
Treasury Wine Estates LtdConsumer Staples
Ausnet Services LtdUtilities
Wisetech Global LtdInformation Technology
Caltex Australia LtdEnergy
Qantas Airways LtdIndustrials
Ansell LtdHealth Care
Boral LtdMaterials
Appen LtdInformation Technology
OZ Minerals LtdMaterials
Chorus Ltd
Steadfast Group LtdFinancials
Regis Resources LtdMaterials
Downer Edi LtdIndustrials

Check out the link if you want to read KPMG Audit Transparency Report. We are starting a new blogpost to collect the salary data to help all current and prospective employees of accounting firms. So if interested, update the form and results will be published soon.

Do read our other blog posts

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Top Australian Companies and their auditors

by enthusiastDeloitte / EY / KPMG / PwC

Focusing our attention to Australia. We previously looked into the S&P 500 US auditors. We also examined FTSE 350 UK auditors in our previous posts.

Audit market share

ASX200 Index has the 200 largest companies in Australia by float adjusted market capitalization. We’ll now look at these 200 Companies to identify their auditors. EY leads with 60 audit clients followed by PwC with 57 clients. KPMG comes in third with 41 clients and Deloitte with 29 clients. Non big-4 firms collectively audit 11 companies.

Audit market share by sectors

Next looking at the break-down of the 200 companies by the various sectors and their auditors. All big-4 firms have share in all sectors except for utilities where Deloitte audits 3 of the 4 clients.

Big4 revenues

The revenues of the big4 audit firms across five years are provided below. PwC leads in total revenues followed by Deloitte, EY, and KPMG. PwC revenues for 2020 was AUD 2.6 billion while KPMG revenues for 2020 was AUD 1.9 billion. A difference of AUD 700 million between the top and last ranked firm.

Audit revenues of big4 firms

Looking at just the audit revenues for the big4 firms for FY20, PwC brings in audit fees of AUD 475 million. EY follows with AUD 417 million. KPMG brings in AUD 363 million. Deloitte brings in AUD 305 million.

Audit Revenue (AUD millions)PwCEYKPMGDeloitte
2020475417363305
2019443390356288
Growth7%7%2%6%

ASIC Inspection firms

Looking into the Audit Inspection reports by ASIC (Australian Securities & Investments Commission) for FY20, EY has the least number of findings among the big4 firms. Only 14% of the areas reviewed for EY had findings while 35% of the areas reviewed for Deloitte had findings. Based on review of 55 financial reports of listed and public interest entities audited by EY, only 2 entities made material changes to their financial statements. The findings for other big4 firms are summarized in the table below.

Audit FirmsDeloitteKPMGPwCEY
Key audit areas reviewed26393535
Findings identified91085
2020 (%)35%26%12%14%
2019 (%)32%33%18%22%
Financial reports reviewed45473655
Material changes based on inquiries4121
(%)9%2%6%2%

The link to the reports for Deloitte, KPMG, EY, and PwC is provided in this link.

Look into our blog posts for additional information on the audit clients for the big4 firms:

Deloitte Australia clients

KPMG Australia clients

EY Australia clients

PwC Australia clients

Subscribe this blog and stay updated on the latest happenings in the big4 audit space. If there is any specific items you want us to look into, please drop in a comment.

Do read into the other published blogs.

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PCAOB Inspection reports

by enthusiastDeloitte / EY / KPMG / PwC

Consistent improvement by Deloitte, EY, and KPMG in their deficiency rate. However, an increasing deficiency rate noticed for PwC. Deloitte has the lowest deficiency rate of 10% for 2019 followed by EY and KPMG. PwC had the highest deficiency rate among the Big4 firms. We’ll have a post soon on the performance of other firms.

PCAOB inspection deficiency rates
Year201920182017
PwC30%25%24%
Deloitte10%12%20%
EY18%26%31%
KPMG29%37%50%

Interesting to note that PwC revised reports for three audits the most among big 4 firms. Probably shows the extent of influence they have over the clients. Check out the inspection report details for each of these firms in subsequent posts.

Do read our individual blogs on the Inspection reports for PwC, EY, KPMG, and Deloitte.

KPMG PCAOB Inspection Report

by enthusiastKPMG

PCAOB released its 2019 inspection report for KPMG. Of the 58 audits reviewed, Part I.A deficiencies were identified in 17 of them (a deficiency rate of 29%). For 2018 and 2017, KPMG’s deficiency rate were 37% and 50% respectively. A lot of improvement here!! KPMG’s deficiency rate for 2019 appears to be slightly lower than PwC (30%).

