KPMG does utilisation target u-turn

Link: Bill padding row reaches accountants

Although the firm insists that utilisation rates and chargeable hours do not exist to the client as fees are arranged upfront, it has conceded that such performance targets are used internally and are set during employee appraisals.

A KPMG spokesman said these targets were just a part of numerous other measures used to assess an employee’s performance and had no linkage at all to client billing.

The controversy surrounding the use of utilisation targets arose after the publication of a memo from City law firm Clifford Chance citing such measures as a pressure on employees to ‘pad’ bills.

Last month PricewaterhouseCoopers said it used utilisation targets while Deloitte & Touche has also admitted that utilisation rates are used as part of the employee appraisal process.

Second-tier firm BDO Stoy Hayward said that it does not assess its employees on utilisation rates, although assumptions of these rates are used to prepare client bills.

A former KPMG employee, who asked not to be named, said: ‘Chargeable hour targets were the be-all and end-all of the job, and were analysed monthly. The pressures to meet these targets led to huge temptations to pad bills. Two-minute phone calls would be put down for quarter of an hour. In meetings with clients you would charge for any chit-chat at the beginning or end.’

In a recent KPMG appraisal form, seen by Accountancy Age, a target of 84% of chargeable hours was set by the firm with objectives to: ‘Charge all available client service time (ie after training, holidays etc) except where subject to other defined responsibilities identified and time agreed.’

‘What you call pressure is just a reality for employees working for any firm in the City,’ said the KPMG spokesman. ‘There is a dynamic to derive value for the partnership. We are no different to other business models in that sense.’

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