KPMG L.L.P. is the US member firm of KPMG International, a global network of accountancies with a 300-year history. Today, parent KPMG is one of the industry's Big Four (alongside Deloitte Touche Tohmatsu, Ernst & Young, and PricewaterhouseCoopers). The US-centric business of KPMG provides audit, tax, and advisory services through approximately 90 offices located nationwide. As part of its business focus, KPMG L.L.P. targets several industries, such as financial services, media and entertainment, consumer products, chemicals, and healthcare and pharmaceuticals. KPMG L.L.P. is part of KPMG's Americas division, which accounts for about a third of the group's global revenues.
KPMG L.L.P. operates within the US borders, but its broader Americas division operates in about 20 countries, including Canada, Brazil, and Mexico.
The firm's core service line is auditing, which accounts for about half of KPMG L.L.P.'s sales. The company also provides operating and technology, risk and compliance, and transactional advisory services. As a result, the rest of its revenue is evenly split between tax and advisory services.
Mergers and Acquisitions
Until the economy fully rebounds, accounting firms have been busy providing restructuring and related services to distressed clients. To this end, KPMG L.L.P. has worked to make strategic acquisitions to strengthen its position in the market. In early 2012 the firm purchased the ONESOURCE Indirect Tax Managed Services business of Thomson Reuters to further enhance its indirect tax compliance services. It made two acquisitions in 2011, as well. KPMG L.L.P. bought Optimum Solutions, which provides management consulting and implementation services to companies that use Oracle enterprise software. The move has enabled it to serve clients with ERP and HR transformation needs. To boost capacity, the company and its UK affiliate teamed up in 2011 to buy outsourcing advisory firm EquaTerra, adding another revenue stream. The acquisition follows KPMG L.L.P.'s 2010 purchase of the supply chain advisory services unit of second-tier accountancy Grant Thornton.
KPMG L.L.P. had a total fee income of $5.4 billion in late 2011. The income comprises audit and accountancy (43%), advisory services (31%), and tax services (26%).
KPMG L.L.P. operates as a Delaware limited liability partnership. It is wholly owned by its more than 1,740 partners and principals.
KPMG has been able to rebound from some past legal troubles. The drawn-out drama began in 2005 when the firm admitted to unlawful conduct in an investigation by the Department of Justice. Former partners of the firm created abusive tax shelters for more than 600 wealthy customers between 1996 and 2002; the unpaid taxes cost the Treasury more than $100 million. KPMG avoided criminal prosecution by agreeing to pay $456 million in fines, restitution, and penalties. (A criminal indictment led to the collapse of KPMG's former rival Arthur Andersen.) A federal jury found three ex-KPMG employees guilty in the tax-shelter trial in 2008 (a fourth defendant was acquitted). Those former managers were ordered to pay nearly $10 million in fines and received sentences between six and 10 years in prison. The trial was considered the largest criminal tax fraud case in US history before a judge dismissed charges against more than a dozen former employees, ruling that federal prosecutors had blocked their right to representation. The tax shelters weren't the end of KPMG's legal woes. The company also had to pay $80 million in fines related to fraud at former client Xerox. KPMG had served as Xerox's auditor for 40 years. – less