Year201920182017
Total audits reviewed585252
Audits with Part I.A deficiencies171926
Deficiency rate %29%37%50%

Part I.A deficiencies

Part I.A deficiencies break-down

Year201920182017
Both financial statement and ICFR audits161418
Financial statement only012
ICFR audit only146
171926

Deficiencies in financial statement audit include failure to perform sufficient testing related to an account, failure to obtain sufficient evidence due to overreliance on controls, and failure to evaluate data and assumptions in developing an estimate. Deficiencies in ICFR audit include nonidentification of controls related to significant account, nontesting of design and operating effectiveness of controls, and failure to test the accuracy and completeness of data used in controls. One area of improvement noticed for KPMG is that there is lower deficiencies related to accuracy and completeness of data used in the operation of controls.

Following are the audit areas with frequent Part I.A deficiencies. These are also some of the audit areas most frequently reviewed.

Year201920182017
Revenue and related accounts91011
Derivatives213
Allowance for loan losses225
Investment securities203
Inventory235
Business Combinations331
Loans and related accounts015

Improvements noted in auditing Inventory and Loans and related accounts.

Looking at the break-up by Industry sector, 13 audits were reviewed from the Financial services sector with deficiencies identified in 4 of them (31%!). Most of audits reviewed were within the $500 million to $1 billion revenue range (12 of them). 1 issuer with revenues exceeding $50 billion were reviewed with no deficiency identified in it.

Part I.B deficiencies

Following Part I.B deficiencies were identified:

Non-complianceReviewedDeficiency
AS 1301, Communications with Audit Committees193
AS 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion31
PCAOB Rule 3211, Auditor Reporting of Certain Audit Participants.202
PCAOB Rule 3524, Audit Committee Pre-Approval of Certain Tax Services101

Looking at KPMG actions to these deficiencies, we note, “In connection with our 2019 inspection procedures for one audit, the issuer restated its financial statements and the firm revised and reissued its report on the financial statements. In connection with our 2019 inspection procedures for this audit and for one additional audit, the issuers revised their reports on ICFR and the firm modified its opinions on the effectiveness of the issuers’ ICFR to express adverse opinions and reissued its reports. In addition, in connection with our 2019 inspection procedures for one audit, the issuer disclosed in a subsequent filing that a material weakness existed as of the date covered by the firm’s audit that was subject to our review“

So for 3 issuers, KPMG has to make revisions to its initial reports. Overall, a pretty decent year for KPMG with a continuing decline in deficiency rate.

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KPMG UK Audit clients

by enthusiastKPMG
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KPMG Fee Income

KPMG UK revenues for FY20 was 2.3 billion pounds. Revenue was lower by 4% when compared with FY19. FY19 fee income was 2.4 billion pounds. See below for a breakout of KPMG fee incomes over the past five years. Fee income grew on an average of 3% over the past five years.

Looking at the break-down of fee income among audit clients and non-audit clients we notice that direct audit fees has increased on an average by 6% while non-audit services to audit clients has decreased on an average by 11%. Advisory income has increased on an average by 5% for 5 years. The table below shows the break-down in millions pounds. There is a consistent trend among all big4 firms where non-audit services to audit clients are decreasing.

KPMG Quality Reports

KPMG’s UK 2020 Transparency Report mentions that of the FTSE 350 audits, 58% of the audits have been graded as good or limited improvement needed while 42% were graded as improvement needed.

The Financial Reporting Council (FRC) published its latest inspection reports on KPMG in July 2020. Of the 18 audits reviewed, 11 (61%) were graded as good or requiring limited improvements. 7 (39%) were graded as improvements needed. Of the 12 FTSE 350 clients reviewed, 7 (58%) were graded as good or limited improvement while 5 (42%) were graded as improvements needed. In regards to the FTSE 350 audits reviewed, FY20 results reflects a significant decline from the 80% good or limited improvement rating received in FY19. The graph below summarizes the results FRC inspections for all audits and FTSE 350 audit clients.

KPMG FTSE 350 Clients

KPMG audits 88 of the FTSE 350 companies bringing in a total revenue of 347 million pounds. KPMG brings in the largest revenue among all big4 companies. Barclays is the biggest audit client of KPMG which brings in revenue of 56 million pounds, i.e. 16% of the total FTSE 350 audit fees. British American Tobacco is the next biggest audit client which brings in 25 million pounds. The top 5 audit clients collectively bring in 41% of the total revenue. All 88 KPMG clients and their audit fee is included in the below graphic.

