PracticeAuditFirms adapt to governance changes

Firms adapt to governance changes

New corporate governance code imposes sweeping changes on the largest eight audit firms

The new governance regime for the big audit firms has led to more fundamental
changes for some than others.

Big Four firm KPMG plans to appoint non-executives to its entire European
operations following the release of this week’s corporate governance code. The
code requires eight of the UK’s largest audit firms to appoint non-executives in
the UK.

John Griffith-Jones, senior partner with KPMG, said the non-executives would
service the entire European operations, which includes branches in the UK,
Germany, Spain, Switzerland, Belgium, Turkey, the Netherlands and Luxembourg.

“We will have one set of non-executives who will fulfill this requirement for
all the countries,” he said. “For those countries that have joined KPMG Europe,
we are proposing to bring (non-executives) in at a (Europe-wide) level, rather
as having it only in the UK.”

KPMG’s Big Four rival Ernst & Young has a similar international operation
known as EMEIA. The firm welcomed the code but declined to comment on the effect
it would have on its international structure.

Most firms embraced last week’s release which brought in a raft of measures
including the introduction of non-executives. Mid-tier firm BDO said it already
complied with all the new provisions with two serving non-executives, which it
appointed more than a year ago.

Scott Barnes, CEO of mid-tier firm Grant Thornton, said his firm was almost
fully compliant with the new code and will begin searching for people to fill
the non-executive roles. “We have had some preliminary discussions with search
firms and we don’t expect any problems in recruiting non-executives.”

Mazars, although not targeted by the code, said it would comply voluntarily.

Further reading:

kpmg.eu

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