Paul Knopp is chair and CEO of one of the largest audit firms in the country, but he wasn’t always interested in becoming an auditor. He first became familiar with the field when he took a job at the Austin National Bank in high school, where he was helping prepare bank statements for mailings, and started understanding the value of an accounting degree when he took a bookkeeping class in his senior year of high school.
Coming from a modest background, Knopp always wanted a career that would allow him to grow as a leader and attain financial independence, and after completing an undergraduate degree and MBA to increase his business acumen, he focused his efforts on eventually becoming an audit partner. Over the course of his career, Knopp moved all over the country — including stints in Texas, New York, Virginia, Missouri, Illinois, and Connecticut — and his work in seven different KPMG offices confirmed his choice to remain in this discipline for the rest of his career.
Knopp said that the auditing profession prepares professionals for leadership early in their careers. Within a few years, those who become managers can lead a team, and as they progress through senior manager and partner positions, these teams only get more expansive. Knopp said that he had the opportunity to lead many teams at KPMG over the years.
Knopp previously was a member of KPMG’s Board of Directors from 2012-2017 and was lead director for a period of time during the tenure of Lynne Doughtie, the firm’s first female chair and CEO (2015-2020). Knopp said his board experience allowed him to get to know KPMG more comprehensively and gain deeper knowledge of the firm’s advisory and tax businesses.
“With these responsibilities, you get exposure to the strategy of the organization more holistically and all those things were really critical to ultimately go into the role of chair and CEO,” explained Knopp. “To move to that CEO role, you really need a broad picture of the firm and have the right kind of business acumen around what we’re trying to accomplish strategically to take the firm in the future.”
“Paul is an inspiring, thoughtful servant leader,” said Doughtie, now retired. “He seeks the facts and evaluates every situation through the lens of his and the firm’s core values. He leads with integrity and a strategic mindset, and is a champion for inclusion and diversity. Paul is exactly the kind of leader KPMG needs during this time of growth and innovation.”
Knopp currently leads over 35,000 partners and professionals in the U.S. firm’s more than 100 offices. Over the course of his career, he has made sure to keep a positive relationship with other member firms in KPMG’s global network, to be able to tap into resources from places all around the world when leading an audit of an international company, for example.
An eye on DEI and culture
When it comes to culture, Knopp said he and the firm greatly benefited from Doughtie’s leadership. In 2019, she established the first chief cultural officer in the history of KPMG, and greatly contributed to strengthening the firm’s values: integrity, excellence, courage, together, for better.
“We can’t serve our clients with excellence without great people, and we want to make sure that we think about our employees as the most important stakeholders who deserve the benefits of having a positive, strong, inclusive culture,” said Knopp. “I talk a lot to our people about our culture being defined by three things: being ethical, being inclusive, and being collaborative. You can’t be successful without all three of those.”
Knopp said it’s essential for employees to recognize that one can only deliver excellence by being a team player. Leaders must be willing to be a mentor who allows their peers to fail until they improve. There again, inclusion is a critical component of a strong culture, not only to create a more diverse and equitable environment, but also to bring the best ideas to the front. If people don’t feel a sense of belonging, they won’t participate or collaborate in a way that benefits the team.
Knopp came into his position only a month after George Floyd was murdered, and increasing diversity, equity and inclusion at the firm is a central strategic priority for him as CEO. Despite many people in the firm and the profession recognizing the importance of the issue, he said progress on previous DEI efforts were relatively slow when he worked as a line partner prior to becoming CEO.
“In 2020, we recognized that it is the responsibility of business leaders to bring more talent from underrepresented groups into our organization and ensure our culture is a place where all people can thrive,” said Knopp. “We said: We’re going to look at this as a strategic imperative and developed Accelerate 2025, which is focused on ensuring more individuals from underrepresented groups choose KPMG as their employer of choice, build careers at KPMG, and advance to leadership positions within our firm and within the profession.’Getting here, Succeeding here and Meeting here’ pillars. We wanted to make sure that we weren’t just recruiting more Black and Latinx talent, for example, but building the kind of culture that would retain that talent.”
He launched Accelerate 2025 on the first day of his tenure as Chair and CEO. The responsibility falls on Knopp, KPMG Deputy Chair and COO Laura Newinski, and the three Vice Chairs running the firm’s Tax, Audit and Advisory lines, and Knopp to right the ship to demonstrate progress against the firm’s aspirational goals.