The top 25 clients of KPMG in this market are:

CompanyAuditorTotal ('000) GBP
Barclays plcKPMG56,000
British American Tobacco plcKPMG25,200
Prudential plcKPMG22,943
Standard Chartered plcKPMG20,150
BT Group plcKPMG19,752
Micro Focus International plcKPMG15,396
Reckitt Benckiser Group PlcKPMG14,500
Unilever plcKPMG14,392
BHP Group PlcKPMG10,964
M&G plcKPMG9,600
Legal & General Group plcKPMG9,500
Smurfit Kappa Group PlcKPMG8,800
Standard Life Aberdeen PlcKPMG8,100
RSA Insurance GroupKPMG6,900
Smiths Group PlcKPMG6,400
Compass Group plcKPMG6,300
Capita plcKPMG6,100
Wood Group (John) PlcKPMG5,434
Smith & Nephew plcKPMG5,132
Quilter PlcKPMG5,000
Experian PlcKPMG4,302
IWG plcKPMG3,600
Balfour Beatty plcKPMG3,300
Royal Mail PLCKPMG3,147
DCC plcKPMG3,016

Post a comment on any other metric you would like to know about EY UK or if you need this dataset. Look into our other blog posts on PwC, KPMG, and Deloitte UK. We are starting a new blogpost to collect the salary data to help all current and prospective employees of accounting firms. So if interested, update the form and results will be published soon.

Do read our other blog posts.

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Top UK Companies and their Auditors

by enthusiastDeloitte / EY / KPMG / PwC
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In this blogpost we’ll look at the top Companies in UK and their auditors. To identify the top companies in UK we’ll use the FTSE350. FTSE 350 is made up of companies of FTSE 100 and FTSE 250 index companies which have their primary listing on the London Stock Exchange.

On analysis of the auditors for the top UK companies for FY20, PwC leads in number of audit clients. KPMG leads in total revenue. PwC audits 95 of the 350 UK companies bringing in total revenue of $336 million pounds. KPMG audits 88 of the 350 UK companies bringing in total revenue of $347 million pounds.

Below is a high level summary of audit clients and total revenue (audit and non-related fees).

The top 25 audit clients of big4 firms within FTSE 350 are below:

CompanyAuditorTotal Fees '000 (GBP)
HSBC Holdings plcPwC110,700
Barclays plcKPMG56,000
WPP plcDeloitte42,700
Royal Dutch Shell PlcEY40,754
BP PlcDeloitte36,980
Royal Bank of Scotland Group plcEY34,500
GlaxoSmithKline plcDeloitte30,400
Lloyds Banking Group plcPwC26,900
British American Tobacco plcKPMG25,200
Prudential plcKPMG22,943
Vodafone Group plcEY22,858
Glencore plcDeloitte22,641
Aviva plcPwC21,900
Standard Chartered plcKPMG20,150
BT Group plcKPMG19,752
National GridDeloitte18,000
CRH plcEY16,085
Micro Focus International plcKPMG15,396
Reckitt Benckiser Group PlcKPMG14,500
Rio Tinto plcPwC14,490
Unilever plcKPMG14,392
Diageo plcPwC12,100
AstraZeneca plcPwC11,245
Rolls Royce Holdings PlcPwC11,000
BHP Group PlcKPMG10,964

Look into our subsequent posts for an analysis of the respective clients of KPMG, PwC, EY, and Deloitte. Subscribe to our posts for information on Big4 firms. If there is some data point that you would like us to analyze, just drop in a comment.

Do read our other blog posts.

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Who are KPMG’s largest clients?

by enthusiastKPMG

The most frequently searched question for all Big4s are who are their largest audit clients. In the previous blog we looked into how KPMG stacks in regard to audit clients versus the total S&P 500 Companies. Below is a scatterplot showing the audit fee distribution of KPMG clients in the US.

Here is the list of top 25 clients of KPMG in terms of total fees in millions. The financials and industrial sectors are the major contributors in terms of fees for KPMG. Citigroup is KPMG’s biggest audit client generating a fee revenue of $97 million. GE, Wells Fargo, and BNY Mellon occupies the second, third, and fourth place respectively. These 25 clients together contribute $676 million in audit fees for KPMG. KPMG’s total global audit revenues for FY20 was $11 billion.

