KPMG reshapes after Canada falls

In a bid to silence concerns over its ability to build a global organisation, KPMG has announced plans to create two single firms out of 23 national practices in Europe and the Americas. This move swiftly followed news that Arthur Andersen had taken control of KPMG’s entire Canadian practice. There were concerns that this put KPMG in a vulnerable position, but Mike Rake, UK senior partner, denied that the move is a defensive one, adding that the restructuring had been agreed before the Andersen coup.

KPMG “Americas” will include 19 member firms from Latin America, Mexico, and the Caribbean. The $5bn organisation will be led by US chairman Steve Butler. In Europe, KPMG will combine practices in the UK, Germany, France, and the Netherlands.

The announcement last month that Arthur Andersen had folded KPMG’s Canadian practice into its operation sent shock waves across the industry. J Spencer Lanthier, chairman and CE of KPMG in Canada said: “Joining Arthur Andersen will greatly improve our infrastructure, our global capabilities, systems, business processes and ability to serve our clients, increasing multinational needs. Andersen is noted for its robust and mature global operating structure and commitment to quality and client service. This is a significant win for our clients and both our firms.” Lanthier also admitted that the current KPMG federation structure made it difficult “for the firm to invest in consistent worldwide infrastructure. Although KPMG International embarked on a global restructuring programme last year, we have had concerns about the high cost and the time it would take to complete. Now we will have those systems and business practices immediately.”

The merger has created the largest professional services firm in Canada with combined revenues approaching C$900m and more than 6,000 people.

The new firm, which will operate as Arthur Andersen, will combine each firm’s assurance, tax, corporate finance and business consulting practices.