Partners at KPMG are facing steep cuts to their bonuses as the accounting giant cuts costs in a bid to prepare for tighter regulation of its audit work.
Partners’ bonuses – which can reach hundreds of thousands of pounds – are set to fall by as much as 40 per cent this year, according to the Telegraph.
Citing sources at the firm, the paper reported that partners have been given a preliminary indication of the amount they will receive, and that final bonus figures will be confirmed this week.
KPMG’s move to slash bonuses is part of a wider £100m cost-cutting plan known as Project Zebra.
The Big Four accounting firm is slashing the headcount of its in-house project management team and offloading its five-storey members’ club in Mayfair as part of the money saving drive.
Regulators had also expressed concern that KPMG was giving away memberships of the club, Number Twenty, to its audit clients as perks.
The company is also preparing for a regulatory clampdown on the audit industry following a series of scandals in the sector, including the demise of KPMG audit client Carillion, which collapsed after being given a clean bill of health by the firm.
The collapses of BHS and Patisserie Valerie have heaped further pressure on the sector and their auditors, PwC and Grant Thornton respectively.
It emerged last week that the Financial Reporting Council (FRC), which regulates the audit industry, was considering pushing for powers that would allow it to clawback bonuses from audit partners if their work fell below a certain standard.
Earlier this year, the Competition and Markets Authority proposed splitting up the audit and non-audit wings of major accountancy firms in a bid to reduce conflicts of interest.
Simon Dingemans, the new head of the FRC, has also backed a similar split, describing an enforced separation of the audit and consulting arms of PwC, EY, Deloitte and KPMG as a “critical” step to improve the quality of their audit work.
KPMG could not be reached for comment.