Independence of INEs and ANEs
KPMG has considered the Audit Firm Governance Code and the FRC’s Ethical Standard in drawing up criteria for appointment of the members of the PIC and ANEs. Whilst our INEs and ANEs are not considered to be part of the chain of command for the purposes of auditor independence requirements, they are required to comply with certain criteria which have been developed to reflect the need for INEs and ANEs to maintain appropriate independence from the firm and its partners and to be free from actual or perceived conflicts of interest. These criteria include considering the impact of any financial, business, employment, or family relationships they have with the firm’s audited entities or KPMG itself:
- None of the INEs or ANEs are permitted to hold a director or key management position role at any entity where KPMG UK (or any KPMG network firm) is the statutory auditor.
- They are not permitted to be the beneficial owner of a financial interest in an entity where KPMG is the auditor if they have significant influence over that entity.
- They are required to notify the firm if (i) a member of their immediate or close family is a director, holds a key management position, or is in a financial reporting oversight role at an entity where KPMG is the auditor, (ii) if they intend to enter into any business relationship (including providing services) with an entity where KPMG is the auditor, or (iii) if they hold any financial interests in any entity that is material to them. This notification is required to enable the firm to consider if any of these relationships could give rise to an actual or perceived conflict of interest that requires safeguarding.
- With respect to relationships with KPMG itself, if an immediate or close family member of an INE or ANE became a partner (or equivalent) of KPMG UK, they would no longer be eligible to hold their role.
- The INEs and ANEs are also required to notify KPMG if an immediate or close family member becomes an employee of the firm. Again, this is to enable the firm to consider the scope for conflicts with their role.
All INEs and ANEs are checked prior to their appointment to ensure they meet these criteria. As a condition of their appointment, they are under a continuing obligation to disclose to KPMG any matters which may constitute a change to their roles or relationships as soon as they become aware of them. They are also required to make an annual declaration of their compliance with the independence criteria.
Support
To support the INEs and ANEs in discharging their role, the firm provides them with:
- An Executive Lead to help them navigate the business and discharge their duties under the Code.
- EA support.
- Any information they require about the firm’s business to discharge their duties.
- Access to independent professional advice at the firm’s expense where judged necessary to discharge their duties.
Remuneration
The annual remuneration of each Non-Executive is £110,000, plus an annual fee of £10,000 per Board Committee they attend as a designated Non-Executive. The Chair of the PIC and the Chair of the Audit Board receive an additional amount of £40,000 in respect of chairing duties. The Chair of the PIC also receives an annual fee of £125,000, in relation to being a non-voting member of the Group board and Group Board Committees.
Communication with partners as members of KPMG LLP
The Chief Executive, together with members of the Executive Committee, have primary responsibility for communication with partners in the UK.
The Chief Executive leads regular calls with the firm's partners. The Chief Operating and Financial Officer provides an update to partners on the firm’s performance. In addition, wider Executive Committee members and Partners are invited to present on key topics. The calls provide the opportunity for two-way feedback between partners and Executive Committee leadership.
The Chair writes formally twice a year to partners to update them on the focus of the Board and its Committees.
All Partners are invited to an extended partner call to discuss a range of topics including the firm’s results and business planning. Every other year this becomes an in-person Partner conference. There is also a dedicated Partner intranet containing partner-specific resources and communications.
Where there is an immediate need to communicate matters, an all-Partner email is used or, exceptionally, all-Partner calls are convened.
