Bad investments see KPMG partner pay slashed

KPMG partners in the UK are to have had their average pay slashed by around 10 per cent after the firm’s annual profits were hammered by a series of write-offs on investments.

Results for the ‘Big Four’ firm show that although UK billings rose 5 per cent, one-off costs, particularly on technology ventures, hit its bottom line.

KPMG UK said that profits tumbled 19.5 per cent to £301 million in the year to September 30, dragged down by what it called “investment write-offs and one-off items”.

It all resulted in a reduction in average pay for the firm’s 600 partners from £582,000 to £519,000.

Chairman Bill Michael, who replaced Simon Collins earlier this year, has been quick to halt a host of investments.

Examples for the tech ventures include a joint venture with software firm Flexeye which it backed only two years ago and is now scrapping, writing off its £2.6 million investment.

Although it continues to back technology related to audit and accounting, Mr Michael, who commanded a £1.4 million salary in the year, is re-orientating the business back to its core functions.

He said that although its core audit and consulting arms had achieved double-digit growth, “we also took some tough decisions, writing down our stake in a selection of historic investments where performance has not met expectations.”

The firm’s results showed audit revenues jumped 10 per cent in a year in which KPMG won the audits of BT, L&G and Micro Focus.

While management consulting grew by 11 per cent as companies sought cost saving operating models.

This year also saw KPMG controversially cleared by the Financial Reporting Council of failings in its audit of HBOS before the bank’s near collapse in 2008 but is now being investigated for its work for Rolls-Royce, for which it denies wrongdoing.