Hundreds of partners at KPMG UK are braced for reduced payouts as the firm postpones the release of its annual results until it has a clearer view of the impact of COVID-19 on the UK economy in 2021.
Sky News has learnt that KPMG told partners this week that results for the year to September, which were due to be published in December, would not now appear until sometime in the new year.
The delay – which makes it the second of the big four auditors to announce such a move, after PricewaterhouseCoopers did the same in August – is intended to give KPMG executives clearer visibility about the level of cash the firm needs to retain in 2021.
Track the economy’s recovery from lockdown
A KPMG UK spokesperson said: “Our business remains resilient and we are focused on advising our clients as they respond to the demands of COVID-19 and adapt their business models for growth.
“However, significant uncertainty remains about the future performance of the UK economy and in line with other businesses we are taking the prudent step to assess our first quarter’s results before we decide year-end reward.”
A source close to the firm said it had, unlike some of its peers, pressed ahead with staff promotions, including the elevation of 38 people to its partner ranks.
In total, more than 900 people are understood to have been promoted across the business.
Sky News revealed in April that the firm had warned partners that they would shoulder the financial burden of the coronavirus pandemic.
It told roughly 600 partners that they could see their 2020 pay packages reduced by around 25%, saying that they “will and should feel a greater impact” – while also warning that the wider workforce should expect to receive “significantly reduced…or no bonuses this year and it would be wise for people to plan for that eventuality”.
During the summer, KPMG abandoned proposals to slash the sums it pays into thousands of employees’ pension pots following the threat of legal action.
Where jobs have been lost in the UK
The firm said it had launched the pensions consultation in July as “part of a broader range of measures to reduce overall costs in FY21 and to protect jobs in an unpredictable economic environment”.
Bill Michael, KPMG’s UK chairman, has described the pandemic as “an economic disaster”.
The firm has announced a small number of redundancies and the closure of some business units.
The efforts to reduce costs come as the big four face radical reforms to their businesses, with the UK’s audit watchdog introducing a model called operational separation to segregate their audit and consulting arms.
That drive has come in the wake of accounting scandals at companies such as BHS and Carillion, which collapsed with the loss of tens of thousands of jobs.
KPMG was Carillion’s auditor prior to its demise, and is likely to face a hefty regulatory fine in the coming months as the Financial Reporting Council concludes its investigation.