Date posted: 11/09/2018 11 min read

Listen: KPMG chair walks a tightrope

KPMG Australia’s new chairman Alison Kitchen, whose audit career spans more than 30 years, wants her firm to open up to the public. Can that plan survive in a sceptical era?

In Brief

  • Alison Kitchen wants KPMG Australia to be open and trusted and this approach worked well in dealing with a public sexual harassment case.
  • She has worked her way up through KPMG audit ranks, often focusing on mining.
  • She’s working against a background of controversies over KPMG’s global behaviour.

It was probably no great surprise that KPMG Australia’s partners voted Alison Kitchen FCA into the national chairmanship last year. She rose through KPMG’s ranks as an auditor via the unforgiving territory of the West Australian mining industry. She claims to bleed KPMG blue when you cut her. As predecessor Peter Nash points out, the partners knew how well she was regarded in the senior levels of Australia’s business community. And at a time when the Big Four and KPMG in particular are under scrutiny, Nash notes, Kitchen presents as the very model of engaging, no-nonsense openness. As the public face of KPMG, she has so far hardly put a foot wrong.

Credit for lead photo: Aaron Francis / Newspix 

Baptism of fire

As Kitchen notes, the chairman’s role is mostly as an influencer. She describes her job as focusing the board’s attention on key issues, selecting the CEO, holding the leadership team to account, and overseeing the appointment of the executive team. She spends time with the firm’s partners and staff. And she sits on the global and regional KPMG boards, giving Australia a voice and providing feedback from global management. 

“I always say to people: ‘I can’t actually do much any more; I’m here to help all of you go well’,” she reflects. She aims to “help them work things out” and sees herself as a listener who can understand her responsibilities to all parties without alienating individuals with whom she disagrees. She values a piece of advice from Nash: “Feel confident in backing your own judgment, but consult widely before you do it.”

Kitchen’s judgment was tested soon after she won the chairmanship. She took over from Nash in September last year, and as soon as December was confronted with a sexual harassment complaint about a KPMG Adelaide partner.

“I think how we handled that incident was exactly how we would want to handle it,” she says now. The incident occurred on a Friday night; KPMG CEO Gary Wingrove, whose relationship with Kitchen was forged during their Perth days, received the complaint on the Monday morning. An investigation began immediately, the board agreed a course of action, and the partner involved left the firm that Friday, she says. There were “appropriate steps” with the staff involved, including involving them in how they wanted the incident communicated. “We dealt with that in as textbook a way as you could possibly deal with it to restore a safe environment, to respect the privacy of the women impacted, [and] communicate to the local partners and the local staff.”

Then in February 2018, when news of the incident leaked, she was up-front about what had happened. “It hit the media the day I happened to be talking at a conference about public trust, and I felt I would have no credibility going on stage and talking on a topic like that if I didn’t address it head on … we were very honest and just practical about it.”

Avoiding the spin

Kitchen wants more of that approach from KPMG. The firm does a great deal of work for state and federal government departments, as well as economic analysis and forecasting. Kitchen believes that if KPMG is to be trusted by the public, it should be willing to put forward its views: “We should be prepared to help inform the public in a balanced and constructive way about issues that they might wonder about, and we’ve got the skills and voice to do that.” She denies any interest in building a public profile; rather, she says, the firm needs to be on the front foot and build community trust.

People can spot BS a mile off ... that will stop them believing anything you say.
Alison Kitchen Chairman, KPMG Australia

But the firm has to first behave in a trustworthy way, she acknowledges. That starts with behaviour inside KPMG: “The first thing we have to do is absolutely have the people within our organisation trust us and believe everything we say. I do go out of my way to try not to say: ‘I can’t answer questions.’ People can spot BS a mile off, so they can spot if you’re toeing a party line, and that will stop them believing anything you say. Your whole message becomes spin if you’re not careful.”

She also has a simpler reason for truth-telling: she’s too busy to lie. “If you’re actually not just telling the truth,” she says, “you can’t possibly remember what you did and didn’t spin.”

