KPMG cuts 195 U.S. audit staff

Milan Jaros/Bloomberg

KPMG has cut 195 people from its U.S. audit business to counter low employee turnover rates and changes in how it conducts its core business. 

Employees learned earlier this week of the layoffs that hit just over 2% of KPMG's U.S. audit workforce, according to a person familiar with the company's operations. KPMG said it is providing severance, access to extended health benefits and career transition services to separated employees. 

"We are changing what we do and how we work," the firm said in a statement. "Our multiyear audit transformation is driving changes in how we conduct our audit and assurance services. We are also balancing the need for new skills to meet changing market demands against persistently low attrition."

The headcount reduction is the fourth in three years at KPMG, after two rounds of cuts in 2023 and one last year. The move also comes amid new leadership with Tim Walsh, a veteran of the U.S. audit practice, taking the helm as U.S. CEO July 1 and Christian Peo becoming vice chair of the audit business. 

Walsh takes over at a critical juncture for the Big Four accounting firms, as they grapple with the impact of AI and the Trump administration's scrutiny of consultants' work for the government. AI presents new business opportunities for KPMG and its rivals — PwC hired a chief AI officer last year — but the technology also raises questions about the role of junior accountants.  

The Big Four firms are "eagerly applying AI to themselves to gain efficiencies and increase margins," said Tom Rodenhauser of Kennedy Intelligence, which covers the professional-services sector. "But their DNA is built on the partner-led pyramid model, which is incredibly difficult for them to deconstruct at the pace necessitated by AI advances."

While KPMG's core audit and tax businesses have performed well of late, it has lagged its rivals in the consulting and advisory space, according to Hrish Desai, associate professor of accounting at Arkansas State University. The firm has also gotten stingier with employee incentive pay, he said, and those who have been let go face a tough job market for white-collar professionals. 

PwC said in May that it planned to cut roughly 1,500 jobs in its tax and assurance practices, and Deloitte LLP has said that it would take personnel actions based on the "evolving needs" of its public sector clients amid the Trump administration's probe into federal spending on consulting work.

"The accounting job market right now is quite bad due to the numerous layoffs in the government and the private sector," Desai said.

Walsh has pledged to invest in innovation and to strengthen KPMG's culture, which was shaken in 2019 after ethics breaches related to routine regulatory inspections and internal training exams. The industry also faces a shortage of seasoned accountants, so staffers' workloads can be grueling. 

KPMG, the smallest of the Big Four firms, brought in $12.6 billion in U.S. revenue last year, 31% of which came from auditing. Results for the fiscal year that ended Sept. 30 aren't yet available. 

"We will continue to refine the size, shape, and skills of our workforce," KPMG said in the statement.

KPMG employees discussed the layoff on a Reddit page dedicated to the firm, with one commenter saying there's "too much people for how much work we have." Quipped another: "It's been a rough week, and it's only Tuesday."