ELLP Annual Report 2013

Contents
Chairmans statement
Report to the members
Statement of members responsibilities in respect of the Report to the members and the
group nancial statements
Independent auditors report to the members of KPMG Europe LLP
10
Consolidated income statement
11
Consolidated statement of comprehensive income
12
Consolidated statement of nancial position
13
Consolidated statement of changes in equity
15
Consolidated statement of cash ows
16
Notes
17
KPMG Europe LLP

Annual Report 2013
Chairmans statement
We continue to live in challenging times

in which business condence remains
fragile and the challenges facing our
clients remain highly complex, be they
economic uncertainties in their
marketplaces, changing regulatory
demands or keeping up with the pace of
global competition and technology
change. We aim to advise and assist
these clients in forming and
implementing solutions, accompanying
them in their necessary transformation
processes. We do this by aligning our
strategy to the KPMG global strategy
and aiming to be the most relevant and
trusted professional services network for
our clients, our people and wider society.
We are facing a new set of dynamics in
our core European marketplace. The
business leaders I meet are looking for
KPMG to demonstrate even greater
borderless and best team responses.
For this reason we have reinvigorated
our KPMG Europe LLP (ELLP) structure
and moved towards an expanded KPMG
structure within the Europe, Middle East
and Africa region (EMA).
During 2013, the EMA Country Senior
Partners (CSPs) and Board discussed
and agreed this new operating model for
the EMA region: through support of the
largest and highest growth rms across
the region, we have built on the success
of ELLP over the last ve years and are
applying the lessons we have learned
about our market. This transition from
ELLP to EMA was supported not only by
our CSPs but also by an overwhelming
majority of the partners who are
members of ELLP; a change in both the
infrastructure within ELLP and a change
to the governance and management
structure were agreed during September
2013, to operate with effect from 1
October 2013.
The nal step in this transition is the

demerger of the ELLP group, thereby
facilitating the alignment with EMA
priorities. The ELLP Board voted in
favour of the demerger in May 2014,
followed by an ELLP members vote in
June 2014. As a consequence, it is
intended that the ELLP group be
demerged by 30 September 2014 or as
soon as is practically possible thereafter.
We now have an EMA region which is
focused on exceptional quality and client
service to drive relentlessly on protable
growth. As an EMA leadership team, we
are dedicated to removing any barriers to
the effectiveness of quality cross-border
client service. We are committed to
ensuring that the best talent KPMG has
to offer globally is assigned to our clients
challenges, and to make and share
investments with regard to the long-term
view of our clients needs.
Europe remains one of the most
competitive and economically
challenging global environments for the
provision of professional services. The
imminent introduction of new Audit
regulations in the European Union,
affecting entities that are, or groups that
contain, EU Public Interest Entities adds
to the scale and complexity of this
challenge. The introduction of mandatory
audit rm rotation and further restrictions
on non-audit services which can be
provided to audit clients represent a
logistical and business challenge that
requires a Europe wide response.
Notwithstanding the challenges, we see
this new regulation as an opportunity to
compete for a greater audit market share
and to deepen relationships with all our
clients on a coordinated Europe-wide
basis with KPMG rms beyond the
ELLP group.
This is an exciting time to lead KPMG in

the EMA region. I am certain that the
decisions we have taken over the past 12
months, to build on our ELLP experience
in the context of a wider and more
commercially focused EMA will drive
signicant improvements in the quality
of service we offer our clients and the
performance of our network.
On behalf of ELLP I would like to pay
tribute to my predecessor as Chairman,
Rolf Nonnenmacher, who stepped down
as Chairman on 30 September 2013 and
who also retired from the German rm.
Rolf was one of the architects and rst
Joint Chairman of ELLP, and whose
vision for making a bold move to bring
KPMG rms closer together in Europe
for the benet of its clients and our
people still drives us forward today as
we evolve our structure into achieving a
wider and enhanced collaboration within
EMA. We wish Rolf well in his
retirement. In addition, I would like to
thank all those Board Members who
stepped down in 2013 for all their hard
work and dedication during their time
of ofce.
John MacLean Scott

Chairman
1/KPMG Europe LLP

Annual Report 2013
www.kpmg.com/eu/annualreport
Report to the members
The Board presents its report together

with the audited consolidated nancial
statements of KPMG Europe LLP (ELLP)
and its subsidiary undertakings (the
group) for the year ended 30 September
2013. The nancial statements to be led
at Companies House will comprise the
group nancial statements and the
separate nancial statements of KPMG
Europe LLP.
Legal structure
KPMG Europe LLP (the partnership) is
incorporated in the United Kingdom as a
limited liability partnership (LLP) under
the Limited Liability Partnerships Act
2000. It was wholly owned by ELLP
Partners (members) throughout the year.
The partnership, which has its
headquarters in Frankfurt am Main,
Germany, has dual registration:
Principal activity
The ELLP group is a cross-border
professional services organisation that
provides audit, tax and advisory services
to a wide range of national and
international clients across the public,
private and not-for-prot sectors.
In the UK: registered number

OC324045, registered address 15
Canada Square, Canary Wharf,
London, E14 5GL.
Events after the year end

Events after the year end, including
changes to the group structure, are set
out in note 28 to these nancial
statements.
In May 2014, the ELLP members took
the decision to demerge the ELLP group
and return the ownership and
governance of each ELLP member rm
to local members. That decision was
fully supported by a subsequent ELLP
member vote concluded on the date of
approval of these nancial statements,
being 6 June 2014. Following completion
of the demerger, it is intended that the
partnership will be placed into a solvent
members voluntary liquidation. As a
result of this decision, the ELLP
members have not prepared these
nancial statements on a going concern
basis. However, as set out in note 1, the
ELLP Board consider that it is still
appropriate to reect the results and
nancial position of the operating
entities, operating through individual
ELLP member rms, on a going concern
basis, within the group nancial
statements. Accordingly, these nancial
statements do not include any
adjustments resulting from the
application of the non-going concern
basis.
2/KPMG Europe LLP

Annual Report 2013
In Germany (in the commercial

register at the District Court of
Frankfurt am Main): registered
number HRA 44574, registered
address The Squaire, Am Flughafen,
60549 Frankfurt am Main, Germany.
At 30 September 2013, the group
comprised the following:
KPMG member rms providing audit,
tax and advisory services in the UK,
Germany, Switzerland, Spain,
Luxembourg, the Commonwealth of
Independent States (CIS, comprising
entities in Russia, Ukraine, Armenia,
Kazakhstan, Kyrgyzstan, Georgia and
Azerbaijan) and Saudi Arabia;
The KPMG member rm in the
Netherlands providing audit and
advisory services; and
Certain entities of the KPMG member
rms in Belgium and Turkey.
The group also comprised certain
entities of the KPMG member rm in
Norway throughout the year, until 30
September 2013. However, on that date,
the nature of the agreement between
ELLP and KPMG Norway changed such
that the relationship changed from
subsidiary to associate for accounting
purposes, as set out in note 9.
The intention of each of the KPMG
member rms in these countries when
originally merging with the partnership
was that their entire rm should be
included within the group. However, for

mostly regulatory reasons, this is not
currently possible in certain countries.
The audit rm in Belgium, the Turkish
rms audit and tax entities and the
entities in the KPMG member rms in
Kuwait and Jordan are therefore wholly
excluded from the group whilst certain
other entities are not wholly owned by
the partnership. In all such cases, ELLP
has call options to acquire 100% of the
share capital of such entities, as set out
in note 27.
The principal subsidiary and associate
undertakings of the partnership are set
out in note 27.
Strategy
The strategy of each ELLP member rm
is aligned to that of the KPMG
International global strategy which
continues to be focussed on delivering
strong and sustainable protable growth.
We aim to be the most relevant and
trusted professional services network for
our clients, our people and wider society.
Key investments in people, quality,
technology and client services across
the global network are targeted to
ensure that clients experience the
benets of a better connected network
whilst giving our people a rm where
they most want to work and succeed.
During the year ended 30 September
2013, the country senior partners of the
KPMG International member rms in
Europe, Middle East and Africa (EMA),
together with the EMA Board, discussed
and agreed a new operating model for
the EMA region that will allow priority
focus on growth, increased collaboration
and the seizing of the best opportunities
across our markets in implementing
KPMG International global strategy.
ELLPs member rms have a
fundamental role to play in this new EMA
operating model and the Board has been
challenged to think differently about our
business, our clients and how KPMG
EMA member rms work together.
Report to the members continued
In light of the necessity for the ELLP

group to support and align with the EMA
priorities, the ELLP Board and its
members agreed a number of steps to
support the transition to the newly
3% and 13% respectively. Our

Transactions and Restructuring practice
saw a 7% fall in net sales, again
reecting the difcult market conditions
and lacklustre M&A market in particular.
Strategy continued
strengthened and optimised EMA region
that enable a greater alignment with
EMA and a stronger focus on the
market place. These steps include the
de-merger referred to above and, in
the interim period, a change in both
the infrastructure within ELLP and a
change to the governance and
management structure with effect from
1 October 2013, as set out further in
the ELLP Transparency Report 2013
(www.kpmg.com/eu).
Prot for the nancial year available for

non salaried members increased by 20%,
largely as a result of signicant measures
taken to reduce headcount in certain
countries, notably the UK and the
Netherlands, towards the end of 2012 and
early in 2013. These measures resulted in
a reduction of 22 million in staff costs
incurred in the year ended 30 September
2013. Other cost saving initiatives have
also been introduced across many ELLP
member rms, resulting in a reduction in
other operating expenses of almost 50
million year on year.
Performance for the year

