KPMG International structure and governance.
KPMG International structure and governance.
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services.
KPMG International is a Swiss cooperative formed under Swiss law. It licenses the KPMG trademark and conducts activities for the overall benefit of the global organization. It facilitates audit quality across the organization by establishing common policies, processes and standards to be applied by member firms. KPMG International does not provide professional services to clients itself. KPMG member firms — all of which are affiliated with KPMG International — provide professional services to clients and their Heads of Audit have direct responsibility for audit quality.
The Global Board is supported by a number of committees, including an Executive Committee. A number of global steering groups support and drive the execution of strategy with a focus on audit quality including the Global Audit Steering Group (GASG) and the Global Quality & Risk Management Steering Group (GQRMSG).
KPMG International Cooperative (KPMG International) is a Swiss cooperative, which is a legal entity formed under Swiss law. It is the entity with which all the member firms of the KPMG network are affiliated.
KPMG International carries on business activities for the overall benefit of the KPMG network of member firms but does not provide professional services to clients. Professional services to clients are exclusively provided by member firms.
One of the main purposes of KPMG International is to facilitate the provision by firms of quality Audit, Tax and Advisory services to their clients. For example, KPMG International establishes and facilitates the implementation and maintenance of uniform policies, standards of work and conduct by all firms, and protects and enhances the use of the KPMG name and brand.
KPMG International is an entity that is legally separate from each member firm. KPMG International and the member firms are not a global partnership, joint venture, or in a principal or agent relationship or partnership with each other. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Legal structure of the KPMG network
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services to a wide variety of public and private sector organizations.
KPMG’s structure is designed to support consistency of service quality and adherence to agreed values wherever the member firms operate.
Unless otherwise stated, the words ‘firm’, ‘KPMG firm’, ‘member firm’ or ‘KPMG member firm’ when used in this Transparency Report include the following:
Legal relationship between KPMG International and each member firm
KPMG is the registered trademark of KPMG International and is the name by which the firms are commonly known. The rights of firms to use the KPMG name and marks are contained within agreements with KPMG International.
Member firms are generally locally owned and managed. Each firm is responsible for its own obligations and liabilities. KPMG International and other member firms are not responsible for another member firm’s obligations or liabilities.
Individual KPMG firms may consist of more than one separate legal entity. If this is the case, each separate legal entity will be responsible only for its own obligations and liabilities, unless it has expressly agreed otherwise.
Responsibilities and obligations of member firms
Under agreements with KPMG International, member firms are required to comply with KPMG International’s policies and regulations including quality standards governing how they operate and how they provide services to clients to compete effectively. This includes having a firm structure that facilitates continuity and stability and being able to adopt global strategies, share resources (incoming and outgoing), service multinational clients, manage risk, and deploy global methodologies and tools.
Each firm takes responsibility for its management and the quality of its work. All KPMG firms commit to a common set of KPMG values (refer to the ‘KPMG values’ section of this report).
KPMG International’s activities are funded by amounts paid by the firms. The basis for calculating such amounts is approved by the Global Board and consistently applied to the member firms. A firm’s status as a KPMG member firm and its participation in the KPMG network may be terminated if, among other things, it has not complied with the policies and regulations set by KPMG International or any of its other obligations owed to KPMG International.
The Global Council focuses on high-level governance tasks and provides a forum for open discussion and communication among member firms.
It performs functions equivalent to a shareholders’ meeting (albeit KPMG International has no share capital and only has members, not shareholders).
Among other things, the Global Council elects the Global Chairman and also approves the appointment of Global Board members. It includes representation from 59 member firms that are ‘members’ of KPMG International as a matter of Swiss law. Sublicensees are generally indirectly represented by a member.
The Global Board is the principal governance and oversight body of KPMG International. The key responsibilities of the Global Board include approving strategy, protecting and enhancing the KPMG brand, overseeing management of KPMG International, and approving policies and regulations. It also admits member firms.
The Global Board includes the Global Chairman, the Chairman of each of the three regions (the Americas; Asia Pacific (ASPAC); and Europe, the Middle East, and Africa (EMA)) and a number of senior partners of member firms.
It is led by the Global Chairman, who is supported by the Executive Committee, consisting of the Global Chairman, the Chairman of each of the regions and currently three other senior partners of member firms. The list of Global Board members, as at October 2019, is available in the KPMG Global Review.
