Rule changes add up to more pay for partners at KPMG

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The Independent Online

New financial regulations in the US and Europe, and an increase in mergers and acquisitions, helped boost revenues and profits at KPMG, while its most senior UK accountant, Mike Rake, was paid £2.4m in the year to 30 September.

New financial regulations in the US and Europe, and an increase in mergers and acquisitions, helped boost revenues and profits at KPMG, while its most senior UK accountant, Mike Rake, was paid £2.4m in the year to 30 September.

Mr Rake warned of a shortage of qualified accountants and specialist advisers to meet the increased demands for his profession's services. KPMG has pulled out of operations such as legal services and certain other advisory services to focus on areas of high priority for its clients.

The introduction of new rules under America's Sarbanes-Oxley law, brought in to tighten up company accounts in the wake of scandals such as Enron, and the implementation of new accounting standards in Europe combined to produce a 14.7 per cent rise in KPMG's global revenues to $13.44bn (£7.2bn).

In the UK turnover was up 6 per cent to £1.06bn and operating profits were £247m compared with £233m the year before. UK partners, called members by KPMG, earnedan average of £451,000, an 8.9 per cent increase on 2003 when the average profit share was £414,600.

However, the partners' earnings are the lowest of the big four accountancy firms. Mr Rake said he believed KPMG was competitive for most of the group's employees who were concerned about their total employment package and working environment and not just their cash remuneration. Apart from KPMG's 553 partners in the UK, 8,204 other British staff shared a bonus pot of £35m at an average of £4,266 each.

Mr Rake himself earned £1,848,000, compared with £1,817,000 in 2003, from his job as UK senior partner, while he earned an extra £602,000 from his role as chairman of KPMG International.

The group's UK arm is trying to persuade qualified accountants from Eastern Europe, South Africa, India and Australia to work in the UK for two-year stints to alleviate the shortage. Worldwide, the accountancy group employs 93,000 people but Mr Rake said this would have to rise to 100,000 to meet demand.

"The problem is the cycle moves on you. We started recruiting early in the UK and we are trying to recruit around the world to try to deal with demand. We have pressure from increased regulations and from an increase in transactions around the world," Mr Rake said.

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