PRACTICE HIGHLIGHTS IN 2014
Our extensive service offering meets the Audit, Tax and Advisory requirements of clients of all industries and sizes, throughout every stage of their lifecycle.
PRODUCTIVE HOURS BY PRACTICE/ INCREASE IN 2014
| AUDIT | 2,254,948 | 9% |
| ADVISORY | 931,909 | 14% |
| TAX | 604,748 | 18% |
Audit
Our audit uses a risk-based approach. We work with Management, the Audit Committee and the Internal Audit to identify business risks with a potential to significantly impact the financial statements. Concurrently, we review the controls in place to mitigate these risks and assess their effectiveness and reliability. Lastly, we use a precautionary approach to analysing the business and forming an independent opinion on its numbers in order to provide the client with a preventive perspective.
Our unique audit methodology is supported by a set of oversight, analysis and advisory standards and technologies that enable our team to ensure quality, efficient and insightful delivery focused on 'Tone at the top'. Read more here.
Audit Framework
Our professionals also perform review and other assurance engagements to assist clients in addressing specific matters and in developing or preparing financial information based on assumptions about future events, as well as in part of the process to obtain funding.
In 2014, our audit practice serviced 30% of the constituents of the Bovespa Sustainability Index and audited more than 5 thousand investment funds in Brazil – many of them pension fund assets – contributing to the credibility and confidence of the capital market and the savings of millions of Brazilians.
The auditor's role and limitations
In the Audit practice, the risks and challenges of our business also involve an essential discussion on auditors' roles and limitations. The crisis of 2008 created questions in the public's mind in this regard, as well as the expectation that auditors should play the added role of scrutinising business conduct. In Brazil, this perception has been exacerbated by reports of serious misconduct by both government and privately owned corporations.
The discussion has become all the more important with the expanded regulation on audit activity and the requirement that responsibilities be shared among clients, auditors and regulators.
In recent years, KPMG has actively engaged in discussions held by both local and international organisations. Professionals at KPMG in Brazil are strongly engaged in these working groups and have contributed to bringing the debates to the appropriate levels of government, enabling the broader market to improve performance and promote the principles of ethics and transparency in reporting.
In recent years, KPMG has actively engaged in discussions held by both local and international organisations. Professionals at KPMG in Brazil are strongly engaged in these working groups and have contributed to bringing the debates to the appropriate levels of government, enabling the broader market to improve performance and promote the principles of ethics and transparency in reporting.
Tax
Pursuing efficiency is the greatest value we offer our clients. It results from clear and transparent rules, policies and procedures that not only ensure compliance with tax obligations, but also aid in structuring transactions, managing tax risk and reducing operating costs.
Tax-related decisions have become increasingly strategic in our business. For companies operating in Brazil, we have assisted clients in planning and implementing the changes required to adjust to obligations deriving from the digitalisation of tax reporting systems. We have also helped clients gain access to tax benefits available to certain industries and activities. Read more here.
For clients operating anywhere in the world, our Tax as well as logistics expertise enables them to operate within the relevant tax systems in a way that ensures the compliance, effectiveness and profitability of their operations.
Research & development tax incentives
Thousands of companies investing in Research, Development and Innovation are unaware that they are eligible to significant Income Tax, CSLL, IPI and Withholding Income Tax reductions through a Tax Incentive Programme introduced by Act 11.196/05.
KPMG's multidiscipline team has worked closely with over 100 clients in applying for tax incentives, as well as advising on their obligation to report to the Brazilian Ministry of Science, Technology and Innovation and tax authorities.
INOVAR-AUTO
The Federal Government's Automotive Value Chain Innovation Incentive Programme aims to strengthen Brazil's industrial capabilities and support research, development and innovation toward improved vehicle efficiency.
In 2014, KPMG advised 11 of the 20 car makers successfully qualifying for the Programme, securing 81% of the tax benefits granted in Brazil for light vehicles, 77% for trucks and 76% for buses.
Source: Ministry of Development, Industry and Foreign Trade and National Automotive Distribution Federation.Advisory
Our advisory services help clients navigate with greater confidence through the complex and rapidly changing markets of today. The knowledge generated by our member firms globally delivers value by empowering our clients to implement the strategic and operational changes required in the short, medium and long term, contributing to their sustainable development.
Amid the uncertainties of 2014, KPMG was high in demand among clients needing to address the challenges and processes of development. Matters such as financial liquidity, value recovery, managing troubled businesses, organisational optimisation and reducing business costs – including the cost of capital – to enhance investment capacity have become increasingly relevant.
