KPMG moves further towards company status: Accountants set up working party to look at implications

Click to follow
BRITAIN'S second largest accountancy firm, KPMG Peat Marwick, has stepped up its plan to abandon partnership status in favour of incorporating as a company, and has set up a working party to investigate the issue.

At a meeting of the 25 to 30 general partners who run KPMG, held at a hotel outside London, it was decided that senior partner Colin Sharman would chair the group looking at the implications of a move largely prompted by a desire to protect the organisation against rising litigation from audit and other clients.

Mr Sharman will be joined by two others - David Leake, senior partner in the firm's Western region, and Robert Berg, a senior tax partner - and they will report back to the general partners on the costs and benefits later this year. If the idea is still felt to be feasible it is likely to be on the agenda of the annual conference of all 594 partners in October.

With the campaigns waged by the Institute of Chartered Accountants and leading firms to reform the law of liability for negligence in audit and other cases appearing to lose momentum, incorporation is seen as providing more certain, albeit limited, protection.

But while partners, unlike directors of limited companies, have unlimited liability when sued, they also enjoy some advantages. Tax benefits are being reduced, but partnerships still have no obligation to reveal their finances.

'National insurance, tax and other reorganisation costs will need looking at seriously,' said a spokesman for the firm. However, details such as the introduction of non-executive directors were not under consideration at this stage.

Incorporation has been an option for professionals for some time, but few have so far taken it up. Although many of its rivals in Britain and the US are understood to be investigating it, KPMG - which last year billed nearly pounds 500m - would be the first leading accountancy practice to become a company.

Comments