The group generated revenue for the
year ended 30 September 2013 of
5,004 million, against a prior year gure
of 4,997 million. Whilst reported
revenue was at year on year, the group
achieved a 2% growth in revenue on a
like for like basis, ignoring the impact of
exchange rate uctuations, referred to
internally as gross sales, as set out in
note 3.
Performance is monitored internally by
reference to net sales, being gross sales
net of recoverable expenses;
reconciliation of net sales to IFRS
reported revenue is given in note 3 of the
nancial statements. With the exception
of the Netherlands, all of the ELLP
member rms achieved growth in net
sales year on year, most notably in the
Gulf and Turkey, with Turkey achieving
over 20% growth in net sales for the
second year running. Net sales growth in
other ELLP member rms was more
modest, ranging between 1-7% on a like
for like basis. Net sales in the
Netherlands fell by 4%, largely reecting
a difcult market in Advisory.
Both the Audit and Tax functions
achieved net sales growth in the year of
2%. Within the Advisory function, both
Risk Consulting and Management
Consulting achieved net sales growth of
Financial position at the end of the

year
The nancial position of the group remains
strong, with net assets increasing to 534
million (2012: 469 million) as a result of
increasing protability. Total assets
reduced slightly year on year, from 3,112
million to 3,065 million, largely reecting a
net reduction in non-current assets arising
through disposal and amortisation charges.
Total members interests totalled 857
million (2012: 834 million). These
members interests reect the
investment from the members in the
group, including members capital which
is provided by each member on
becoming a partner. Members capital
totalled 132 million at 30 September
2013 (2012: 150 million). Since it is only
repayable on retirement or resignation,
members capital is generally stable from
year to year. The relatively large
reduction year on year is primarily as a
result of the repayment of capital to
retiring ELLP partners which has not
been replaced by new capital held at this
level most ELLP member rms now
have a national partner category and
whilst those new partners also
contribute capital to their local ELLP
member rm, it is not classied as
members capital for the purposes of

these nancial statements.
The main categories of current assets of
the group are trade receivables and
unbilled amounts for client work. Both
categories are monitored at
departmental and function levels within
each member rm. The prompt
rendering of fees for work done and
collection of the resulting receivables are
important aspects of the monitoring of
nancial risks within the group. These
assets totalled 1,448 million at 30
September 2013 (2012: 1,448 million).
Signicant liabilities of the group include
provisions for dened benet pension
plans and partner annuities, both of
which have increased during the year
largely as a result of the assumptions
used for valuation for accounting
purposes (see note 20 and note 21).
Cash ows during the year
The groups activities are normally cash
generative, save for investments in
property, plant and equipment and
intangible assets. Cash generated from
operations of 707 million (2012: 688
million) facilitated a signicant reduction
in short-term bank borrowings during the
year.
Bank facilities of 587 million (2012:
609 million) are available to the group,
including a revolving credit facility of
479 million which was renewed in
November 2013 and matures in January
2019 (see note 23(c) and 28). At 30
September 2013 163 million (2012:
318 million) had been drawn down
against these facilities; the group
continues to maintain a signicant level
of committed undrawn borrowing
facilities to enable us to respond quickly
to investment opportunities.
Cash outows are strongly inuenced by
the timing and amounts of payments in
respect of prot shares and bonuses to
members and staff. In addition to the
bank facilities available, the group could
cease or alter the phasing of partner
distributions in order to ensure sufcient
* Net sales is revenue net of recoverable expenses and is the key internal top line key performance indicator. Details concerning the reconciliation of net sales to IFRS reported revenue is given in note
3 of the nancial statements.
3/KPMG Europe LLP

Annual Report 2013
nance is available to the group as

required.
Changes in accounting policy
The ELLP group has adopted early the
Amendment to IAS 19 Employee
benets, resulting in a restatement of
prior year comparatives in both the
income statement and statement of
nancial position. Full details of the
impact of this change in accounting
policy are set out in note 1.
Treasury and risk policies
The principal treasury risks of the group
relate to currency, liquidity and interest
full details of the groups policies and
management of treasury risks are set out
in note 23.
Staff and members
KPMG aims to be an employer of choice
being ranked in the top ten of
Universums Worlds most attractive
employers survey for the fourth
consecutive year is endorsement to the
fact that we are achieving that aim.
Although our employment and
recruitment programmes are now
entirely run at a country level, reecting
the needs of each local market, we
continue to promote cross border
secondments to enable our people to
enhance professional skills whilst
building a deeper understanding of
international business.
The average number of staff and
members of the group during the year
was 32,192 (2012: 32,281). The
reduction year on year reects the
restructuring programmes in certain
areas towards the end of 2012 and early
in 2013. As a result of this restructuring,
the ELLP member rms are now better
placed for future opportunities and
growth.
A member may receive income under an
employment or service contract with a
subsidiary entity, or as a prot share from
the partnership or a subsidiary partnership.
Policies on the allocation of prots and
drawings, and on members capital, are set
out in note 1. Further details on partner pay
4/KPMG Europe LLP

Annual Report 2013
is also set out in section 7 of the 2013 ELLP

Transparency Report.
Rolf Nonnenmacher (resigned 30

September 2013)
Joachim Schindler
Corporate social responsibility (CSR)

We continue to build on strong
foundations in CSR, following the
commitment of the members of the
KPMG EMA Board to undertake CSR
activities in all EMA member rms. As
with our employment initiatives, all CSR
activity is run at a country level, which is
entirely appropriate, given the varied
markets in which we operate. That said,
the common CSR agenda for all ELLP
rms is to inspire, challenge and
empower our people to make a positive
contribution to local communities.
Full details of country specic CSR
activity can be found on the websites of
each ELLP member rm, accessible
through www.kpmg.com.
Governance
As a major international organisation, the
ELLP group applies high standards of
corporate governance. The governance
structure in place during the year ended
30 September 2013 is described fully in
the ELLP Transparency Report 2013
(www.kpmg.com/eu) but is summarised
below. As noted in the Strategy section
above, the governance and management
structure set out below changed with
effect from 1 October 2013 to allow
ELLP management to better align with
EMA priorities; these changes are
detailed further in the 2013 ELLP
Transparency Report.
Klaus Becker
Simon Collins
Paul Long
James Marsh
Jaap Van Everdingen (through
Parkside BV)
Subsequent to the year end, in March
2014, Jaap van Everdingen and Joachim
Schindler resigned and John Maclean
Scott and Ewald van Hamersveld were
both appointed as designated members
of the partnership.
The Board
The Board is responsible for ensuring
that the group is run in the interests of
the members and for setting the strategy
of the group and overseeing its
implementation by the Executive
Committee. As at 30 September 2013,
there were 21 members on the Board;
those serving during the year were as
follows:
Executive
Rolf
Chairman (until 30
Nonnenmacher**** September 2013)
John M Scott
Chairman (from 1
October 2013)
Jaap van Everdingen Chief Operating

Ofcer
Mike Ashley**
The Chairman
Formally appointed by the Board (with
appointment ratied by the members),
the Chairman is responsible for leading
the group and chairing the Board and
Executive Committee.
Aiden Brennan*
Designated members
The designated members (as dened in
the Limited Liability Partnerships Act
2000) of the partnership during the year
were:
Joachim Schindler*
Christian Jnisch*
Graeme Ross*
Tim Payne*
Carsten Schiewe*
Lief Zierz*
The Board continued

Non-executive
Abdullah Al Fozan
Klaus Becker
Georges Bock
Jurgen van Breukelen
Simon Collins
Gertraud Dirscherl*
Oleg Goshchansky
Roger Neininger
Stein-Ragnar Noreng*
Jack van Rooijen***
Patrick Simons
Ian Starkey*
* Resigned on 30 September 2013 as part of
the governance restructure
** Retired from KPMG on 13 September 2013
*** Retired from KPMG on 27 September 2013
**** Retired from KPMG on 30 September 2013
Subsequent to the year end, in March

2014, Jaap van Everdingen resigned
from the ELLP Board and Ewald van
Hamersveld was appointed as Chief
Operating Ofcer. Roger Neininger,
Abdullah Al Fozan and Jurgen van
Breukelen subsequently resigned from
the Board in May 2014.
Five bodies reporting to the Board during
the year:
The Executive Committee: comprising
of ve members of the Board, the
Executive Committee is responsible
for recommending policy to the Board
and implementing the strategy of the
group, through development of the
business plan.
The Nominations & Remuneration
Committee: comprising of ve
members, this Committee is
responsible for key appointments
within the group and for policies or
partners remuneration, including the
determination of the remuneration of
the Chairman.
The Quality & Risk Committee:
comprising of three members who held
a non-executive role on the Board, this
Committee is responsible for providing
oversight of quality and risk
management matters across the group.
Public Interest Committee: comprising

of three external non-executives, this
Committee is responsible for
overseeing the public interest aspects
of decision making of the group,
including the management of risks. A
full report from the Chair of the Public
Interest Committee on the activities of
the Committee during the year ended
30 September 2013 can be found in
the ELLP Transparency Report 2013 at
www.kpmg.com/eu.
The Audit Committee: comprising of
three members who held a nonexecutive role on the Board, this
Committee is responsible for
reviewing the effectiveness of the
operational and nancial controls of
the group and for considering
accounting and disclosure issues
arising in respect of the groups affairs.
Activities of the Audit Committee
The key responsibilities of the Audit
Committee are set out in full terms of
reference, approved annually by the
ELLP Board. In reviewing the
effectiveness of the operational and
nancial controls of the group, the Audit
Committee is required to review and
monitor the scope and effectiveness of
the activities of the groups internal audit
function. Similarly, in considering
accounting and disclosure issues arising
in respect of the groups affairs, the Audit
Committee is required to review the
annual nancial statements and liaise
with the external auditors, reviewing the
nature and scope of the audit.
In order to discharge its duties, the Audit
Committee met four times during the
year ended 30 September 2013. When
appropriate, they were joined by the
Head of Finance & Infrastructure, Head
of Finance, Head of Internal Audit and
the lead audit partner of our external
auditors. The Audit Committee
members also meet privately with both
the Head of Internal Audit and the
external auditors as part of the year end
process.
During its meetings, the Audit

