General Electric announced today that Deloitte was selected to replace KPMG as its auditor in a press release.
KPMG will complete its audit services for GE ending Dec. 31, 2020 and will file GE’s 2020 Annual Report on Form 10-K. KPMG and its predecessor firms have worked with GE since 1909, and GE accounts generated $80 million in revenue for the auditing firm last year. The selection concludes the audit tender process announced by GE in 2018.
The decision to change comes as the electric company suffered accounting woes in 2018, where shortfalls in its legacy insurance business revealed $15 billion was needed in funding for reserves in long-term-care policies. In addition, GE practices in using complex contract accounting rules to report revenue before cash arrived in their power business, as well as a $22 billion write off, were scrutinized in an SEC investigation.
The scandals led to the ousting of GE’s CEO and a shareholder lawsuit, which alleged fraud but was mostly dismissed in 2019. Two proxy advisory firms urged GE to dump KPMG as its auditor in 2018, but shareholders cast votes that supported keeping KPMG in both 2018 and 2019, delaying the process of change. 
Stephanie Liu is assistant editor at Internal Audit 360°