KPMG produced its first U.S. Impact Plan last year, which reports on the firm’s ESG progress and released its second Impact Plan, which re-addresses DEI progress, as well as climate and principles of governance commitments. The latest report details how KPMG is tracking against two of its Accelerate 2025 goals: 50% partner and managing director representation from underrepresented groups; and 50% increase in its Black and Latinx workforce. For example, the number of partners and managing directors from underrepresented background increased by 3.3% between 2020 and 2022.
“It’s a journey and I feel really good about some of the progress we’ve made, but I feel really anxious about the progress we still have to make,” said Knopp. “I find these current numbers to be unacceptable, and we’re trying to think about any underrepresented group there is, from LGBTQ+, and disabled to military veterans.”
Benchmarks of change
Knopp can still remember when he first joined the accounting profession in 1983, back when accountants didn’t have cell phones or computers and had to use typewriters to work. He said it would be easy to designate technology as the most remarkable evolution for the accounting field, but he considers the focus on diversity the most remarkable and important change in the profession since that time.
Knopp was present when KPMG welcomed its first ever Black partner and when there were only a handful of female partners, and he has seen how the organization has benefited from diversity over the years. Where technology is a natural evolution of innovation cycles, driving an organization to be more diverse and inclusive takes hard work and intentional and strategic firm initiatives.
“Everybody has a responsibility to make KPMG more inclusive and I want them to understand that wherever they are in the firm, they can have an impact on making KPMG more diverse and equitable,” said Knopp. “As a leader of the organization, I’m
really proud of the fact that we’ve changed our organization’s mindset to realize that DEI is absolutely essential to the success of our business. We haven’t achieved our goals yet, and we will never rest easy until we do.”
ESG becoming a focus
Since his investiture in 2020, Knopp has been thinking a lot about the idea of sustainability, which has often been associated with climate. However, the broader concept of ESG includes talent, ethics and culture, which are landmarks that Knopp wants people to associate KPMG with. Making employees feel “the power of the culture” is a critical way to unlock their potential, and the firm’s commitment to ESG and helping companies on their ESG journeys is a great way to give them a sense of purpose.
ESG training is being provided to all of KPMG’s people to ensure that everyone is empowered to be an agent of positive change. In 2022, KPMG professionals spent more than 33,000 hours training on ESG. Additionally, 750 KPMG professionals completed the NYU Executive Sustainability Certification.
“We’re helping clients with ESG reporting and compliance and working with them to embed ESG in their strategies,” he said. “We’ve been asked to provide third-party attestation on some of that ESG data, because high-quality, relevant and reliable information is what the market wants and needs.”
KPMG and Context Labs recently announced an alliance to help companies better measure, quantify, and reduce their environmental footprints using distributed ledger technology and advanced climate data and analytics, enabled with machine learning and artificial intelligence.
Knopp explained that ESG compliance is central to helping clients reach their goals, but the firm also helps their clients with their ESG strategies and transformation. To do so, KPMG first directs them toward their advisory practice to help them integrate ESG principles in their business strategies. Establishing effective governance processes and internal controls and hiring technology talent are all essential to meeting the high standards of ESG reporting, regardless of which regulatory body will scrutinize it, he explained.
Audit quality
Knopp considers the quality of the firm’s audits to be a defining factor of KPMG’s brand. He believes the firm has historically been known as a protector of the capital markets, which drives innovation and delivers high-quality audits. To perpetuate this ideal, the firm focuses a lot of effort on ensuring its audit talent is equipped with the latest technology and supported by continuous learning and development delivered at KPMG Lakehouse. In addition, the firm relies on the strength of its multidisciplinary business model focused on audit, tax and advisory, which Knopp said allows it to deliver high-quality audits.
In fiscal year 2022, KPMG U.S. audit partners and professionals spent more than 120,000 hours of training on data and technology, more than double the previous year.
“We’re all working to make sure that we use technology as much as we can as a differentiator for more effective and efficient audits, and I can tell you that’s exactly what our people want,” said Knopp. “Every school I visit is producing really smart talent that has a desire to apply emerging technology to everything we do in business, so to attract talent in the future, you need to have them know that you’re going to put digital and data-driven tools in their hands.”