In the sugar and ethanol industry, for example, we have designed specific solutions for our clients in restructuring liabilities and identifying new opportunities to capture the cash flow funding they need to address market instabilities and government regulations.
Despite the decline in investments during the period in Brazil, significant M&A activity has created demand for our specialist advice to ensure the success of highly complex transactions. We have an extraordinary track record, both in Brazil and globally, and particularly in telecom, oil and gas. Despite the decline in investments during the period in Brazil, significant M&A activity has created demand for our specialist advice to ensure the success of highly complex transactions. We have an extraordinary track record, both in Brazil and globally, and particularly in telecom, oil and gas.
These and other Advisory service offerings operate within three groups:
Risk Consulting (RC)
Good governance is about managing risk, establishing effective internal controls and communicating the health of the organisation to owners, stakeholders and the general market. It is also about preventing fraud, ensuring compliance with laws and regulations and, ultimately, gaining value from the compliance process. Our services include:
- Accounting and Finance
- IT Advisory Services
- Operating processes (internal audit and compliance)
- Financial and capital allocation processes (Basel and Solvency)
- Corporate governance (listing, family-owned companies, corporate matters)
- Fraud (Forensic)
- Sustainability (environmental, social and regulatory)
Forensic and the Anti-corruption Act
In force since January 2014, Act 12846 (the ‘Anti-corruption Act’) is a milestone in the fight against corruption in Brazil and imposes severe penalties on businesses, including for violations committed by employees. As a result, it is increasingly in companies' interests to exercise oversight of staff at all levels and implement codes of conduct, internal controls and transparency policies. In 2014, our Forensic team was high in demand to assist companies in addressing related matters, including:
- Mapping corruption risk in their business against international law (Foreign Corrupt Practices Act (FCPA), UK Border Agency (UKBA) and other laws) and Act 12846
- Designing risk mitigation standards and procedures, including Third-Party and Employee Management procedures
- Third-party due diligence
- Structuring Fraud Prevention functions
- Specific training
- Operating independent whistle blowing hotlines
- Transaction testing and monitoring
- Investigations
- Forensic Technology
- Disputes
Management Consulting (MC)
Management Consulting assists clients in pursuing their strategic objectives through performance improvement, strategic use of technology, and innovation processes, using an integrated approach to processes, information technology and people. Our Management Consulting services include:
- Financial Management
- Business Process Redesign and Improvement
- Business Effectiveness
- Project Management
- Business Process Sourcing & Shared Services
- Change Management
- Talent Development & Management
- IT Governance
- Information Security
Supply Chain Management improves clients' financial performance
Supply chain management has become increasingly complex in an increasingly globalised world, with companies under pressure to reduce costs while delivering excellence in service to consumers. Balancing these pressures is crucial to business profitability and success.
We undertake engagements that help companies improve the efficiency and effectiveness of key processes across all stages of warehousing and distribution, directly impacting their financial performance. Examples of benefits include: service-level improvement (by approximately 20%), working capital optimisation (40 to 120%), improved returns on capital employed (ROCE) (13-18%), reduced time-to-market (30-40%) and lead times (15-30%).
Transactions & Restructuring (T&R)
T&R helps clients achieve desired results across an array of financial transactions, based on a combination of business, technical and industry expertise. Transaction & Restructuring services include:
- Corporate Finance: assessments, M&A advisory, financial advice in Infrastructure Projects/PPPs and Debt Advisory
- Transaction Services: Financial Due Diligence, Vendor Due Diligence and Strategic and Commercial Intelligence
- Restructuring Services/Non Performing Loans Advisory
Brazil's 15 infrastructure priorities
Recognizing the importance of infrastructure to Brazil's development, the weekly news magazine Exame invited KPMG to conduct a survey to determine which infrastructure projects – both planned and under development – have the potential to make the greatest difference in Oil & Gas, Transportation, Power, Water and Sanitation, Telecommunications and Social Infrastructure.
15 priority infrastructure projects
were selected out of Exame's Infrastructure Ranking 2013, a list of the 1,566 largest projects in the sector. The selection was made using qualitative and quantitative criteria defined by KPMG specialists based on global megatrends identified in the Future State 2030 report, published by KPMG International. Inputs were also provided by an assessment panel of eight specialists who analysed the infrastructure projects within their fields of expertise.
The complete survey is a valuable tool to inform decisions by governments and companies looking to invest in Public-Private Partnerships.