KPMG exits US federal audit business after losing Pentagon contract, FT reports
KPMG's Federal Audit Exit and Pentagon Contract Loss
KPMG Shuts Down Federal Audit Business
April 29 (Reuters) - Big Four firm KPMG is shutting its federal government audit business and will redeploy more than 450 U.S. staff after losing a $60 million-a-year contract with the Pentagon, the Financial Times reported on Wednesday, citing sources.
Background: KPMG and the U.S. Army
Decade-Long Relationship Ends
KPMG had audited the U.S. Army for almost a decade; however, the defense department now plans to use a new accounting firm to oversee a larger proportion of the military’s accounts, according to the report.
Changes in Pentagon's Financial Oversight
This comes amid mounting bipartisan criticism of the Pentagon's financial accountability problems, after it failed an annual audit last year, for the eighth year in a row.
The Pentagon has now decided to reorganize its financial reporting, slashing the number of disjointed separate audits by two-thirds.
Impact on KPMG and Staff
Loss of Major Client and Contract Wind-Down
The U.S. Army was the largest single customer of KPMG’s federal audit practice, the FT report said, adding that the firm is also winding down contracts with other parts of the government.
Staff Redeployment and Transition
Some staff have already been placed in alternative roles, while others will shift to new jobs between now and the end of the final federal contract in 2030, the report said.
Industry and Government Response
KPMG's Official Statement
KPMG did not immediately respond to a Reuters request for comment.
Pentagon Audit Challenges
History of Failed Audits
The Pentagon's first audit was conducted in 2018 and consistently failed, reflecting persistent system and accounting problems across its vast bureaucracy. Lawmakers have set a 2028 deadline for the department to pass an independent audit.
Reporting Credits
(Reporting by Akanksha Khushi in Bengaluru; Editing by Sumana Nandy ad Rashmi Aich)