Committee has performed the following:
Provided input into the groups
Enterprise Risk Management process,
reviewing key business risks and
mitigations, prior to consideration by
the ELLP Board;
Considered the current status on all
professional claims, including the
exposure to uninsured cost; discussed
regular updates as to the progress of
each claim with the groups legal
team;
Reviewed the work undertaken in
respect of internal controls operating
within the group, including review of
the ELLP Transparency Report, prior
to approval by the ELLP Board;
Reviewed and approved the scope of
work to be undertaken by the Internal
Audit function, reviewed regular
updates as to the progress of each
review against plan and discussed any
signicant issues identied as a result
of those reviews;
Reviewed and approved the external
auditors plan for the audit of the group
nancial statements, including the
identication of key risks; reviewed
detailed reports as to the progress of
audit work against plan and discussed
any signicant issues identied as a
result of the work undertaken; and
Considered the appropriateness of the
groups accounting policies,
culminating in the review of the annual
nancial statements, prior to the
approval by the ELLP Board.
The key areas of risk that have been
identied, reported to and considered by
the Audit Committee in relation to the
nancial statements are as follows:
Revenue recognition: the judgements
applied in determining the timing of
revenue recognition and the
recoverability of related unbilled
amounts for client work and client
receivables;
5/KPMG Europe LLP

Annual Report 2013
Professional claims: the judgements

applied in either provisioning for, or
disclosing, exposure to uninsured cost
(including related legal expenses);
Retirement benets: the assumptions
selected for valuation of the dened
benet pension plans and former
member annuities, under IAS 19, and
the impact of the adoption of IAS 19
Revised.
Scope of consolidation: the application
of IAS 27, particularly in respect of
entities that are not wholly owned, or
where ELLP does not have the
majority voting rights, to ensure that
accounting policy is applied
consistently.
Events after the year end: accounting
and disclosure issues arising from
events after the year end, particularly
in respect of the demerger and
intended liquidation of the partnership.
Having reviewed the reports received
from the Head of Infrastructure and
Finance and external auditor, the Audit
Committee is satised that these key
areas of risk and judgement have been
appropriately addressed in the nancial
statements.
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Annual Report 2013
As noted above, the Audit Committee is

also responsible for overseeing the
relationship with the external auditor,
including the approval of annual fee
arrangements and reappointment by the
Board. Grant Thornton UK LLP was
appointed as group auditor in 2008,
following a competitive tender process.
During the year ended 30 September
2013, member rms of Grant Thornton
International Limited provided audit
services to seven of the 11 ELLP rms.
The Audit Committee has reviewed the
performance of the external auditor and
is satised that Grant Thornton UK LLP
remained effective and independent in
carrying out its responsibilities up to the
date of signing this report. Accordingly,
the Audit Committee have
recommended the reappointment of
Grant Thornton UK LLP.
The provision of non-audit services is
monitored by the Audit Committee.
During the year, fees of 26,000 (2012:
8,000) were paid to Grant Thornton UK
LLP in respect of non-audit services.
Principal risks and uncertainties

The identication, evaluation, management and monitoring of the most signicant risks that face ELLP member rms and could
threaten the achievement of our strategic objectives are the responsibility of the Board. Mitigating actions are taken where
possible in order to reduce these risks to acceptable levels. Further details of quality control procedures are set out in the ELLP
Transparency Report 2013, available online at www.kpmg.com/eu. The principal risks and uncertainties facing ELLP member
rms are set out below:
Risk description
Mitigation
Audit failures major or multiple
A tone at the top which emphasises quality, ethics and integrity
Issuance of an incorrect audit opinion and/or poor quality auditing

Rigorous client and engagement acceptance procedures
resulting in shareholder loss, litigation, regulatory action or lost clients
Clear standards and robust audit methodology and tools
through the resulting reputational damage.
Appropriate oversight of both internal and regulatory audit quality
reviews, recommendations and actions
Regulatory relationships
Nominated individuals responsible for interaction with regulatory

authorities on a country by country basis
Failure to maintain good relationships with our key regulators or deal

with any adverse ndings from regulatory inspections to the
regulators satisfaction resulting in loss of market condence in the
quality of our audits, loss of key clients or sanctions from our
regulators.
Majority of ELLP Board are Qualied Individuals with appropriate

audit training and background
Major litigation or regulatory investigation
General engagement quality and risk management controls
Actual or suspected failure of our services, delivered either

Default position of engagement contracts being prepared under
domestically, in another jurisdiction or jointly with other KPMG
local law and jurisdiction
member rms, resulting in loss for our clients, harming our reputation,
Rigorous and robust inter-rm contracting protocols when working
opening us to increased scrutiny, the prospect of major claims and
with other KPMG member rms
legal costs.
Major regulatory change
An established plan within ELLP for regulatory liaison
Major change in regulation impacting on our business model from

Robust contingency planning in place for each of the potential likely
either the European Commission, national legislation, international or
regulatory outcomes
national regulators or from clients themselves in anticipation of
regulatory changes, in particular resulting in further restrictions on the
non-audit services we can offer to existing audit clients or being
precluded from pitching for an audit.
Data loss
Robust IT security policies and processes
Failure to protect client condential or personal data, leading to loss

for our clients, potential damage to our reputation, loss of key clients
and open us up to potential litigation or regulatory nes.
ISO 27001 accreditation in our largest rms
Financial risk
Appropriate budgetary challenge
Failure to achieve nancial objectives as a result of challenging

economic circumstances would put pressure on our earnings and
margins, and reduce partner and staff compensation.
Monthly nancial analysis of groupss results
Ongoing training and awareness campaigns
Pricing panels in operation

Cost optimisation programmes
7/KPMG Europe LLP

Annual Report 2013
Principle risks and uncertainties continued

Risk description
Mitigation
Delivering inappropriate services
Overriding internal quality control system, including:
Delivery of services which are either illegal, unethical, contravene

professional standards, or are otherwise perceived by investors,
regulators or other stakeholders as inappropriate could damage the
reputation of ELLP and that of our clients and could potentially result
in regulatory sanctions, legal action or damage our relationship with
key regulators.
Rigorous client and engagement acceptance procedures

Robust conict checking processes
Policies and processes around auditor independence
Robust compliance programmes
Code of conduct and values
Whistle blowing processes
Money laundering reporting procedures
Failure to grow our market share
Continuous monitoring of resource levels and functional hot spots
Through being unable to quickly and effectively match key skills to

Career paths, development and succession planning for senior
growth areas due to organisational barriers, skills shortages, slowness
grades
in identifying or recruiting appropriate skills or lack of staff mobility
Global mobility programme in place
and/or exibility, resulting in loss of revenue, excessive resources or
costs building up in areas of low demand or lead to a reduction in the
Engagement acceptance processes consider skills and
quality of the service that our clients receive as the wrong teams try
competencies of the team
to deliver our services.
Failure to engage our people
An embedded group of People Management Leaders
Resulting from high workloads impacting work life balance, poor

Sophisticated appraisal and reward processes
internal communication, uncertainty around career development, or
reward packages being perceived as uncompetitive, in turn impacting Ongoing review of global performance management and
development programmes
the levels and quality of service delivered to our clients, resulting in
the loss of key personnel or the loss of our strong reputation as
Ongoing initiatives to address feedback from people surveys
employer of choice.
Partner capability
Failure to build condent and capable lead partners could result in a
loss of important talent with delivery and quality of services provided
to our clients, leading to lower revenues and loss of reputation and
also impact on the effectiveness of our succession planning.
Special training programmes in place focusing on leaders of

the future
Annual promotion process and pay review
Dened partner career paths and development framework
Partner succession planning
Disclosure of information to the auditor

The Board members who held ofce at the date of approval of these nancial statements conrm that, so far as they are each
aware, there is no relevant audit information of which the groups auditor is unaware; and each Board member has taken all the
steps that he ought to have taken to make himself aware of any relevant audit information and to establish that the groups auditor
is aware of that information.
Auditor
In accordance with Section 485 of the Companies Act 2006, the independent auditor, Grant Thornton UK LLP, will be proposed
for reappointment.
8/KPMG Europe LLP

Annual Report 2013
Statement of members
responsibilities in respect of the
Report to the members and the
group nancial statements
The members are responsible for
preparing the group nancial statements
in accordance with applicable law and
regulations.
The Limited Liability Partnerships
(Accounts and Audit) (Application of
Companies Act 2006) Regulations 2008
(the 2008 Regulations) require the
members to prepare group nancial
statements for each nancial year. Under
that law the members have elected to
prepare the group nancial statements in
accordance with IFRS as adopted by the
EU and applicable law.
Under Regulation 8 of the 2008
Regulations the members must not
approve the nancial statements unless
they are satised that the nancial
statements give a true and fair view of
the state of affairs of the group and of the
prot of the group for that period.
In preparing these nancial statements,
the members are required to:
select suitable accounting policies and
then apply them consistently;
make judgements and estimates that
are reasonable and prudent;
state whether they have been
prepared in accordance with IFRS as
adopted by the EU; and
prepare the nancial statements on

the going concern basis unless it is
inappropriate to presume that the
group will continue in business. As
explained in note 1, the decision has
been taken to de-merge the ELLP
group and return the ownership and
governance of each ELLP member
rm to local members. Following
completion of the demerger, it is
intended that the partnership will be
placed into a solvent members
voluntary liquidation and the members
do not consider that it is appropriate to
prepare these nancial statements on
a going concern basis.
John MacLean Scott

Designated member
Paul Long
Designated member
Under Regulation 6 of the 2008

Regulations the members are
responsible for keeping adequate
accounting records that are sufcient to
show and explain the partnerships
transactions and disclose with
reasonable accuracy at any time its
nancial position and enable them to
ensure that the nancial statements
comply with those regulations. They
have general responsibility for taking
such steps as are reasonably open to
them to safeguard the assets of the
group and to prevent and detect fraud
and other irregularities.
The members are responsible for the
maintenance and integrity of the
corporate and nancial information
included on the groups website.
Legislation in the UK governing the
preparation and dissemination of
nancial statements may differ from
legislation in other jurisdictions. During
the year, these responsibilities were
exercised by the Board on behalf of the
members.
9/KPMG Europe LLP

Annual Report 2013
Consolidated income statement
for the year ended 30 September 2013
Note
2013
m
Restated (note 1)
2012
m
Revenue
5,004
4,997
Other operating income
170
160
Staff costs
(2,557)
(2,579)
11, 12
(105)
(101)
(1,529)
(1,578)
Depreciation and amortisation

