KPMG UK has overhauled its executive governance structure which introduces more separate performance management and governance of the firm’s audit practice, with a primary focus on driving quality.
The changes, which will take effect from 1 June 2019, will see KPMG create a new audit executive committee, which will assume executive responsibility for the audit business’ performance management, risk management and controls.
The audit executive committee will be led by Jon Holt, who will become the firm’s head of audit. Karim Haji will succeed Holt as head of financial services.
Michelle Hinchliffe, KPMG’s current head of audit, will join the firm’s UK board in the newly created role of chair of audit. In this role, as well as chairing the audit business, she will lead the firm’s work and stakeholder engagement on the future of the audit profession.
She will also become the deputy chair of the board audit oversight committee, which is responsible for the governance of the firm’s audit practice. The firm said these changes do not mark the separation of its audit practice from the rest of the firm, but aim to deliver on many of the recommendations proposed by the CMA and the BEIS Select Committee in their recent reports on the profession.
Bill Michael, chairman and senior partner at KPMG in the UK, said: “We’re serious about making changes to restore trust in audit. We understand concerns that the profession’s operating models have become too opaque and we are taking action to tackle these.
“The sole aim and focus of our chair of audit, our new audit executive and our audit oversight committee is to drive audit quality, via strong leadership, good governance, rigorous controls, independent decision-making and separate performance management from the rest of the firm.”
The creation of the audit executive committee is also part of a new executive committee structure being introduced at KPMG, which aims to enable management decisions to be made faster by the people closest to the firm’s people, clients and stakeholders.
The firm’s current UK executive committee will be reshaped to form a core executive leadership team, consisting of an executive board and a clients and markets executive,
supported by operations, risk and audit executive committees.
To support the new structure, Tim Jones, KPMG’s global head of management consulting will join the UK firm’s leadership team in the newly created role of COO and will chair the operations executive.
Scott Parker will take on the new role of head of clients and markets and will be responsible for driving growth and performance across KPMG’s non-audit business. Parker is currently head of international and market development at KPMG. Philip Davidson, KPMG UK’s managing partner will retire from the UK partnership in September.
Additionally, Mary O’Connor, KPMG’s chief risk officer, will chair the firm’s risk executive committee, which oversees the firm’s governance, risk management, legal affairs and regulatory compliance, and Chris Hearld, the firm’s north region chairman, will be appointed to the role of head of regions, overseeing the firm’s extensive regional presence across the UK.
Melanie Richards, the firm’s deputy chair, will also now work closely with Michael and the new executive board to shape and drive the firm’s strategy.
Michael added: “We are committed to establishing a more transparent operating model that effectively demonstrates the conduct and execution of our public interest responsibilities. We have already introduced new performance management rules for our auditors, within which audit quality is the primary objective and were the first to implement a ban on providing non-audit services to FTSE350 companies we audit.
“I would also like to take this opportunity to thank Philip Davidson and Iain Moffatt for their invaluable contributions to KPMG.”