KPMG trims senior partner ranks to cut costs

As reported by The Australian Financial Review, KPMG chief executive John Sams has slashed the cost of the firm’s ranks of senior partners to $13 million a year. The firm’s confidential list of partner bands for this financial year (distributed internally) revealed that the number of partners in band 11 or higher has dropped from 17 in the past year to about 10.

There are around 14 bands in the firm’s partnership, and the profit distributions start at $1.3 million a year for band 11 and $1.6 million for band 12, it has been reported.

In addition to these cuts, Sams has also scaled back the bands of some senior partners and told the partnership that their average income could fall by 20 per cent this financial year. This would equate to an average loss of around $144,000, based on average annual distributions totalling $717,000 paid last year.

There have also been changes applied to executive roles under an interim structure, with Sams combining the chief operating officer role formerly held by Eileen Hoggett and removing the chief strategy officer role.

Silvana Mammoliti is acting COO and chief financial officer while the firm recruits a permanent replacement.

Meanwhile, new KPMG chairman Michael Ebeid (who is not a partner) is being paid around half that of former chairman Martin Sheppard at $1 million a year.

The cost-cutting would allow KPMG to fund band increases for around 150 junior partners. KPMG’s partner headcount has reduced from 700 to 650.

The remuneration changes are part of KPMG’s internal review, known as Project Vector, and follow whistleblower allegations of audit misconduct, the sharing of confidential documents with unauthorised personnel, and alleged mistreatment of the whistleblower, who aired the allegations through senator Deborah O’Neill.

It is also due to weaker demand for consulting, with KPMG Australia’s FY26 results revealing that the accounting giant is reducing its workforce by 5 per cent following a review of its cost base and future workforce needs.

Sams said much of this reduction would take place in the consulting business due to falling demand.

“Changes to our business and the professional services landscape have also reduced the need for some roles in business services,” Sams said.

The firm reported that its total revenue fell by 1 per cent for the year ended 30 June 2026 to $2.3 billion, which it attributed to ongoing soft market conditions and a decrease in government use of consultants. Indeed, it reported that revenue for its consulting business fell by 16.9 per cent compared to the previous year.

However, the results showed an 11.0 per cent increase in revenue in its audit and assurance division despite facing scandals, with the growth credited to external audit and assurance.

Sams said there would be several internal and external reviews in the coming months, and those findings would inform KPMG’s next steps.

“We know there is more to do, and we will continue that work with openness, care and determination – focused on supporting our people, serving our clients and building a stronger, more trusted firm for the future,” Sams said.

It was reported in August that KPMG would undertake large-scale redundancy proceedings, with reports stating that Sams emailed firm partners around 19 August to inform them.

“Some of you will have seen media attention this afternoon about partner exits and staff job losses. I want to address this head-on … conversations have commenced this week with impacted partners,” he wrote.

The conversations reportedly ran from 19 August to 21 August.

The audit scandal has cost several KPMG executives their jobs, including former CEO Andrew Yates. Sams replaced interim CEO Stan Stavros in July. Other executives leaving the firm include former chairman Martin Sheppard, former national managing partner of audit and assurance Julian McPherson, and audit partners Kim Lawry and Paul Rogers. Lawry departed the big four accounting firm after Westpac demanded that she be removed from its file.

Hoggett was the only partner to be expelled from the partnership last month after Allens discovered evidence in its investigation of the alleged audit misconduct. Hoggett has now commenced legal proceedings in the Supreme Court of NSW against KPMG for her dismissal, with the case listed for 23 September.

KPMG faced the Parliamentary Joint Committee on Corporations and Financial Services' KPMG ethics and accountability public hearing on 14 August, along with Macquarie Bank. KPMG was bidding for a $75 million audit contract tender, but Macquarie Bank recently announced that following the hearing, it will no longer recommend KPMG as its future auditor. Instead, it will continue to engage PwC for auditing services.