KPMG’s Incoming CEO Takes Over in Accounting’s Reinvention Era

KPMG’s incoming US CEO, Tim Walsh, is taking the helm at a critical moment for his firm and the rest of the Big Four. With muted demand for traditionally more profitable consulting work, he’s pressed to figure out how to integrate new technologies that could reinvent the firm’s tax and assurance services.

Walsh, a veteran of KPMG’s US audit business, has offered a limited glimpse into his priorities saying he’s ready for change and confident that the firm is prepared to wrangle technology and recruit the top talent it’ll need to woo profitable clients.

“We’re not only going to keep pace with change but lead it—by delivering the best services for our clients and being the most trusted professional services firm,” Walsh said in a social media post earlier this week.

Since the firm announced his appointment on Monday, Walsh has encouraged the firm’s 36,000 US employees to embrace change and to focus on the future. Artificial intelligence will likely be at the center of that future helping clients roll out the emerging technology and reimagine how the firm prepares tax filings and financial statement audits—core services that drive 60% of the US firm’s $12.6 billion in revenue.

Walsh’s approach looks to build on the efforts of his predecessor Paul Knopp, who steered the firm through the coronavirus pandemic and the early days of the AI revolution. Knopp, who is set to retire after his term ends in June, oversaw the firm’s efforts to open its first law firm in Arizona—a new service that could help diversify the firm’s revenue streams.

Partners ratified Walsh’s selection last week along with Atif Zaim, who previously led KPMG’s consulting business, as deputy chair, the firm said.

New Leader for New Era

Walsh, like Knopp, rose through KPMG’s ranks as an auditor during his 33 years with the firm and led the audit for toymaker Hasbro Inc. through 2021. He most recently served as the firm’s national managing partner for audit operations.

Although AI presents new business opportunities for the Big Four, the firms have invested billions to stay ahead of their competitors and the fast-evolving technology. The technology promises to revolutionize tax and auditing, replacing manual, repetitive work like formatting data while also providing analysis and fraud detection far beyond what’s possible today.

For now, firms still need armies of accountants and other professionals to complete audits and prepare tax records. That’s raised questions about how to prepare junior accountants for future leadership roles as well as how to use still-nascent technology in their current jobs.

“The Big Four consulting firms are at a pivotal moment of reinvention,” said Joy Taylor, managing director of consulting for alliant and a former principal of organizational transformation at Grant Thornton. The future belongs to firms that can “leverage global talent, and drive down costs through AI-driven solutions while simultaneously adapting to change themselves,” she said.

Culture Shift

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. Similar lapses have plagued KPMG units and other Big Four affiliates around the world.

The firm has been adding to its audit portfolio and recently touted what is expected to be its best auditor report card in over a decade, crediting a revised calendar that spreads audit work throughout the year. The firm also has hiked starting wages in a bid to attract younger workers.

Despite those efforts, work-life balance and burnout remain a challenge for KPMG and could hurt recruitment efforts, said Hrish Desai, an assistant accounting professor at Arkansas State University.

“KPMG’s new leadership would need to prioritize improving workload management and supporting employee well-being to retain talent,” Desai said.

KPMG says its doing just that. Last year, the firm rolled out a program meant to prevent employee burnout by monitoring staff workload, vacation time usage and off-hours email traffic. Employee surveys suggest the effort is making progress: an indicator that staff aren’t worn out climbed to its highest level since 2019, according to the firm.

The broader accounting industry has struggled to attract new entrants and shed more than 300,000 jobs during the pandemic. That talent crisis sparked efforts to revise state licensing laws to reduce the minimum education required to earn the certified public accountant credential—an effort both Knopp and Walsh have backed.

Virginia is poised to join Ohio in adopting education reforms while states from Texas to Hawaii are weighing similar licensing changes.

Bolstering ethics of top leaders and front-line staff is a key ingredient to build the culture of accounting firms that deliver services meant to underpin trust in the financial markets. And staff will be watching Walsh’s actions and his decisions carefully, said Sarah Cabral, executive professor of management and entrepreneurship at Santa Clara University.

Underscoring integrity could also help the firm as US regulators continue to press auditors for better quality of financial statement audits and consistent compliance with ethics rules, Desai said.

“Given KPMG’s traditional strength in audit,” he added, “excelling in quality and compliance can be a differentiator.”