KPMG to Lay Off 4% of U.S. Audit Workforce to Counter Fewer Voluntary Exits
Nov.4, 2024
The Big Four accounting firm notified roughly 330 people in the U.S. audit business they would be let go, people familiar with the matter said
KPMG is laying off hundreds of employees in its U.S. auditing business as it works to make up for lower levels of voluntary turnover.
The Big Four accounting firm last week notified about 330 people, or nearly 4% of its roughly 9,000-person U.S. audit workforce, that they would be let go in the coming weeks, people familiar with the matter said. The cuts have focused on employees such as associates and managers, and included no partners, the people said.
The move follows several rounds of KPMG cuts in the U.S., including an audit-centric round in March. Last year, KPMG laid off about 5% of its U.S. staff over the summer—including advisory, tax and back-office workers—after cutting some advisory personnel, or almost 2% of U.S. staff, earlier in the year.
KPMG is among the large accounting firms that have continued to experience slower-than-expected levels of voluntary attrition after aggressively hiring people during the pandemic. Layoffs at several firms have focused on the advisory side, for which revenue growth has generally slowed as corporate clients pull back on certain services, as opposed to audit.
KPMG’s global audit revenue grew 6% to $12.6 billion for the year ended Sept. 30, 2023, compared with 3% the previous year. The firm hasn’t yet reported global revenue for its 2024 fiscal year.
The firm is expanding its U.S. audit business while sustaining quality, KPMG said. “The actions reflect our ongoing focus to align the size, shape and skills of our workforce to the market, while addressing continued low levels of attrition,” the firm said in a statement, referring to the latest job cuts. “We remain focused on investing in our people to grow our business with quality.”
PwC’s U.S. unit recently laid off about 1,800 workers, some of which worked in audit, The Wall Street Journal reported.
Meanwhile, audit firms have struggled to find sufficient skilled accounting personnel, part of a deepening shortage in the profession. KPMG, which has said it isn’t experiencing a shortage, last month supported allowing prospective accountants to bypass a fifth year of school to make the path to a state accounting license less expensive. Many states are exploring changes to certified public accountant licensing laws to provide an alternative.
“Today, we can recruit the talent we need, but the shortage is already impacting our profession, as well as businesses,” Paul Knopp, chief executive of KPMG’s U.S. unit, said in a LinkedIn post at the time.
Auditors are also facing a threat from their firm’s increased use of artificial intelligence. While AI could provide opportunities to gain new skills for auditors who continue working at the firms, the technology may reduce how many of them are needed.
KPMG said its layoffs had no connection to the use of AI.
Fifty-nine percent of U.S. and U.K. companies say that AI will reduce the number of college graduates needed at the firms that audit the businesses, according to a new survey from consulting-research provider Source Global Research. “To that extent, clients and audit firms are aligned that technology is going to replace some of these people’s work,” said Fiona Czerniawska, chief executive of Source.
[The Wall Street Journal]