Knopp said that one of his top priorities, alongside his commitment to culture and DEI efforts, is to continue to invest in audit quality. While KPMG has had a very low number of restatements, Knopp said that the firm isn’t where it wants to be with regards to Public Company Accounting Oversight Board inspection reports. In 2021, 26% of KPMG audits reviewed by the PCAOB presented some kind of deficiencies, which is approximately the same number reported the year before.
(Despite recent discussions of the failures of Silicon Valley Bank and Signature Bank, which were both KPMG audit clients, industry experts don’t expect them to reveal any responsibility on the firm’s part, as the collapses were the result of old-fashioned bank runs sparked by social media, not of underlying issues in the banks’ financial statements. While the firm did not specifically comment on those issues, it did say in a statement in March: “It’s important to recognize that audit opinions, which only address the financial statements and internal controls of the business, are based on audit evidence available up to and at the date of the opinion. Any unanticipated events or actions taken by management after the date of an opinion could not be contemplated as part of the audit.”)
The firm has accelerated global adoption of KPMG Clara, its smart audit platform that is currently used by 90,000 audit professionals across 143 countries and territories. It also just announced a strategic alliance with an AI firm MindBridge to infuse KPMG Clara with AI capabilities to further enable the identification of unexpected or high-risk transactions, enhancing audit quality.
‘Invaluable’ input
Knopp has had a lot of mentors throughout his career, but three professionals have had a significant impact on the way he carries out his responsibilities. One of them was Park Pearson, who worked as a partner at the KPMG office where Knopp started his career, in San Antonio. While Pearson passed away in 2011, Knopp said that under his leadership, he learned to never compromise on quality and excellence.
Throughout the 10 years Knopp spent at this office, Pearson assigned him the “hardest of assignments,” which he said he truly benefitted from. Shortly after Knopp became a partner in 1997, he was assigned to a role to support the global lead partner for a Fortune 10 company while working in the firm’s Stamford office, where two partners spent a lot of time with Paul. Knopp said they taught him how to use his business acumen to be an effective audit partner and he learned how to be a successful lead partner by watching them closely. Hearing about their stories and experiences was “invaluable” to his career.
“I met and began working with Paul shortly after he was admitted to the partnership,” said Greg Russo, retired KPMG partner and former KPMG global leader. “I asked him to join our client service team in a new role to better serve one of our major global clients. He accepted that role and created the model for future teams that serve global clients across the firm.”
“I first worked alongside Paul on the same client; I was truly impressed with his maturity and professionalism,” added Joe Mauriello, a retired partner and former U.S. deputy chair. “Later we worked together on another client. The growth he demonstrated in his performance was wonderful, showing professionalism, integrity and class. I was not surprised to hear that Paul was elected Chair and CEO of KPMG; the firm is in good hands.”
When reflecting on his 39-year career, Knopp wished he had dedicated more time to mentoring more people at KPMG. He said that it’s a common trap, once someone reaches an executive level position, to become lost in their daily responsibilities and find less time to foster these types of relationships. However, Knopp said he’s always considered cooperation critical for his staff to succeed, even if it means accompanying them toward opportunities outside of the firm.
“I think that’s a learning point for anybody to take away, that you always need to clear time on your schedule to make sure that people benefit from your thinking and ideas,” said Knopp. “It’s just part of being inclusive and intentional, to make sure that you’re having a two-way dialogue about what somebody wants to achieve in their life and career.”
At a glance: Paul Knopp
College: BBA and MBA degrees from the University of Texas at Austin
Where did you grow up? Austin, Texas
Where did you begin your career in accounting? With KPMG in San Antonio
Where and when did you first make partner? Based in Norfolk, Virginia, when admitted to KPMG partnership in 1997 and shortly thereafter transferred to Stamford, Connecticut
What are your strongest areas of professional expertise? Extensive experience serving large, multinational clients in a wide variety of complex industries as lead audit engagement partner. Highly focused on excellence and quality and helping KPMG professionals grow and develop.
Something that people may not know about you: I’m a big sports fan.
Someone you admire: My wife
Favorite music: Classic rock
This is the first installment of The Leadership Files, an ongoing series profiling extraordinary firm leaders from across the accounting profession.
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