Other operating expenses
983
899
Financial income
23
20
Financial expense
(44)
(51)
(21)
(31)
964
870
Operating prot
Net nancial expense

Share of prot of associated undertakings
Prot before taxation and remuneration for current members
Tax expense
10
Prot for the nancial year before remuneration for current members
Remuneration for current salaried members
Prot for the nancial year available for non-salaried members
(12)
(7)
952
863
(446)
(440)
506
423
503
422
506
423
Prot for the nancial year attributable to:

Members as owners of the parent entity
Non-controlling interests
11/KPMG Europe LLP

Annual Report 2013
Consolidated statement of comprehensive income
for the year ended 30 September 2013
Note
Prot for the nancial year
2013
m
Restated (note 1)
2012
m
506
423
Other comprehensive income

Items that will not be reclassied subsequently to prot or loss:
Remeasurement on dened benet pension plans
21
(50)
(127)
Related tax effect
10
25
29
Foreign exchange translation differences
(20)
36
Other comprehensive income for the year, net of tax
(45)
(62)
Total comprehensive income for the nancial year
461
361
458
360
461
361
Items that may be reclassied subsequently to prot or loss:
Total comprehensive income for the nancial year attributable to:

Members as owners of the parent entity
12/KPMG Europe LLP

Annual Report 2013
Consolidated statement of nancial position
at 30 September 2013
Note
2013
m
Restated (note 1)
2012
m
Restated (note 1)
2011
m
Assets
Non-current assets
Property, plant and equipment
11
543
600
570
Intangible assets
12
136
144
132
Other investments
13
11
10
25
Deferred tax assets
14
112
87
48
Tax receivable
10
13
16
19
Retirement benets
21
14
13
11
Non-current loans and receivables
15
16
19
18
845
889
823
Current assets
Trade and other receivables
16
1,632
1,647
1,551
Amounts due from members
22
150
156
140
Other investments
17
61
78
73
14
15
14
18
363
327
273
2,220
2,223
2,051
3,065
3,112
2,874
526
464
577
534
469
581
Tax receivable
Cash and cash equivalents
Total assets
Equity and liabilities
Other reserves classied as equity, being equity attributable
to members, as owners
Total equity
Liabilities
Non-current liabilities
Retirement benets
21
342
316
175
Amounts due to members
22
19
20
Provisions
20
163
149
133
Deferred tax liability
14
18
27
20
14
19
13
556
531
345
Other non-current liabilities
13/KPMG Europe LLP

Annual Report 2013
Consolidated statement of nancial position continued

Note
2013
m
Restated
2012
m
Restated (note 1)
2011
m
Current liabilities
Short-term bank borrowings
23
163
318
313
Trade and other payables
19
1,276
1,231
1,031
18
Tax payable
22
330
356
412
Provisions
20
56
49
42
Members capital
22
132
150
146
1,975
2,112
1,948
Total liabilities
2,531
2,643
2,293
Total equity and liabilities
3,065
3,112
2,874
132
150
146
Total members interests

Members capital
526
464
577
658
614
723
(150)
(156)
(140)
349
376
416
Total members interests
857
834
999
Other reserves classied as equity

The nancial statements on pages 11 to 61 were approved by the members on 6 June 2014 and were signed on their behalf by:
John Maclean Scott

Designated member
14/KPMG Europe LLP

Annual Report 2013
Paul Long
Designated member
Consolidated statement of changes in equity
Restated
(note 1)
Members other
Note
reserves
m
Balance at 1 October 2011

Prior year adjustment to opening balance
Restated balance at 1 October 2011
Translation
reserve
m
Restated
(note 1)
Total
m
Non-controlling
interests
m
Restated
(note 1)
Total equity
m
695
(140)
555
559
22
22
22
717
(140)
577
581
422
422
423
36
36
36
(127)
(127)
(127)
Comprehensive income:
Remeasurement on dened benet pension
plans
Related tax effect
Total comprehensive income
29
29
29
324
36
360
361
(450)
(450)
(450)
Transactions with owners:

Prots allocated to members during the year
(23)
(23)
(23)
Total transactions with owners
(473)
(473)
(473)
Balance at 30 September 2012
568
(104)
464
469
503
503
506
Other movements
22a
Comprehensive income:
Remeasurement on dened benet pension
plans
Related tax effect
Total comprehensive income
(20)
(20)
(20)
(50)
(50)
(50)
25
25
25
478
(20)
458
461
Transactions with owners:
(386)
(386)
(386)
(3)
(2)
(2)
22a
(8)
(8)
(8)
Total transactions with owners
(397)
(396)
(396)
649
(123)
526
534
Prots allocated to members during the year

Disposal of subsidiary to members
Other movements
15/KPMG Europe LLP

Annual Report 2013
Notes forming part of the consolidated nancial statements continued
1 Accounting policies continued

Change in accounting policy continued
In addition there have been amendments made to the disclosure requirements for dened benet plans, requiring more
information about the characteristics of such plans and the risks to which entities are exposed through participation in these
plans, as set out in note 21.
(Credit)/charge
Retirement
benets
m
Provisions
m
Total
m
Adjustment to opening equity at 1 October 2011:
(12)
(12)
Restate provision held for obligations to employees
(14)
(14)
Restate deferred tax on provision
(12)
(10)
(22)
(3)
(3)
14
14
(10)
(10)
(4)
(4)
Increase in remeasurement losses on dened benet pension plans
Net impact on equity at 30 September 2013
(10)
(10)
Restate net dened benet pension obligation
Net impact on opening equity at 1 October 2011
Adjustment to income statement year ended 30 September 2012:

Reduction in dened benet current service cost
Increase in dened benet net interest charge
Adjustment to other comprehensive income year ended 30
September 2012:
Increase in remeasurement losses on dened benet pension plans
Net impact on equity at 30 September 2012
Adjustment to income statement year ended 30 September 2013:
Reduction in dened benet current service cost
Increase in dened benet net interest charge
Adjustment to other comprehensive income year ended 30
September 2013:
The application of the Amendment has resulted in a net impact on opening equity in respect of both retirement benets and
provisions; the former as a result of the application of risk sharing concepts in Switzerland, now permitted under IAS 19 Revised,
and the latter as a result of certain provisions held in Germany no longer qualifying for recognition under IAS 19 Revised.
18/KPMG Europe LLP

Annual Report 2013

Future developments
The following standards and
amendments have been endorsed and
will be adopted by the group in future
periods:
Judgements made by management in

the application of adopted IFRSs that
have a signicant effect on the nancial
statements and estimates with a
signicant risk of material adjustment in
the next year are discussed in note 2.
IFRS 10: Consolidated Financial

Statements and subsequent
amendments; effective for periods
beginning on or after 1 January 2014.
The functional currency of the

partnership and the presentation
currency of the group is the euro. The
nancial statements are presented in
millions of euro (m) unless stated
otherwise.
IFRS 11: Joint Arrangements and

subsequent amendments; effective
for periods beginning on or after 1
January 2014.
IFRS 12: Disclosures of Interests in
other Entities and subsequent
IAS 27: Separate Financial
Statements and subsequent
IAS 28: Investment in Associates and
Joint Ventures; effective for periods
Amendment to IFRS 7: Disclosures
Offsetting nancial assets and
liabilities; effective for periods
Amendment to IAS 32: Offsetting
nancial assets and liabilities;
effective for periods beginning on or
after 1 January 2014.
These standards and amendments are
expected to have minimal impact on the
groups nancial statements.
Basis of preparation
The nancial statements are prepared on
the historical cost basis except that
derivative nancial instruments and
certain other nancial instruments are
stated at their fair value.
The preparation of nancial statements
in conformity with adopted IFRSs
requires management to make
judgements, estimates and assumptions
that affect the application of policies and
reported amounts of assets and
liabilities, income and expenses.
Basis of consolidation and equity

accounting
The bringing together on 1 October 2007
of the KPMG International member rms
in Germany and the UK and the
subsequent addition of member rms in
other countries (see notes 9 and 27)
were regarded by the respective
countries partners as being mergers of
like-minded professional services rms,
not involving an acquisition in the
normal sense. No attempt was made in
the merger negotiations to value each
rm on an arms length basis, other than
for the impact of harmonising accounting
policies.
However, adopted IFRSs do not permit
the possibility of accounting for a
business combination as a merger or
through the pooling of interests method.
Rather, IFRS 3 Business Combinations
requires that all cases meeting the
denition of a business combination
must be accounted for as an acquisition.
The creation of the group and
subsequent mergers have each
contained aspects that meet the
denition of a business combination and
have therefore been treated as
acquisitions.
The group has applied the acquisition
method for all business combinations
disclosed in note 9.
Subsidiaries are entities controlled by the
partnership. Control exists when the
partnership has the power, directly or
indirectly, to govern the nancial and
operating policies of an entity so as to
obtain benets from its activities. In
assessing control, potential voting rights
that are currently exercisable or

convertible are taken into account. The
nancial statements of subsidiaries are
included in the consolidated nancial
statements from the date that control
commences to the date that control
ceases.
When the group looses control over a
subsidiary, it derecognises the assets
and liabilities of the subsidiary and any
related non-controlling interest and other
components of equity. Any resulting gain
or loss is recognised in the income
statement. If the subsidiary represents a
separate major line of business or
geographical area of operations, the
subsidiary is classied as a discontinued
operation under IFRS 5 Discontinued
operations and the results of the
subsidiary are classied accordingly
within the income statement.
Associates are those entities in which
the group has signicant inuence, but
not control, over the nancial and
operating policies. Associates are
accounted for using the equity method
and are initially recognised at cost. The
consolidated nancial statements
include the groups share of the total
comprehensive income and equity
movements of associates, from the date
that signicant inuence commences to
the date that signicant inuence
ceases.
Business combinations
For business combinations, fair values
that reect conditions at the date of the
business combination and the terms of
each business combination are
attributed to the identiable assets,
liabilities and contingent liabilities
acquired. For business combinations
achieved in stages, the group revalues its
equity accounted investment to the fair
value reecting the conditions at the date
of acquisition of the controlling share
with any resultant gain or loss
recognised in the income statement.
19/KPMG Europe LLP

