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Payouts for UK partners at KPMG climbed 4 per cent to an average of £746,000 last year despite a surge in fines for audit failures and a slowdown in growth at the Big Four firm.
The accounting and consulting firm reported a 9 per cent jump in revenues to £2.96bn during the year to September, compared with growth of 16 per cent in the previous 12 months.
Pre-tax profits fell nearly a fifth to £364mn, with the firm blaming higher staff costs. However, a cull in the firm’s senior ranks, which left the partnership at its lowest level in more than two decades, meant that average individual payouts rose.
Jon Holt, chief executive of KPMG UK, is seeking to repair the firm’s image following a raft of regulatory penalties for audit failures and misconduct in recent years. KPMG received three regulatory fines during its latest financial year, worth £2.8mn, as well as a record £21mn penalty in October for “textbook” failures in its auditing of outsourcer Carillion.
Despite fines and weaker growth, average partner pay at the firm jumped to £786,000, from £757,000 a year earlier. However partners took home an average of £746,000, as £40,000 was held back. The same amount was also held back in the year to September 2022.
The profit hauls still left KPMG partners as the lowest paid of the Big Four. EY handed partners an average of £761,000, while PwC and Deloitte paid out £906,000 and £1.06mn respectively.
The rise in average partner pay comes after KPMG launched a fresh round of job cuts and froze pay for about 12,000 employees in the UK last year amid a difficult economic environment.
In a statement on Tuesday, Holt said: “Our people have worked exceptionally hard to deliver strong revenue growth against a challenging economic backdrop.
“I am confident that our long-term strategy is delivering and putting the right foundations in place to transform the business for future, sustainable growth.”
Like its rivals, KPMG has been forced to contend with higher costs and waning demand for some of its services against a gloomy economic backdrop.
Sales in the firm’s deals advisory and consulting arms rose 6 per cent and 7 per cent respectively, while the firm’s audit division drove revenue growth with a jump of 19 per cent.
Holt is also seeking to boost profits at the firm, which have lagged behind rivals. KPMG said the drop in pre-tax profits during the year to September was affected by a 17 per cent jump in staff costs. The firm hired more than 2,500 new staff during the period, which combined with low attrition rates, led to a 12 per cent rise in headcount to 17,200.