Trust and auditing

Since the late 1980s, when she moved from the UK to Perth, she has worked her way up through the KPMG auditing ranks, often focusing on mining companies. Former chairman Doug Jukes made her head of KPMG’s mining practice. Her auditing career has run for more than 30 years; even as chairman she retains one audit client, ANZ.

Kitchen sees her auditing role as helping find common ground between corporate boards and their management. “You need to get management to have a very open, trusted relationship with you, and therefore be prepared to talk to you on just about anything,” she notes. At the same time, a good auditor must be honest with the board about what they’ve seen at the company. “The art of a good auditor,” she says, “is walking a tightrope.” 

Of course, she is walking a leadership tightrope as well. “We have had our stuff-ups, as has everyone,” she says. “And they will get found out. So you’re much better to be on the front foot and deal with them in a transparent and really rapid way.”

Early days in the UK

Trust and straightforward honesty resonate for Kitchen. Her father, an aircraft engineer, helped create the Concorde supersonic airliner; her mother was a strict Methodist who had no opportunity for a career. Both parents experienced wartime rationing. The young Alison Kitchen was “brought up mostly by serious, diligent, hardworking people to be serious, hardworking and diligent”, and told to appreciate her opportunities. The outlook and the discipline appear to underpin a lot of what she’s about today. “It’s just so deeply ingrained in me, I don’t think about it that way,” she reflects.

Kitchen began her accounting career in the UK in the somewhat grim northern English town of Sheffield, working for KPMG predecessor Peat Marwick. Her work there included auditing the National Union of Mineworkers (NUM) in the middle of the famous 1984-85 miners’ strike. Police escorted her to work. One evening as she was auditing, the fiery socialist NUM leader Arthur Scargill sat down and gave her a lecture on the virtues of his union. “It was the scariest experience of my life,” she says.

Then she heard of a three-month secondment in Sydney. Told that the firm’s management hadn’t thought her then-husband would let her go, she talked them into letting her discuss it with him. “He was like, ‘let’s get out of here’,” she recalls. Within a few months she was in late-1980s, sun-soaked Alan-Bond-era Perth. Now she is at the helm of KPMG in Australia. 

Transgressions

Kitchen has made a bet – for herself and her firm – that getting out and telling the story is the right move. So far, it’s working and this open approach certainly suits the times. Trust in business generally is declining. A series of reports on financial services businesses have culminated in a Royal Commission. The Big Four are attracting increasing attention.

And KPMG’s honesty is under special global scrutiny right now. The firm audited fallen UK construction giant Carillion, has had to lay off hundreds of staff in South Africa over a government corruption scandal, and in January saw three US partners charged with leaking confidential audit information. In June, a report by UK accounting watchdog the Financial Reporting Council said that more than half of KPMG’s 2016 and 2017 audits of FTSE 350 companies required “more than limited improvements” – a result far out of line with EY, Deloitte and PwC. The Financial Times newspaper even quoted business school professor Erik Gordon as saying that it was “a surprise that [any] company would engage KPMG”.

“We have had our transgressions,” Kitchen admits. She wants KPMG Australia to be straighter than straight. When someone does the wrong thing, she says, “we should not hide it but own it – and then tell people why we didn’t tolerate it and what we’ve done about it, and why we want to change it”.

One result of her approach has been much greater media visibility for both Kitchen and KPMG. One of the toughest issues for any current-day leader of a Big Four office is where to pitch your profile and that of your firm. As Kitchen puts it: how much do you keep your head down and hope it will go away?

KPMG is not a consumer business like the banks or an energy utility or Telstra, she notes. “They touch everyone, mums and dads … most people in the community aren’t touched by a Big Four consulting firm.” But she’s seen “a massive ramp-up” in attention. “I’ve spent a lot more of my time than I expected talking to the media about all sorts of weird things that I didn’t expect they’d be interested in.”

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