Annual Report 2013

Business combinations continued
Consideration is measured at the fair
value of assets provided and liabilities
incurred by the group to the previous
owners of the acquiree. Goodwill is
recognised where the fair value of the
consideration transferred exceeds the
total of these fair values. Where the
excess is positive, it is treated as an
intangible asset, subject to annual
impairment testing.
Transaction costs that the group incurs in
connection with a business combination,
such as legal fees, are expensed as
incurred.
The mergers which formed the group, or
have arisen since formation, reect
expectations that future prots arising in
the acquired member rms from their
existing client contracts and relationships
will continue in practice substantially to
accrue to the partners in the acquired
rms. This is to be contrasted with the
groups commercial acquisitions where
the purchase results in the acquirer
having full access to the prots and cash
ows of the entity acquired. Accordingly,
in considering the value to be ascribed
under each merger to intangible assets
in the acquired rm, allowance is made
for an arms length assessment of the
remuneration of partners in the joining
country for their services to the group, as
distinct from that part of their total
reward estimated to be attributable to a
return on the capital they own in the
group. Similar assessments of intangible
assets arise on commercial acquisitions
but without this renement for partners
remuneration.
Non-controlling interests arise where the
group holds less than 100% of the
shares in the entities acquired or, as a
result of agreements in place, is entitled
to less than 100% of prots or losses
arising. Non-controlling interests are
measured on initial recognition at their
share of the relevant net assets.
Intangible assets have been recognised
in respect of customer relationships,
framework contracts, order books and
similar assets. Each category is
20/KPMG Europe LLP
Annual Report 2013
amortised over its estimated useful life,

as follows:
Customer relationships
Framework contracts
Order book
7-20 years
2-4 years
3-6 months
Foreign currency
Transactions in each entity in currencies
other than its functional currency are
recorded at the foreign exchange rate
ruling at the date of the transaction.
Monetary assets and liabilities
denominated in foreign currencies at the
year end date are translated in each
entity at the foreign exchange rate ruling
at that date. Foreign exchange
differences arising on translation are
recognised in the income statement
within nancial income or expense, as
appropriate. Non-monetary assets that
are measured in terms of historical cost
in a foreign currency are translated using
the exchange rate at the date of the
transaction.
For presentation purposes, the revenues
and expenses of subsidiary undertakings
with a functional currency other than the
euro are translated at an average rate for
the period where this rate approximates
to the foreign exchange rates ruling at
the dates of the transactions. The assets
and liabilities of such undertakings,
including goodwill and fair value
adjustments arising on consolidation, are
translated at foreign exchange rates
ruling at year end. Exchange differences
arising from this translation are
recognised in other comprehensive
income in the translation reserve. They
are reclassied from equity to the
income statement as a reclassication
adjustment when a gain or loss on
disposal of the relevant subsidiary is
recognised.
Revenue
Revenue represents the fair value of the
consideration receivable in respect of
professional services provided during the
year, inclusive of recoverable expenses
incurred on client assignments but
excluding value added tax. Where the
outcome of a transaction can be
estimated reliably, revenue associated

with the transaction is recognised in the
income statement by reference to the
stage of completion at the year end,
provided that a right to consideration has
been obtained through performance.
Consideration accrues as contract
activity progresses by reference to the
value of work performed. Hence revenue
in respect of service contracts
represents the cost appropriate to the
stage of completion of each contract
plus attributable prots, less amounts
recognised in previous years where
relevant.
Where the outcome of a transaction
cannot be estimated reliably, revenue is
recognised only to the extent that the
costs of providing the service are
recoverable. No revenue is recognised
where there are signicant uncertainties
regarding recovery of the consideration
due or where the right to receive
payment is contingent on events outside
the control of the group. Expected losses
are recognised as soon as they become
probable based on the latest estimates
of revenue and costs.
Unbilled revenue is included in trade and
other receivables as Unbilled amounts
for client work. Amounts billed on
account in excess of the amounts
recognised as revenue are included in
Trade and other payables.
Recoverable expenses represent
charges from other KPMG member
rms and sub-contractors and out of
pocket expenses incurred in respect of
assignments and expected to be
recovered from clients.

Taxation
For those group entities that are
partnerships, taxation on all prots is
solely the personal liability of the
individual members. Consequently
neither taxation nor related deferred
taxation arising in respect of the
partnership (or its subsidiary
partnerships) is accounted for in these
nancial statements.
Distributions to members of these
partnerships are made net of income tax;
such amounts retained are paid to the
local tax authorities by the entities, on
behalf of the individual members, when
this tax falls due. These amounts
retained for tax are treated in the
nancial statements in the same way as
other prots of the partnership and its
subsidiary partnerships and so are
included in Members other interests or
in Amounts due to members depending
on whether or not division of prots has
occurred.
The companies dealt with in the
consolidated nancial statements are
subject to local corporate taxes based on
their prots for the accounting period.
Tax and any deferred taxation of these
companies are recorded in the
consolidated income statement or
consolidated statement of
comprehensive income under the
relevant heading and any related
balances are carried as tax payable or
receivable in the consolidated statement
of nancial position. Current tax is the
expected tax payable on the taxable
income for the year, using tax rates
enacted or substantively enacted at year
end, including any adjustment to tax
payable in respect of previous years.
Deferred tax in subsidiary companies is

provided on temporary differences
between the carrying amounts of assets
and liabilities for nancial reporting
purposes and the amounts used for
taxation purposes. The following
temporary differences are not provided
for: the initial recognition of goodwill; the
initial recognition of assets or liabilities in
a transaction that is not a business
combination and that affects neither
accounting nor taxable prot; and
differences relating to investments in
subsidiaries to the extent that they will
probably not reverse in the foreseeable
future.
The amount of deferred tax provided is
based on the expected manner of
realisation or settlement of the carrying
amount of assets and liabilities, using tax
rates enacted or substantively enacted at
year end. A deferred tax asset is
recognised only to the extent that it is
probable that future taxable prots will
be available against which the asset can
be utilised.
Financial income and expense
Financial income comprises interest and
dividend income on funds invested
(including available-for-sale nancial
assets), gains on derivatives recognised
in the income statement, exchange gains
and other nancial income. Interest
income is recognised as it accrues, using
the effective interest method.
Financial expense comprises exchange
losses, interest cost on short-term bank
borrowings, losses on derivatives
recognised in the income statement, net
interest cost on net dened benet
pension plan liabilities, discount on
provisions and other nance costs. All
borrowing costs are recognised in the
income statement using the effective
interest method.

Property, plant and equipment is stated
at cost less accumulated depreciation
and impairment losses. Parts of an item
of property, plant and equipment having
different useful lives are accounted for as
separate items.
Leases under which the group assumes
substantially all the risks and rewards of
ownership are classied as nance
leases. Upon initial recognition the
leased asset is measured at an amount
equal to the lower of its fair value and the
present value of the minimum lease
payments, assessed at inception of the
lease. Subsequent to initial recognition,
the asset is accounted for in accordance
with the accounting policy applicable to
that asset.
Depreciation is provided to write off the
cost less the estimated residual value of
property, plant and equipment and is
charged to the income statement on a
straight-line basis over the estimated
useful lives of each part of an item of
property, plant and equipment.
The estimated useful lives are as follows:
The residual value, if not insignicant, is
reassessed annually.
Leasehold land
999 years
(or life of lease, if shorter)
Leasehold
buildings
50 years
(or life of lease, if shorter)
Ofce furniture,
ttings and
equipment
5-12 years
Computer and
communications
equipment
2-5 years
Motor vehicles
5 years
21/KPMG Europe LLP

Annual Report 2013

Intangible assets
Expenditure on research is recognised in
the income statement as an expense as
incurred. Development expenditure on
internally generated software is
capitalised only if development costs can
be measured reliably, if the product or
process is technically and commercially
feasible, future economic benets are
probable and the group has sufcient
resources to complete development.
The expenditure capitalised includes the
cost of materials, direct labour and an
appropriate proportion of overheads.
Other development expenditure is
recognised in the income statement as
an expense as incurred.
Capitalised development expenditure
and software and licences that are
acquired by the group and have a nite
useful life are measured at cost less
accumulated amortisation and
impairment losses.
Amortisation is charged to the income
statement on a straight-line basis over
the estimated useful lives of intangible
assets from the date that they are
available for use. The estimated useful
life of software and licences and of
internally generated software is
generally ve to eight years.
Goodwill, customer relationships,
framework contracts and order books
are discussed in Business combinations
above. Goodwill is stated at cost less any
accumulated impairment losses.
Customer relationships, framework
contracts and order books are stated at
cost less accumulated amortisation.
Non-derivative nancial instruments
comprise other investments, trade and
other receivables, unbilled amounts for
client work, cash and cash equivalents,
loans and borrowings, trade and other
payables, members capital and amounts
due to and from members.
22/KPMG Europe LLP

Annual Report 2013
Other investments
Other investments held by the group
mainly comprise bonds, as equities and
shares in investment funds. These
assets are classied either as availablefor-sale or at fair value through prot or
loss and are stated at fair value,
calculated by reference to their listed
price at the year end.
Any resultant gain or loss on those
assets classied as available-for-sale is
recognised in other comprehensive
income, in the fair value reserve, except
for impairment losses and, in the case of
monetary items such as debt securities,
foreign exchange gains and losses.
When these investments are
derecognised, the cumulative gain or
loss is reclassied from the fair value
reserve to the income statement. Where
these investments are interest bearing,
interest calculated using the effective
interest rate method is recognised in the
income statement.
Any resultant gain or loss on those
assets classied as fair value through
prot or loss is recognised in the income
statement.
Other investments also include
investments in non-consolidated
entities, stated at cost less provision for
impairment, and the groups share of net
assets in associated undertakings.
Non-current loans and receivables are
initially recognised at fair value, based
upon the estimated present value of
future cash ows discounted at the
market rate of interest at the year end.
Subsequent to initial recognition,
non-current loans and receivables are
recorded at amortised cost.

