KPMG’s response to outcome AFM review

KPMG’s response to outcome AFM review

KPMG sees in the findings of the AFM review a positive opinion on the progress in the implementation and safeguarding of the change process in 2016. This demonstrates that KPMG has made considerable progress in the implementation of improvement measures in the field of quality, attitude and conduct. At the same time, KPMG is disappointed with the outcome of the AFM’s inspection of audits of the financial years 2014/15, which the firm finds unsatisfactory.

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KPMG’s response to outcome AFM review

Positive regarding the change process

Board chairman Albert Röell: ‘We as KPMG had a great deal of work to do. We have learned our lesson since then and have made considerable progress in terms of improving the quality of our audits. In doing so, we have made major efforts to put our procedures, culture and quality in order. We are therefore pleased that the AFM has a positive opinion on the progress in the implementation and safeguarding of the change process at KPMG. At the same time, we are aware we are not done yet. So we will continue on the path we have set out to ensure we can meet the expectations of the AFM. On this front, we are focusing on the culture and conduct components of the improvement measures. However, it takes time to raise the professional organization as a whole to a higher level both fully and sustainably. As we are aware that the rate of change must remain high, that will remain a top priority for the Board of Management.

Audit inspections unsatisfactory

KPMG acknowledges that the outcome of the audit inspections is unsatisfactory. Of the eight audits inspected, the AFM ruled that six were inadequate. We have conducted extensive technical discussions about a number of audits to learn from each other’s insights. The analyses and necessary adjustments were taken immediately. None of the financial statements and audit reports needed to be amended. These are audits for the 2014/15 financial years, when we had only just begun with the implementation of far-reaching change measures. It was a little too soon for the measures to be fully reflected in the statutory audits for 2014 and 2015.

On the right track, extra efforts

KPMG considers the outcome of this AFM investigation a sign that the organization is on the right track with its change process. The disappointing audit inspections are both a warning and a stimulus. Albert Röell: ‘This is a clear signal that we need to make additional efforts. We will focus these on safeguarding quality – also visibly in our culture and conduct – and on ensuring that we perform considerably better in future audit inspections by the AFM.’

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