April 29 (Reuters) – Big Four firm KPMG is shutting its federal government audit business and will redeploy more than 450 U.S. staff after losing a $60 million-a-year contract with the Pentagon, the Financial Times reported on Wednesday, citing sources. KPMG had audited the U.S. Army for almost a decade; however, the defense department now […]
Business
KPMG exits US federal audit business after losing Pentagon contract, FT reports
Audio By Carbonatix
April 29 (Reuters) – Big Four firm KPMG is shutting its federal government audit business and will redeploy more than 450 U.S. staff after losing a $60 million-a-year contract with the Pentagon, the Financial Times reported on Wednesday, citing sources.
KPMG had audited the U.S. Army for almost a decade; however, the defense department now plans to use a new accounting firm to oversee a larger proportion of the military’s accounts, according to the report.
This comes amid mounting bipartisan criticism of the Pentagon’s financial accountability problems, after it failed an annual audit last year, for the eighth year in a row.
The Pentagon has now decided to reorganize its financial reporting, slashing the number of disjointed separate audits by two-thirds.
The U.S. Army was the largest single customer of KPMG’s federal audit practice, the FT report said, adding that the firm is also winding down contracts with other parts of the government.
Some staff have already been placed in alternative roles, while others will shift to new jobs between now and the end of the final federal contract in 2030, the report said.
KPMG did not immediately respond to a Reuters request for comment.
The Pentagon’s first audit was conducted in 2018 and consistently failed, reflecting persistent system and accounting problems across its vast bureaucracy. Lawmakers have set a 2028 deadline for the department to pass an independent audit.
(Reporting by Akanksha Khushi in Bengaluru; Editing by Sumana Nandy ad Rashmi Aich)