KPMG cuts 4% of US audit staff amid industry wide adjustments
KPMG has announced a reduction of approximately 330 positions from its US audit practice, representing nearly 4% of its 9,000-person audit workforce, as the firm grapples with historically low employee turnover and evolving market demands.
The cuts, which target audit associates and managers while sparing partners, mark the latest in a series of workforce adjustments across major accounting firms.
The reduction comes despite KPMG’s audit division generating $3.7 billion in revenue in 2023, highlighting a broader transformation in how major accounting firms are structuring their operations.
“The actions reflect our ongoing focus to align the size, shape, and skills of our workforce to the market, while addressing continued low levels of attrition,” KPMG said in a statement.
This latest round of layoffs follows several previous workforce reductions at KPMG, including an audit-focused cut last March and a broader reduction in June 2023 that affected approximately 5% of U.S. staff across advisory, tax, and back-office functions. Earlier that year, the firm had already reduced its advisory personnel by almost 2% of U.S. staff.
The pattern of workforce reduction extends beyond KPMG to its Big Four competitors. PwC recently cut approximately 1,800 positions—roughly 2.5% of its US workforce—primarily affecting its advisory practice and products and technology operations, while also impacting business services, audit, and tax divisions. Earlier in 2023, Deloitte and EY implemented their own reductions, letting go of 1,200 and 3,000 employees respectively.
These industry-wide adjustments come as major accounting firms face multiple challenges. The Big Four firms, including Deloitte, Ernst & Young, and PwC, have reported slowing global revenue growth in their recent financial results, with KPMG set to release its network-wide figures in December.
The paradox of the accounting profession
The situation presents several paradoxes within the industry. While firms cite low voluntary turnover as a challenge, internal reports suggest growing employee dissatisfaction with compensation and company culture. Some audit teams reportedly face understaffing issues, even as the broader organization implements layoffs. This tension is particularly notable as KPMG’s CEO Paul Knopp has recently advocated for CPA licensing standard reforms, citing concerns about the profession’s diminishing talent pipeline.
Industry transformation appears to be driven by several factors, including increased offshoring of work to countries like India and the growing impact of artificial intelligence on productivity. These changes follow a period of aggressive hiring during the pandemic, which may have led to current overcapacity issues.
The impact on remaining staff could be significant, particularly during busy seasons. Internal discussions suggest that replacing departing employees during peak periods could prove challenging, potentially creating additional stress on existing teams. This pressure comes amid reports of mediocre bonuses and raises that some employees view as falling below competitor offerings.
The broader accounting industry faces a complex future. While firms implement these reductions, they simultaneously express concern about long-term talent availability, particularly in corporate accounting teams and smaller firms. This dichotomy reflects the profound changes occurring within the profession, as firms attempt to balance immediate market conditions with long-term sustainability.
