Definitions

KPMG Peat Marwick

KPMG

KPMG is one of the largest professional services firms in the world. KPMG employs over 123,000 people in a global network of member firms spanning over 145 countries. Composite revenues of KPMG member firms in 2007 were $19.8 billion USD (17.4% growth from 2006). KPMG has three lines of services: audit services, tax services, and advisory services.

KPMG is a Big Four auditor, alongside PricewaterhouseCoopers, Ernst & Young and Deloitte Touche Tohmatsu.

Name

The roots of the name "KPMG" stem from four partners in the firms that merged to form KPMG.

History

  • In 1870, William Barclay Peat formed an accounting firm in London
  • In 1877 accountancy firm Thomson McLintock opens in Glasgow
  • In 1911, William Barclay Peat & Co. and Marwick Mitchell & Co. merged to form Peat Marwick Mitchell & Co, later known as Peat Marwick.
  • In 1917 Klynveld opened his accounting-firm in Amsterdam. Later he merged with Kraayenhof to Klynveld & Kraayenhof Accountants.
  • In 1979, Thomson McLintock forms KMG (Klynveld Main Goerdeler) a grouping of independent national practices to create a strong European-based international firm.
  • In 1987 Thomson McLintock/KMG and Peat Marwick joined forces in the first mega-merger of large accounting firms and formed a firm called KPMG in the US and Peat Marwick McLintock in the UK.
  • In 1990, the two settled on the common name of KPMG Peat Marwick McClintock.
  • In 1991, the firm is renamed KPMG Peat Marwick.
  • In 1995, the name is reduced again to KPMG.
  • In 1997, KPMG and Ernst & Young announced that they were to merge, in a manoeuvre largely seen as a spoiling tactic over the merger of Price Waterhouse and Coopers & Lybrand. However that merger, to form PricewaterhouseCoopers, was granted regulatory approval while the KPMG/Ernst & Young tie-up was later abandoned.
  • In 2001, KPMG divested its U.S. consulting firm through an IPO of KPMG Consulting Inc, which is now called BearingPoint, Inc..
  • In 2002, the UK and Dutch consulting arms were sold to Atos Origin.
  • In 2003, KPMG agreed to pay $125 million to settle a lawsuit stemming from the firm's audits of the drug chain Rite Aid.
  • In 2003, KPMG divested itself of its legal arm, Klegal.
  • In 2003, KPMG LLP sold its Dispute Advisory Services to FTI Consulting.
  • In 2004, KPMG agreed to pay $115 million to settle lawsuits stemming from the collapse of software company Lernout & Hauspie Speech Products NV.
  • In 2005, the U.S. member firm admitted criminal wrongdoing in a multi-billion dollar tax shelter fraud.
  • In 2006, Fannie Mae sued KPMG for malpractice for approving years of erroneous financial statements.
  • In February 2007, KPMG Germany investigated for ignoring questionable payments in Siemens bribery case.
  • In October 2007, KPMG's member firms in the UK, Germany, Switzerland and Liechtenstein merged to form KPMG Europe LLP. They now have joint Chairmen, John Griffith-Jones and Ralf Nonnenmacher.
  • In March 2008, KPMG accused of enabling “improper and imprudent practices” at New Century Financial, a failed mortgage company.
  • In March 2008, KPMG agreed to pay $80 million to settle suits from Xerox shareholders over manipulated earnings reports.

Legal structure and executives

Each national KPMG firm is an independent legal entity and is a member of KPMG International, a Swiss cooperative registered in the Swiss Canton of Zug. KPMG International changed its legal structure from a Swiss Verein to a cooperative under Swiss law in 2003.

KPMG International is led by:

  • Timothy P. Flynn, Chairman-Americas Region, Chairman and CEO of KPMG LLP (US), has led KPMG International since October 01 2007;
  • Carlson Tong and John B. Harrison, Chairman-Asia Pacific Region, Partner of KPMG in China and Hong Kong;
  • Ben van der Veer, Chairman-Europe, Middle East and Africa Region, Chairman of KPMG in the Netherlands.

Services

KPMG offers the following services:

Audit clients

KPMG member firms serve as the independent auditors for a large number of major corporations:

Tax shelter fraud

In early 2005, the United States member firm, KPMG LLP, was accused by the United States Department of Justice of fraud in marketing abusive tax shelters. KPMG LLP admitted criminal wrongdoing in creating fraudulent tax shelters to help wealthy clients avoid $2.5 billion in taxes and agreed to pay $456 million in penalties in exchange for a deferred prosecution agreement. KPMG LLP would not face criminal prosecution if it complied with the terms of its agreement with the government. On January 3, 2007, the criminal conspiracy charges against KPMG were dropped. However, Federal Attorney Michael J. Garcia stated that the charges could be reinstated if KPMG does not continue to submit to continued monitorship through September 2008.

Before the settlement, the firm, on the advice of its counsel Skadden, Arps, Slate, Meagher & Flom LLP, removed several tax partners and admitted "unlawful conduct" by those partners. The firm agreed to cooperate with DOJ's investigation and help prosecute former partners who had devised and sold the tax shelters. Additionally, the firm hired former U.S. district judge Sven Erik Holmes to monitor its legal and regulatory affairs.

Staff

KPMG is one of the top 10 companies for working mothers. It is also ranked No. 71 on Fortune Magazine's list of 100 Best Companies to Work For, voted for by employees.

KPMG ranks No. 5 out of 125 among companies with the best training programs according to "Training Magazine".

KPMG was the preferred employer among the Big Four accounting firms according to College Grad.com. It was also ranked No.5 on the list of "50 Best Places to Launch a Career" in 2008.

In 2008 KPMG in the UK was named the best big company to work for by The Times. This was the fourth consecutive year that KPMG has made the top three winning three times in that four years.

Sponsorship and Media

In February 2008, Phil Mickelson, ranked one of the best golfers in the world, signed a three-year global sponsorship deal with KPMG. As part of the agreement, Mickelson will wear the KPMG logo on his head wear during all golf related appearances. Mickelson will also attend a number of KPMG sponsored marketing events.

Notable current and former employees

Business

Politics and public service

Other

Media representation

Tax Me if You Can - PBS Frontline documentary into corporate tax avoidance and its implications, including the role of KPMG in tax related services

References

External links

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