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Our system of governance is based on checks and balances; these help ensure we take the best possible decisions. We have a formal governance structure, including a Supervisory Board and a Board of Management; this structure is supported by internal policies, controls and a Code of Conduct, setting out our values and commitment to responsible business.

Legal structure

KPMG N.V. is, in effect, a holding company for our assurance, advisory and business services operations. All shares in KPMG N.V. are held by Coöperatie KPMG U.A.; individual equity partners are members of this cooperative through their professional companies. These partners provide services to KPMG clients under a management agreement with the cooperative. Under Dutch law, Coöperatie KPMG U.A. Board members are considered co-policymakers – which means they fall under the ‘fit-and-proper’ rule for Management or Supervisory Board members[1].

KPMG N.V. simplified legal structure

External regulation

The audit profession in the Netherlands is regulated by two Acts:

The Authority for the Financial Markets (AFM) is responsible for overseeing audit firms in the Netherlands. To operate, all audit firms must have a licence from the AFM. KPMG N.V. maintains an active, two-way communication with the AFM. The AFM conducts regular inspections of KPMG N.V., as does the US Public Company Accounting Oversight Board (PCAOB); both the AFM and PCAOB carried out extensive inspections in 2021. Communication from the AFM on their inspections can be found on their website. The PCAOB is expected to publish its results next year. 

We comply with all relevant laws and regulations, as well as policies and procedures issued by the Royal Dutch Institute of Chartered Accountants (NBA). In the Netherlands, audit clients – if they are classified as ‘public interest entities (PIEs)’ according to Dutch law – must change their auditor at least once every ten years (or two terms of five years). There is also a four-year ‘cooling-off’ period before a former auditor may be re-hired. We also endorse the principles and best practices in the Dutch Corporate Governance Code; we implement these to the extent they can be applied to an unlisted firm, such as KPMG.

At international level, KPMG regularly discusses audit issues with the International Forum of Independent Audit Regulators (IFIAR) and representatives of the Committee of European Auditing Oversight Bodies (CEAOB).

For more information on our compliance with industry policies and procedures, see How we assess and maintain quality.

Board of Management and Supervisory Board

We have a two-tier management structure:

  • Our Board of Management manages the firm; it’s responsible for strategy, performance and value creation.

  • The work of the Board of Management is overseen by our Supervisory Board – the Supervisory Board operates in part through three committees: Assurance Quality, Audit & Risk, and Remuneration & Appointment.

Currently, the Supervisory Board comprises five members – these members are all external and independent of the firm’s management. All Supervisory Board members are appointed by the firm’s shareholder (Coöperatie KPMG U.A.).

Supervisory Board members are elected for terms of up to four years, and may serve no more than two terms. Board of Management members are appointed by our Supervisory Board, following approval by the firm’s shareholders – members may serve up to a maximum of eight consecutive years. Our Supervisory Board members are also considered co-policymakers under the Audit Firms Supervision Act.

We aim for diversity among members of both our Board of Management and Supervisory Board; this diversity, we believe, makes for better long-term decision-making. Diversity is built into the rules of procedure for both the Board of Management and Supervisory Board. Under the rules, our aim is to have a minimum 30% women – or, if applicable, 30% men – on each Board. 

For more information, see our Supervisory Board Report. Our Supervisory Board and Board of Management Rules may also be found online on the KPMG website.

Code of Conduct and other internal controls

Our formal system of governance is supported by a Code of Conduct; this Code applies to all KPMG member firms. All employees are required to abide by its provisions. As well as the firm’s values, the Code sets out the firm’s commitments in areas ranging from compliance with laws, regulations and standards, to maintaining quality, fair competition and independence. The Code also details employees’ responsibilities – the conduct we expect of the people working for us. In addition to the Code, we have processes that allow personnel to report suspected violations without fear of retaliation; these include a dedicated whistle-blower ‘hotline’, open to third parties as well as KPMG employees.

Aside from the Code, we have extensive internal policies and controls; these cover areas such as quality, risk management, remuneration, document retention, data privacy, and a disciplinary policy that addresses potential breaches of rules, regulations or standards. IT security is overseen by a National IT Security Officer, who works closely with our IT services and the firm’s Quality & Risk Management Group (QRMG). We also have a Supplier Code of Conduct – we ask all suppliers to acknowledge and comply with standards set out in the UN Global Compact. We make sure our partners and employees are up-to-date with all our internal controls – this is done largely through mandatory training. In 2020/2021, 84% of our Board members, partners and employees, for example, completed training on the firm’s anti-corruption policies and procedures.

To guarantee client confidentiality, we have an annual affidavit / confirmation process that all KPMG professionals are required to complete. There are also established protocols governing technical consultations with our Department of Professional Practice (DPP); these include specific procedures to resolve any differences of opinion between KPMG professionals.