KPMG to exit US federal audit business
By Hyunsu Yim and Heera Hari
KPMG’s Transition Away from Federal Audit Contracts
April 29 (Reuters) - Big Four firm KPMG is exiting its federal government audit business and will redeploy staff, a spokesperson said on Wednesday.
Details of the Exit and Staff Redeployment
KPMG was transitioning out of federal audit roles through a "multi-year process" and will be redeploying federal audit professionals across the firm to meet client needs, a spokesperson told Reuters in an email, declining to give further details.
Impact on KPMG Staff
The Financial Times reported earlier on Wednesday that the firm will redeploy more than 450 U.S. staff after losing a $60 million-a-year contract with the Pentagon.
Largest Federal Clients and Contract Wind-Down
The U.S. Army was the largest single customer of KPMG’s federal audit practice, the report said, adding that the firm is also winding down contracts with other parts of the government.
A spokesperson for the Pentagon did not immediately respond to a request for comment.
Pentagon’s Audit Changes and Industry Response
In a video posted on X this week, U.S. Defense Secretary Pete Hegseth said the Pentagon was slashing the number of disjointed separate audits by two-thirds, and would bring in a "world class accounting firm" as group auditor.
New Audit Oversight Plans
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 FT report.
Criticism and Accountability Issues
There has been 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.
Future Outlook for KPMG and Pentagon Audits
Some KPMG 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 FT said.
Audit History and Legislative Deadlines
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 by Akanksha Khushi and Heera Hari in Bengaluru and Hyunsu Yim in Barcelona; Editing by Rashmi Aich, Kirsten Donovan)