Trade and other receivables (except
unbilled amounts for client work) are
initially recognised at fair value, based
upon discounted cash ows at prevailing
interest rates, or at their nominal amount
less impairment losses if due in less than
12 months. Subsequent to initial
recognition, trade and other receivables
are valued at amortised cost less
impairment losses.
Unbilled amounts for client work
Unbilled amounts for client work relate to
service contract receivables on
completed work where the fee has yet to
be issued or where the service contract
is such that the work performed falls into
a different accounting period.
Unbilled amounts for client work are
stated at cost plus prot recognised to
date (in accordance with the revenue
accounting policy above) less provision
for foreseeable losses and net of
amounts billed on account.
Cash and cash equivalents comprise
cash balances and call deposits. The
cash and cash equivalents are stated at
their nominal values, as this
approximates to amortised cost.
Short-term bank borrowings are initially
recognised at fair value, based upon the
nominal amount outstanding.
Subsequent to initial recognition, they
are recorded at amortised cost.
Borrowing costs arising on short-term
bank borrowings are expensed as
incurred within nancial expense. Initial
facility fees incurred in respect of bank
borrowing facilities are capitalised and
amortised over the facility life.

continued
Trade and other payables are initially
recognised at fair value, based upon the
nominal amount outstanding.
Subsequent to initial recognition, they
Members capital
The capital requirements of the group
are determined from time to time by the
Board, following recommendations from
the Executive Committee. Each member
is required to subscribe a proportion of
this capital after taking into account any
capital already contributed by the
member to a partnership or other entity
(being a subsidiary of the partnership) of
which he is also a member. Hence,
members capital of the group
represents capital subscribed by
members of the partnership to either the
partnership or a subsidiary entity.
No interest is paid on capital.
On leaving the partnership, a members
capital must be repaid within two
months of the leaving date, unless other
arrangements have been agreed
between the member and the Executive
Committee. Members capital is
therefore considered a current liability
and is stated at its nominal value, being
the amount repayable.
Amounts due to and from members
Non-current amounts due to members
are initially recognised at fair value,
based upon the estimated present value
of future cash ows discounted at the
market rate of interest at the year end.
Subsequent to initial recognition,
non-current amounts due to members
Current amounts due to and from
members are stated at their nominal
value, as this approximates to amortised
cost. Any amounts due to or from
members are included in amounts due to
or from other group entities, as
appropriate.
Derivative nancial instruments and

hedging
The group uses derivative nancial
instruments to provide an economic
hedge against its exposure to foreign
exchange rate and interest risks arising
from operational, nancing and
investment activities. In accordance with
its treasury policy, the group does not
hold or issue derivative nancial
instruments for trading purposes. The
derivative nancial instruments used do
not satisfy the criteria to be classied as
hedging instruments and so are treated
as nancial assets or liabilities held for
trading.
Derivative nancial instruments are
recognised at fair value. Those with a
positive fair value are classied within
Other investments; derivative nancial
instruments with a negative fair value are
classied within Trade and other
payables. Attributable transaction costs
are recognised in the income statement
when incurred. Subsequent gains or
losses on re-measurement of fair value
are recognised immediately in the
income statement. The fair value of
forward exchange contracts, interest
rate caps and interest rate swaps is the
estimated amount that the group would
receive or pay at the year end, taking into
account current exchange rates, interest
rates and the current creditworthiness of
the swap counterparties.
Impairment
The carrying amounts of the groups
assets (except employee benet and
deferred tax assets) are reviewed at each
year end to determine whether there is
any indication of impairment. If any such
indication exists, the assets recoverable
amounts are estimated. For goodwill the
recoverable amount is estimated at each
year end.
The recoverable amount of receivables

carried at amortised cost is calculated as
the present value of estimated future
cash ows, discounted at the original
effective interest rate (being the
effective interest rate computed at initial
recognition of these nancial assets).
Receivables with a short duration are not
discounted. The recoverable amount of
other assets is the greater of their fair
value less costs to sell and value in use.
In assessing value in use, the estimated
future cash ows are discounted to their
present value using a pre-tax discount
rate that reects current market
assessments of the time value of money
and the risks specic to the asset.
An impairment loss is recognised
whenever the carrying amount of an
asset or its cash generating unit exceeds
its recoverable amount. Impairment
losses are recognised in the income
statement. An impairment loss in
respect of a nancial asset carried at
amortised cost is reversed if the
subsequent increase in recoverable
amount can be related objectively to an
event occurring after the impairment loss
was recognised. In respect of other
assets, an impairment loss is reversed
when there is an indication that the
impairment loss may no longer exist and
there has been a change in the estimates
used to determine the recoverable
amount.
An impairment loss is reversed only to
the extent that the assets carrying
amount does not exceed the carrying
amount that would have been
determined, net of depreciation or
amortisation, if no impairment loss had
been recognised. Impairment losses in
respect of goodwill cannot be reversed.
23/KPMG Europe LLP

Annual Report 2013

Leases
Operating lease rentals are charged to
the income statement on a straight-line
basis over the period of the lease. Lease
incentives received are recognised in the
income statement as an integral part of
the total lease expense.
Minimum lease payments due under
nance leases are apportioned between
the nance expense and the reduction of
the outstanding liability. The nance
expense is allocated to each period
during the lease term so as to produce a
constant periodic rate of interest on the
remaining balance of the liability.
Rental income from sub-let property is
recognised in the income statement,
within other operating income, on a
straight line basis over the term of the
lease. Lease incentives granted are
recognised as an integral part of the total
rental income, over the term of the lease.
Provisions
A provision is recognised when the
group has a present legal or constructive
obligation as a result of a past event and
it is probable that an outow of
economic benets will be required to
settle the obligation. If the effect is
material, provisions are determined by
discounting the expected future cash
ows at a pre-tax rate that reects
current market assessments of the time
value of money and, where appropriate,
the risks specic to the liability.
Provision for onerous contracts is
recognised when the expected benets
to be derived by the group from a
contract are lower than the unavoidable
cost of meeting its obligations under the
contract. Provision is made for the
present value of foreseeable rental
commitments in respect of surplus
property, after offsetting any future
sub-letting income that could be earned.
Surplus property includes premises
which will become redundant as a result
of steps to which the group is
committed.
24/KPMG Europe LLP

Annual Report 2013
The group has conditional commitments

to pay annuities to certain former
members (and dependants) of KPMG in
the UK. These annuities are payable only
out of the prots of KPMG LLP, on which
they constitute a rst charge. The
present value of the best estimate of the
expected liabilities for future payments
to retired members or their dependants
is provided in full, gross of attributable
taxation that is deducted by KPMG from
payments to annuitants, as a charge
against income at the point at which the
contractual right arises. Any changes in
the provision for former members
annuities arising from changes in former
members and their dependants or in
nancial estimates and actuarial
assumptions are recognised in the
income statement.
The unwinding of the discount is
presented in the income statement as a
Financial expense. The payment of
former members annuities is shown as
a movement against the provision.
Insurance cover is maintained in respect
of professional negligence claims. This
cover is principally written through
mutual insurance companies. Premiums
are expensed as they fall due with
prepayments or accruals being
recognised accordingly. Rebates are
recognised once they become
receivable. Where appropriate, provision
is made for the uninsured cost to the
group of settling negligence claims.
Separate disclosure is not made of
insured costs and related recoveries on
the grounds that such disclosure would
be seriously prejudicial to the position of
the group in any dispute with other
parties.
Financial guarantees
Where the partnership or a subsidiary
enters into a nancial guarantee contract
to guarantee the indebtedness of
another entity within, or associated with
the group, the partnership considers this
to be an insurance arrangement and

accounts for it as such. In this respect,
the partnership or subsidiary entity treats
each guarantee contract as a contingent
liability until such time as it becomes
probable that a payment will be required
under the guarantee.
Retirement benets
The group operates various dened
contribution pension plans for which the
charge for the year represents the
contributions payable to the plans in
respect of the accounting period. An
accrual or prepayment is included in the
statement of nancial position to the
extent to which such costs do not equate
to the cash contributions paid in the year.
The group also operates several dened
benet pension plans including three
closed plans. Two of the plans are closed
to new entrants and provide benets on
nal pensionable pay whilst the other is
closed to new entrants and to current
service and provides benets based on
average pensionable pay. The groups
net obligations in respect of its dened
benet plans are calculated separately
for each plan by estimating the amount
of future benet that employees have
earned in return for their service in the
current and prior periods; that benet is
discounted to determine its present
value, and the fair value of plan assets (at
bid price) is deducted.
The group determines the net interest on
the net dened benet liability for the
period by applying the discount rate used
to measure the dened benet
obligation at the beginning of the annual
period to the net dened benet liability.
The liability discount rate is the yield at
the year end on AA credit rated bonds
that have maturity dates approximating
to the terms of each plans obligations.
The calculations are performed by
qualied actuaries using the projected
unit credit method.

