General Electric Company (NYSE:GE) is being pushed by the Institutional Shareholder Services (ISS) to sever its ties with the longtime auditor of the company KPMG following recent federal probes. GE and KPMG share a long association and are very close and hence severing the ties are not going to be easy for the industrial giant.
The ISS has urged the Boston-based company to reject the topmost auditor after performance-issues related to accounting surfaced some time ago. According to a report, a similar call was made a few days ago by Glass, Lewis & Co. The prominent proxy advisory services stated that the growing concerns related to the previously undisclosed liabilities of GE and its accounting practices have led to SEC investigation.
However, there has been no reply or comment from either GE or KPMG. Rather the proxy statement of 2018 issued by General Electric reveals the company’s enormous trust in its long-time auditing partner. The statement says that GE has benefitted from the higher audit quality as KPMG is familiar with the vast portfolio of the company.
GE & KPMG Association Goes Long And Deep
KPMG is a huge auditing company that has a long association with GE. The two have been working together since 1909 with KPMG conducting approximately 14, 00 statuary audits for GE in 90 countries. The proxy statement of GE underlines the strength of this association as it says that introducing new auditor will call for immense discipline and commitment which can easily interfere with the focus of the management on its internal controls and financial reporting.
The company recently reappointed KPMG as its auditor and urged its shareholders to accept and approve its decision in the shareholders meeting which is due soon. However, it seems that ISS is not convinced with this decision of GE and has said that the company must come out with a balanced reasoning in support of the reappointment of KPMG.