SecurityGICS SectorAudit FeesAudit Related FeesTax FeesOther FeesTotal
Citigroup Inc.Financials67219097
General ElectricIndustrials61144079
Wells FargoFinancials4647057
The Bank of New York MellonFinancials21232047
Pfizer Inc.Health Care4115047
General DynamicsIndustrials2522029
Baker Hughes CoEnergy2700028
PepsiCo Inc.Consumer Staples2410026
Omnicom GroupCommunication Services2300024
Accenture plcInformation Technology2011023
Emerson Electric CompanyIndustrials2021023
FMC CorporationMaterials1611119
CBRE GroupReal Estate1332018
CenturyLink IncCommunication Services1800018
Occidental PetroleumEnergy1600016
Western DigitalInformation Technology1005016
Fidelity National Information ServicesInformation Technology1301014
Centene CorporationHealth Care1210013
Estée Lauder CompaniesConsumer Staples1102013
Halliburton Co.Energy1200012
Visa Inc.Information Technology1021012
SVB FinancialFinancials1111012
ZoetisHealth Care1001011
NortonLifeLockInformation Technology1100011
General MillsConsumer Staples812011

Do read our posts on KPMG’s audit clients across the various US States and their corresponding Audit Fees. Subscribe to our posts for information on Big4 firms. If there is some data point that you would like us to analyze, just drop in a comment. We are starting a new blogpost to collect the salary data to help all current and prospective employees of accounting firms. So if interested, update the form and results will be published soon.

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KPMG audit clients

by enthusiastKPMG

KPMG is one of the biggest audit firms in the world. They operate through a network of firms across the world. The key audit topic areas of KPMG based on their website are (1) Environmental, Social and Governance (2) SPAC IPO readiness for Controllers and CFOs (3) Industrial Manufacturing and AI and (4) Climate risk for the technology industry.

KPMG audits 84 of the 500 companies in S&P 500. KPMG’s biggest market share is within the Real Estate, Communications, and Energy sector. The biggest clients of KPMG in these sectors are CBRE Group, Omnicom Group, and Baker Hughes. In dollar terms, biggest fees is from Citigroup which pays $97.4 million followed by GE which pays $79.1 million. Big loss for KPMG in 2021 when GE switches to Deloitte. In total, the S&P 500 clients brings in ~$1 billion in fees.

The below chart shows KPMG’s share of major US audit clients spread across the different Industry sectors:

GICS SectorKPMG # clientsTotal Industry (#)%KPMG fees ($ M)Total Industry ($ M)%
Financials146621%287.401438.8920%
Health Care76111%92.43848.3211%
Information Technology137118%114.27841.7214%
Industrials86912%145.38876.4917%
Materials52818%40.98393.8210%
Consumer Discretionary86213%43.01568.648%
Communication Services52223%60.59471.7913%
Energy62623%72.31297.3924%
Consumer Staples73321%76.48425.4918%
Utilities1284%10.91263.44%
Real Estate103132%50.44141.1736%

Do read our posts on KPMG’s audit clients across the various US States and their corresponding Audit Fees. Subscribe to our posts for information on Big4 firms. If there is some data point that you would like us to analyze, just drop in a comment.

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US Audit clients in Switzerland, Netherlands and Bermuda

by enthusiastDeloitte / EY / KPMG / PwC
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Check out our earlier blogposts on the Big4 accounting firms and their audit clients across the various states in the US. The last grouping is US S&P 500 Companies with headquarters located outside the US. PwC audits most of these companies. The largest among them is Chubb Limited which pays PwC an audit fee of $28.73 million.

CompanyHeadquarters LocationAuditorTotal ($ million)
Chubb LimitedZurich, SwitzerlandPwC        28.73
Schlumberger Ltd.Curaçao, Kingdom of the NetherlandsPwC        17.60
TE Connectivity Ltd.Schaffhausen, SwitzerlandDeloitte        12.22
LyondellBasellRotterdam, NetherlandsPwC        11.60
Mylan N.V.Amsterdam, NetherlandsDeloitte        11.10
Everest Re Group Ltd.Hamilton, BermudaPwC          6.29
Garmin Ltd.Schaffhausen, SwitzerlandEY          3.19

Check out our other blogposts for a listing of the top 25 clients of PwC, Deloitte, EY, and KPMG in the US. Subscribe to our posts for up to date information on Big4 firms and if there is some data point that you would like us to analyze, just drop in a comment.

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