Retirement benets continued
When the benets of a plan are changed,
or when a plan is curtailed, the portion of
the changed benet relating to past
service by employees, or the gain or loss
on curtailment is recognised
immediately in the income statement
when the plan amendment or
curtailment occurs.
Remeasurements comprise actuarial
gains and losses and the return on plan
assets (excluding interest). These are
recognised immediately in the statement
of comprehensive income and all other
expenses related to dened benet
plans in either staff costs or nancial
expense in the income statement.
Surpluses are recognised on dened
benet pension plans only to the extent
that they are considered to be
recoverable by the group, taking account
of future service by members of, and
contributions payable to, the relevant
plan.
Allocation of prots and drawings
The allocation of group prots to those
who were members of the partnership
during the nancial year occurs at the
discretion of the Board following
nalisation of the annual nancial
statements. As is permitted by the
Limited Liability Partnerships
Regulations and the Partnership
Agreement, allocated prots may not
necessarily represent all the prots
arising in a particular nancial year, if the
Board considers it appropriate to retain
prots or to allocate prots previously
retained.
During the year, members in certain
countries receive salary under their
separate contracts of employment with
subsidiary legal entities and are entitled
to bonuses under the same contracts of
employment. Members in other
countries receive remuneration by
rendering charges for their services
personally or from a company under their
control. Such items are considered to be
expenses of the group and are disclosed
separately in the income statement as
Remuneration for current salaried

members. Amounts remaining unpaid at
the end of the year in respect of such
remuneration are classied as Amounts
due to members.
During the year, members working in
subsidiary partnerships receive monthly
drawings and, from time to time,
additional prot distributions. The level
and timing of the additional distributions
are decided by the Executive
Committee, taking into account cash
requirements for operating and investing
activities. Similarly, drawings or
distributions may be paid. Both the
monthly drawings and prot distributions
represent payments on account of
current year prots and are reclaimable
from members until prots have been
allocated.
Pending the allocation of prots and their
division between members, drawings
and on-account prot distributions paid
to such members during the year are
shown as Amounts due from members.
Any over-distribution of prot during the
year is also receivable from members
and so is classied in the same way.
Unallocated prots are shown in equity
as Other reserves. In both cases,
amounts that may be determined as due
from and attributable to members who
retired from the partnership or subsidiary
partnerships in the year may be included.
2 Accounting estimates and
judgements
The Audit Committee has discussed the
development, selection, application and
disclosure of the groups critical
accounting policies and estimates.
Key sources of estimation
uncertainty
Revenue on service contracts
In calculating revenue on service
contracts, the group makes certain
estimates as to the stage of completion
of those contracts. In doing so, the group
estimates the remaining time and
external costs to be incurred in
completing contracts and clients
willingness and ability to pay for the
services provided. A different
assessment of the outturn on a contract

may result in a different value being
determined for revenue and also a
different carrying value being
determined for unbilled amounts for
client work.
The total carrying amount of trade
receivables and unbilled amounts for
client work is 1,448 million (2012:
1,448 million) net of impairment losses
on trade receivables and after giving
consideration to the clients willingness
to pay those amounts accrued in respect
of incomplete contracts. A different
assessment of the recoverability of
either balance, with reference to either
the ability or willingness of the client to
pay, may result in different values being
determined.
Retirement benets
The net dened benet liabilities of the
groups pension plans of 342 million
(2012: 303 million) are valued using
certain assumptions (see note 21),
including mortality assumptions, based
on current published tables, and discount
and ination rates, both of which reect
current market trends. If either were to
change, there is a risk that there would
be further variance in the actuarial gains
and losses and nancial expense.
Former members annuities
The group has used certain assumptions
in assessing the provision for former
members annuities of 72 million (2012:
68 million) as set out in note 20. The
assumptions used are based upon the
current prole of the former members
concerned and currently published
mortality tables. If either were to change,
the assumptions used in calculating the
provision would no longer be
appropriate. The resulting variation in the
underlying assumptions may result in a
value for the provision that is different
from that disclosed.
25/KPMG Europe LLP

Annual Report 2013
2 Accounting estimates and

judgements continued
Key sources of estimation
uncertainty continued
Claims
The group from time to time receives
claims in respect of professional
negligence. It defends such claims
vigorously but makes provision for the
possible amounts considered likely to be
payable, up to the deductible under the
groups related insurance arrangements.
A different assessment of the settlement
prospects of each case or of the possible
cost involved may result in a different
provision and cost.
Acquisition accounting
Under IFRS 3, Business combinations,
the acquirer is required to determine fair
values (reecting conditions at the date
of the business combination and its
terms) for the identiable assets,
liabilities and contingent liabilities
acquired. Within such items will be
intangible assets reecting the current
value of anticipated income streams
from framework contracts, customer
relationships and the open order book of
the party acquired. In assessing the
value of such items, the group has to
make assumptions on matters such as
the future prots likely to arise after
reecting charges for the services of the
workforce (including the services of
those individuals who separately are
members of the partnership) and for the
use of the KPMG brand, as well as the
anticipated period over which benets
from existing customer relationships
may endure.
26/KPMG Europe LLP

Annual Report 2013
Critical accounting judgements in

applying the groups accounting
policies
Acquisition accounting
IFRS 3, Business combinations,
requires that all cases meeting the
denition of a business combination
must be accounted for as an acquisition.
The creation of the group in 2008 and
subsequent mergers each met the
denition of a business combination.
Hence, fair values must be determined
for the identiable assets, liabilities and
contingent liabilities acquired, and for the
consideration transferred, even though
internally these transactions were each
regarded as a pooling of interests with no
attempt to value each rm on an arms
length basis, other than for the impact of
harmonising accounting policies (see
note 9).
Similarly, the basis for co-working with
those entities in Belgium, Turkey,
Norway, Kuwait and Jordan not
controlled by the group, and the precise
terms of the related merger
documentation, were not drafted to
clarify control within the context of the
relevant accounting standard. The group
has assessed that certain entities fall to
be regarded only as associates over
which signicant inuence is exercised
and that other entities are subject to
neither control nor signicant inuence,
even where these entities constitute
integral parts of the operations of the
KPMG member rms in these countries.
Further details impacting this
assessment are given in note 27.
Partner retirement provisions

The group has assessed that no
provision is required in respect of partner
retirement arrangements that exist
across the ELLP member countries.
There are no contractual obligations in
respect of these arrangements. The
assessment is based on the countryspecic remuneration models and on the
existence of a constructive obligation. In
all countries, it has been determined that
a constructive obligation does not exist,
either due to past practice in those
counties or, in the case of the UK
partnership, due to the nature of the
prot allocation mechanism. A different
assessment of the obligation arising
under each of the remuneration models
may result in a recognised provision.
3 Segmental reporting
The group has previously voluntarily adopted IFRS 8 Operating Segments. Accordingly, segment information is presented in
respect of the groups segments, reecting the groups principal management and internal reporting structures.
The group is managed internally through the functions of Audit, Tax and Advisory. The Advisory function is further split into
Transactions & Restructuring (T&R), Risk Consulting (RC) and Management Consulting (MC). Therefore, these are considered as
separate operating segments for the purposes of presenting segment information under IFRS 8.
The segments are identied for internal reporting purposes according to the nature of services provided; principal services
provided by each segment include:
Audit:
Provision of statutory and regulatory attestation services, advice in compliance with changing reporting and regulatory
requirements, and non-statutory assurance services.
Tax:
Advice and compliance assistance in relation to tax, remuneration planning and pensions.
Advisory:
T&R
Deal support from pre-deal evaluation to completion including strategy, due diligence, debt and equity advice, valuations,
separation and integration; provision of restructuring and recovery advice, including corporate and personal insolvency; nancial
advice on public and private transactions including mergers and acquisitions, otations and valuations.
RC
Provision of advice on embedding governance, risk management and internal controls and on compliance with changing
regulatory requirements; provision of accounting, investigation and business skills to assist clients involved in contentious
nancial matters.
MC
Advice and support to improve business performance through transforming operations, business intelligence and nance
transformation, working capital and cash management, revenue enhancement and cost optimisation, IT-enabled
transformation, embedding risk and regulatory management and deal services.
Segmental reporting 2013

Information by segment is as follows:
Net sales (as reported internally)

Recoverable expenses (as reported
internally)
Gross revenue (as reported internally)
Audit
Tax
Advisory
T&R
m
Total
RC
m
MC
m
1,983
1,074
687
582
513
4,839
197
136
99
109
118
659
2,180
1,210
786
691
631
5,498
Entities not controlled by ELLP
(244)
Impact of foreign exchange
(107)
Elimination of intragroup trading
(132)
(11)
Other nancial statement adjustments
5,004
Total group revenue

Segmental contribution (as reported
internally)
740
413
290
226
133
1,802
(54)
(47)
Members remuneration adjustments
508
(1,224)
Costs not allocated to segments

Net nancial expense
(21)
Total group prot before taxation*
964
Segmental assets (as reported internally)
251
347
147
164
147
1,056
(72)
(21)
Assets not allocated to segments
2,102
Total assets
3,065
* Also before deduction of remuneration for current salaried members
27/KPMG Europe LLP

Annual Report 2013
3 Segmental reporting continued

Segmental reporting 2012 (restated)
Information by segment is as follows:
Audit
Net sales (as reported internally)

Recoverable expenses (as reported
internally)
Gross revenue (as reported internally)
Tax
Advisory
Total
T&R
m
RC
m
MC
m
1,935
1,057
736
566
453
4,747
187
126
125
103
102
643
2,122
1,183
861
669
555
5,390
(201)
(59)
(110)
Elimination of intragroup trading
(23)
Other nancial statement adjustments
4,997
Total group revenue

Segmental contribution (as reported
internally)
661
415
291
195
107
1,669
(43)
(12)
Members remuneration adjustments
510
(1,223)
Costs not allocated to segments

Net nancial expense
(31)
Total group prot before taxation*
870
Segmental assets (as reported internally)
270
319
143
163
145
1,040
(17)
(34)
Assets not allocated to segments
2,123
Total assets
3,112
* Also before deduction of remuneration for current salaried members.
The information reported internally for each of gross revenue, prots and assets includes data for various entities which are not
controlled by ELLP within the denition of IAS 27 Consolidated and Separate Financial Statements. Additionally, for entities
whose functional currency is not the euro, a xed exchange rate from their local currency to euro is set at the beginning of each
nancial year and this rate is used in reporting actual, budget and prior year data, thus eliminating the impact of exchange rate
movements: this approach does not comply with IAS 21 The Effects of Changes in Foreign Exchange Rates and a foreign
exchange adjustment is required to reconcile to the nancial statements.
In addition, certain other adjustments are made to revenue reported in the nancial statements compared to that reported
internally and certain judgements taken in respect of revenue on incomplete contracts may differ for nancial statements
purposes.
As discussed in note 1, members in certain countries receive remuneration under employment or service contracts whilst
members working within subsidiary partnerships have no contractual right to remuneration until prots are allocated to them.
Internal reporting includes a notional charge for such members, intended to equate to a salary equivalent, together with
members remuneration in other countries.
Costs not allocated to segments represent the costs of central support and infrastructure such as costs relating to property, IT
costs, marketing, training and other general overhead expenses (including depreciation, amortisation and other non-cash items).
These are not directly controllable by the segments and are not allocated to them in the groups internal reporting. Allocation of
such items to the segments would involve subjective assessments and it is not therefore considered appropriate.
28/KPMG Europe LLP

