KPMG appoints chief risk officer

KPMG in the UK, which has been slated by the Financial Reporting Council (FRC) over an ‘unacceptable’ decline in its audit quality, has appointed a former regulator as the firm’s chief risk officer

Mary O’Connor will take up the post at the end of August and will be a member of KPMG’s executive committee and the UK board. She will oversee the firm’s risk management framework, including quality and risk management and the legal function.

O’Connor joins KPMG from Willis Towers Watson, where she led the client and business development function and the global financial institutions industry group. Prior to this, she served as a senior regulator in both the US and the UK, including as the head of approved persons at the Financial Services Authority.

Bill Michael, chairman at KPMG UK said: ‘Like any professional services firm we are operating in a period of significant change, and the risks we are facing are evolving - from complex regulatory and geopolitical change to providing new technology based services for our clients.

‘Societal expectations of large businesses are also shifting, particularly for firms which have a public interest responsibility. It’s therefore essential that we continually invest in our risk management processes and procedures and seek fresh insights as to how risks are anticipated and managed.’

KPMG was heavily criticised in this year’s audit quality review report from the FRC, which singled out the firm for specific criticism over an ‘unacceptable deterioration in quality’.

The review found that the overall decline in quality of KPMG’s audits ‘reflects badly on the action taken by the previous leadership, not just on the performance of front line teams.’

The FRC noted: ‘Whilst we have seen improvements in certain areas where we have raised findings in previous years (for example, the audit of revenue), we are concerned that previous changes to the firm’s policies and procedures have not brought about the improvements required to the overall quality of audits we have reviewed.’

As a result, the FRC announced it is to increase by 25% the number of KPMG audits it plans to inspect in 2018/19 and said it will also be monitoring closely the implementation of the firm’s audit quality plan.

KPMG is also subject to an FRC investigation over its auditing of failed outsourcer Carillion, and an investigation into its work at alcohol wholesaler and retailer Conviviality, which went into administration in April having identified a ‘material error’ in its financial forecasts and an unexpected £30m tax bill earlier in the year.

Report by Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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