One of the other Global Board members is elected as the lead director by those Global Board members who are not also members of the Executive Committee of the Global Board (‘non-executive’ members). A key role of the lead director is to act as liaison between the Global Chairman and the ‘non- executive’ Global Board members.
Global Board committees3
The Global Board is supported in its oversight and governance responsibilities by several other committees. The lead director nominates the chairs and members of certain Global Board committees for approval by the Global Board. The roles of a number of these committees are summarized below.
The Executive Committee’s role includes:
The Governance Committee’s role includes:
Investment and Technology Committee
The Investment and Technology Committee’s role includes:
Audit and Finance Committee
The Audit and Finance Committee’s role includes:
Global Quality, Risk & Reputation Committee
The Global Quality, Risk & Reputation Committee’s role includes:
Global Audit Quality Committee
The overarching responsibility of the Global Audit Quality Committee is to strive for globally consistent audit quality across the organization and to oversee those activities by KPMG International that relate to improving and maintaining the consistency and quality of audits provided by the KPMG member firms.
The Global Board has delegated certain responsibilities to the Global Management Team. These responsibilities include developing global strategy by working together with the Executive Committee. The Global Management Team also supports firms in their execution of the global strategy and is responsible for holding them accountable for commitments.
It is led by the Global Chairman and includes the Global Chief Operating Officer, the Global Chief Administrative Officer, global function and infrastructure heads, and the General Counsel.
The list of Global Management Team members is available in the KPMG Global Review and on the leadership section of our website.
The Global Head of Quality, Risk and Regulatory is a member of the Global Management Team and has global responsibility for KPMG’s system of quality controls, risk management, and ethics and compliance programs.
The Global Steering Groups represent the function and infrastructure groups of KPMG International and are the main driving groups of the organization. They act under delegated authority from the Global Board and oversight by the Global Management Team, in particular the GASG, GAQSC and GQRMSG work closely with regional and member firm leadership to:
Global Audit Steering Group (GASG)
The GASG is responsible for driving the firms’ implementation of KPMG’s audit strategy, including standards of audit quality. The GASG works closely with the GQRMSG in relation to quality and risk matters related to audit.
The GASG is chaired by the Global Head of Audit, and includes the Heads of Audit from the 10 larger member firms,4 the Regional Heads of Audit, the Chief Operating Officer for Global Audit, and the Global Audit Quality & Risk Management Partner.
Global Audit Quality Council
The Global Audit Quality Council is chaired by the Global Head of Audit Quality and includes: the Global Head of Audit, Global Head of Quality, Risk and Regulatory, Regional Audit Quality Leaders, country Heads of Audit Quality from the 10 larger member firms, Global Services Centre Leadership, International Standards Group Leadership and the Head of the Global Audit Quality Monitoring Group.
The Global Audit Quality Council is responsible for:
Global Quality & Risk Management Steering Group (GQRMSG)
The GQRMSG is chaired by the Global Head of Quality, Risk and Regulatory and includes the Global Head of Audit Quality; the Chief Operating Officer for Global Quality & Risk Management; the Global Head of Audit; the Global Quality & Risk Management Partners for Audit, Tax and Advisory; the Global Head of Independence; the General Counsel; and the Risk Management Partners for each of the three regions and for certain Global Board member firms.
The GQRMSG is responsible for setting quality and risk management policies and procedures for the network and for providing associated guidance. These are documented in the Global Quality & Risk Management Manual (GQ&RM Manual) available to all firms and their personnel on a web-based platform. The GQRMSG is responsible — through the Quality Performance Review (QPR), the Risk Compliance Program (RCP), Global Compliance Reviews (GCR), and Area Quality & Risk Management Leaders (ARLs) — for monitoring:
Area Quality & Risk Management Leaders (ARLs)
The Global Head of Quality, Risk and Regulatory appoints Area Quality & Risk Management Leaders who serve a regular and ongoing monitoring and consultation function to assess the effectiveness of a firm’s efforts and processes to identify, manage and report significant risks that have the potential to damage the KPMG brand.
Significant activities of the ARL, including member firm issues identified and related member firm response/remediation, are reported to GQ&RM leadership.
The objectives of the ARL role are to:
3. As of October 2019.
4. Australia, Brazil, Canada, China, France, Germany, Japan, Netherlands, United Kingdom, United States.