GE opens door to replacing KPMG
General Electric Co. opened the door to replacing KPMG as its auditor, potentially ending a relationship that goes back more than a century, after high-profile financial stumbles spurred the manufacturer’s share collapse.
The board will hold a competition for the auditor position, GE said in a statement Friday. The appointment date will be based on progress in the company’s plan to revamp its portfolio, and GE will stick with KPMG as auditor in 2019.
“The plan announced today is responsive to our shareowners and balances the competing considerations about undertaking an audit firm rotation amidst the portfolio and other strategic actions that the company is currently executing,” Audit Committee chair Geoff Beattie said in a statement.
GE’s ties with KPMG have drawn scrutiny amid questions over whether a too-cozy relationship allowed problems at the manufacturer to metastasize without proper oversight. GE said the board’s audit committee had been considering options after KPMG was ratified with just 65 percent of the vote at April’s annual meeting.
Proxy-advisory firms Glass Lewis & Co. and Institutional Shareholder Services had recommended against bringing KPMG back.
In the statement, GE also said that it plans to share more details about its deliberations and its response to the vote in the proxy statement it is due to file in March 2019.
GE announced a $6.2 billion charge at a long-term care insurance portfolio in January, plus a $15 billion shortfall in insurance reserves. The company revealed another charge of $22 billion related to the power business in October. The U.S. Justice Department and Securities and Exchange Commission are investigating GE’s accounting.
GE’s market value has tumbled more than $200 billion during the last two years, and dropped 1 1 percent on Friday in advance of the statement.