Despite recommendations from a U.K. authority, KPMG revealed it would not split up its accounting and auditing units.
However, starting on June 1, the company will boost the oversight of its U.K. audit arm, creating a new executive committee that will manage performance, risks and controls for its auditing unit. The committee will be led by Jon Holt, KPMG’s new head of audit, while the current head of audit, Michelle Hinchliffe, will take on the new role of chair of audit.
Last month, the U.K. Competition and Markets Authority (CMA) proposed an operational split between the Big Four’s audit and consulting businesses, as well as the recommendation that they undergo joint audits with smaller audit firms, and for corporate audit committees to be accountable for the auditor they choose. But in order to implement the changes, the audit and consulting businesses at the Big Four firms would need separate chief executives and boards, and separate financial statements.
In addition to KPMG, the Big Four accounting firms also include Deloitte, Ernst & Young and PricewaterhouseCoopers.
“These changes do not mark the separation of KPMG U.K.’s audit practice from the rest of the firm, but will deliver on many of the recommendations proposed by the CMA and the [business, energy and industrial strategy] Select Committee in their recent reports on the profession,” KPMG said in a statement, according to The Wall Street Journal.
As for the other firms, PwC said it is working to bolster its governance and audit quality, while Ernst & Young wants to keep both units in one business. Deloitte declined to comment.
CMA’s proposal comes after a number of high-profile corporate failures, leading to questions about the work performed by the firms. In fact, last month the U.K. Financial Reporting Council started an independent review into the governance, controls and culture at KPMG’s U.K. audit unit, and has fined the firm’s audit business twice.
“We are serious about making changes to restore trust in audit,” said Bill Michael, KPMG’s U.K. chairman. “We understand concerns that the profession’s operating models have become too opaque, and we are taking action to tackle these.”