Global accounting giant KPMG is reportedly closing its federal government audit business in the United States and will redeploy more than 450 U.S. staff. The move follows the firm’s loss of a significant US$60 million-a-year contract with the Pentagon, as reported by the Financial Times. KPMG, a prominent professional services network, provides audit, tax, and advisory services. Its federal government audit business focused on scrutinising financial records for U.S. government agencies, having audited the U.S. Army for nearly a decade.
This development comes amidst increasing bipartisan scrutiny over the Pentagon’s persistent financial accountability issues. The U.S. defence department recently failed its annual audit for the eighth consecutive year, prompting widespread criticism. In response, the Pentagon is reorganising its financial reporting structures, aiming to reduce the number of separate, disjointed audits by two-thirds. The U.S. Army had been the largest single customer within KPMG’s federal audit practice.
The defence department now intends to engage a new accounting firm to oversee a larger proportion of the military’s accounts. KPMG is also in the process of winding down contracts with other parts of the U.S. government. While some affected staff have already transitioned into alternative roles within KPMG, others are expected to move into new positions between now and the conclusion of the final federal contract in 2030. The Pentagon’s audits, which commenced in 2018, have consistently identified ongoing system and accounting challenges across its extensive bureaucracy, with lawmakers setting a 2028 deadline for the department to successfully pass an independent audit. KPMG did not immediately respond to requests for comment.