Annual Report 2013
3 Segmental reporting continued

Segmental reporting 2012 (restated) continued
Assets attributed to the segments for internal reporting purposes comprise trade receivables and unbilled amounts for client
work. All other assets, including non-current assets, balances with members and cash are controlled centrally and are not
allocated across segments. There is no internal reporting of liabilities by segment; hence no segmental disclosures are given.
The entities not controlled by ELLP and the xed foreign exchange rates used in 2013, as applied to the 2012 year, both represent
changes to the internal presentation of segmental information compared to that applying in 2012. Comparative gures have been
restated accordingly.
Geographical disclosure
Revenue from external clients and non-current assets (excluding deferred tax assets, retirement benets and other investments)
by geographical area are as set out below. Both revenue and non-current assets relate to entities situated in each country.
Revenue
Geographical area:
2013
m
Non-current assets
2012
m
2013
m
2012
m
United Kingdom
2,118
2,154
517
549
Germany
1,297
1,247
70
79
456
476
46
50
1,265
1,230
124
151
(132)
(110)
(49)
(50)
5,004
4,997
708
779
Netherlands
Other countries
Intercountry eliminations
The groups results for nancial statement purposes include twelve months results for KPMG member rms in UK, Germany,
Switzerland, Spain, Luxembourg, CIS, Belgium (advisory only), Netherlands (audit and advisory only), Norway and Saudi Arabia.
Major clients
The group has no reliance on any one client no more than 2.4% (2012: 1.7%) of group net sales is attributable to the largest client.
4 Other operating income
Included in other operating income are the following items:
2013
m
2012
m
Charges to other KPMG International member rms
73
61
Support cost charges to non-group KPMG entities within ELLP countries
21
19
Rental income
11
12
Other items
65
68
170
160
5 Members and staff

The average numbers of members (being those who are members of the partnership) and staff of the group during the year
were as follows:
2013
Members
Staff
2012
1,354
1,437
30,838
30,844
32,192
32,281
Included above are 33 members (2012: 34 members) who are members of the partnership, but primarily work for entities that are
not consolidated in these nancial statements.
29/KPMG Europe LLP

Annual Report 2013
5 Members and staff continued

The average numbers of members and staff by function were as follows:
2013
2012
12,108
12,149
Tax
5,810
5,800
T&R
2,836
2,980
RC
3,565
3,560
MC
2,994
3,044
Infrastructure
4,879
4,748
32,192
32,281
Audit
Employment costs
The aggregate employment costs of staff were as follows:
2013
m
Restated
2012
m
2,197
2,222
Social security costs
231
233
Cost of retirement benets (note 21)
129
124
Staff costs per income statement
2,557
2,579
Net nancing cost charged to the income statement in respect of dened benet pension plans (note 21)
13
14
Amounts recognised in the statement of comprehensive income in respect of dened benet pension plans
(note 21)
50
127
2,620
2,720
Salaries (including bonuses)
Total staff related costs
6 Members remuneration
Remuneration for current salaried members totalled 446 million for the year (2012: 440 million). These costs include those
costs of members receiving salary and bonuses under contracts of employment or service contracts with subsidiary entities but
exclude amounts in respect of members receiving an allocation of prot of the partnership or subsidiary partnerships.
7 Other operating expenses
Other operating expenses include property and IT costs, marketing, training and other general overhead expenses together with
direct expenses incurred on client engagements. Also included in other operating expenses are impairment losses on trade
receivables of 6 million (2012: 9 million)(see note 16), and impairment losses on goodwill of 6 million (2012: nil) (see note 12).
2013
000
2012
000
Auditors remuneration:
374
334
913
973
Audit related assurance services provided to the group
26
Audit of certain of the group pension plans
54
56
1,367
1,371
Audit of partnership and consolidated nancial statements

Amounts receivable by auditors of the group and their associates in respect of:
Audit of nancial statements of subsidiaries
Amounts receivable by other auditors of the group and their associates in respect of:
Audit of nancial statements of subsidiaries
30/KPMG Europe LLP

Annual Report 2013
286
156
1,653
1,527
7 Other operating expenses continued

In 2013 audit related assurance services were provided in respect of sustainability reporting ,expenses verication work and other
specic assignments requested (2012: expenses verication work and other specic assignments requested).
8
Financial income and expense

2013
m
Restated
2012
m
Interest income on bank deposits
Net change in fair value of nancial assets at fair value through prot or loss
Interest income on available-for-sale nancial assets
12
23
20
(13)
(14)
Discount on provisions (note 20)
(5)
(5)
Interest expense on short-term bank borrowings
(6)
(10)
(12)
(9)
(8)
(13)
(44)
(51)
Recognised in the income statement:
Exchange gains
Other nancial income
Financial income
Net interest on net dened benet pension plan liabilities (note 21)
Exchange losses
Other nancial costs
Financial expense
The total interest income for nancial assets that were not classied as fair value through prot or loss was 3 million (2012: 4
million). The total interest expense on nancial liabilities that were not classied as fair value through prot or loss was 6 million
(2012: 10 million).
9 Business combinations, acquisitions and disposals
The detail set out below provides information required under IFRS 3 Business Combinations for those mergers and acquisitions
occurring during the year ended 30 September 2013 together with summary information in respect of those occurring during the
year ended 30 September 2012. If the 2013 mergers, acquisitions and disposals had each occurred on 1 October 2012,
consolidated revenue and prot for the year would have been 5,016 million and 504 million respectively.
Since the initial merger in 2008, the group has merged with a number of member rms within the KPMG International network so
as to benet from synergies to be obtained in enhanced client service delivery and cost efciency. Specic details regarding
assets and liabilities acquired and consideration paid have been given at the time of each transaction, but certain aspects of the
mergers were consistent in each case:
Unless stated otherwise, the mergers each met the denition of a business combination under IFRS 3 and are therefore
presented as acquisitions by the partnership.
However, the nancial arrangements agreed amongst the members in respect of each merger do not fall easily within the
considerations that IFRS 3 requires to be applied to commercial acquisitions. In particular, although the partnership in most
cases has the power to determine how the prots of each of its subsidiary national rms are to be distributed, members will in
practice continue to be largely remunerated from the prots arising in the country in which they are based. This will be as
salaries or bonuses under their local contracts of employment or service contracts or, in the UK and other countries whose
structure is that of a partnership, as prot shares, with no differentiation made between remuneration for services to the group
and return on capital subscribed.
Shares in entities acquired were exchanged for members capital and, from the date of acquisition, the partners in the entities
acquired therefore became members of the partnership and had an ownership interest in the partnership. The fair values of the
members interests is equal to the amount contributed, as a result of the following attributes:
31/KPMG Europe LLP

Annual Report 2013
Business combinations, acquisitions and disposals continued

The levels of capital take no account of the value of, and in particular the amount of any goodwill inherent in, the member
rm involved and attract no possibility of capital appreciation.
On leaving the rm, members receive no compensation for the value of the rm, or any inherent goodwill, sold at the date
of retirement, nor for any increase in this value or inherent goodwill that might be attributed to their efforts on the rms
behalf; they are rather repaid the same amount originally contributed as capital.
The individuals promoted to member, or joining from outside at that level, are required to contribute a pre-dened sum as
capital at an amount that is the same for all individuals in each group member country.
Call options have been granted over certain shares but are not yet exercisable. However, no value is attributed to these options
as the cost to the group of exercising these options does not change over time, nor does the fair value of the assets of the
entities being acquired, since prots (or losses) generated between the date of the mergers and the date of exercising the
options will accrue to the partners in each country. Hence although the options fall to be treated as derivative instruments, they
have negligible fair value.
Pre-acquisition carrying amounts have been determined from accounts of each acquired entity as at the date of acquisition
under applicable adopted IFRSs, in line with group accounting policy. The values of assets, liabilities and contingent liabilities
recognised on acquisition are their estimated fair values which approximated to their pre-acquisition carrying amounts in nearly
all cases. The following fair value adjustments were considered for each merger:
Intangible assets for the current value of anticipated income streams resulting from customer relationships, framework
contracts and order books. This calculation (in accordance with the accounting policies in note 1) reects charges for the use
of the KPMG brand (assessed against comparable publicly available data for entities in the service industries), for the
workforce and working capital of the entities acquired (net of applicable taxes) and a charge for the services of equity
partners which excludes their estimated return on capital. It assumes an appropriate future average churn rate for customer
relationships, normally of ten years. The resulting cash ows were discounted to current values using an estimated weighted
average cost of capital.
No value is ascribed to the use of the KPMG brand in any country as neither the partnership nor the entity acquired controls
these rights.
Fair value reviews were carried out on liabilities, including contingent liabilities for unrecognised professional negligence
claims, and on assets, including the carrying value of contingent fee assignments.
Where negative goodwill arises, this is normally attributable to undistributed reserves. Positive goodwill is normally attributable
to the skills and knowledge of the workforce and the synergies expected to be achieved from integrating the acquired entity,
which are not assets recognisable under adopted IFRSs.
Mergers
Mergers year ended 30 September 2012
During the year ended 30 September 2012, the group merged with the KPMG member rm in Jordan.
On 8 December 2011, the partnership acquired 100% non exercisable call options over the ownership interests in KPMG AlKawasamy and Partners Co, the entity providing audit, tax and advisory services in Jordan (KPMG Jordan). No consideration was
transferred for the grant of call options. These call options are not exercisable as a result of local regulatory constraints. However,
the partnership is considered to have signicant inuence over the entities under the agreements in place. Hence, these entities
are considered to be associates under IFRS.
Mergers year ended 30 September 2013
There were no mergers during the year ended 30 September 2013.
32/KPMG Europe LLP

Annual Report 2013
9 Business combinations, acquisitions and disposals continued

Acquisitions
Acquisitions year ended 30 September 2012
During the year ended 30 September 2012, the group made three acquisitions. Summary details of those acquisitions are as
follows:
Xantus Limited: the group acquired 100% of the shares in Xantus Limited, a UK-based rm that provides independent CIO
advisory services to FTSE-100 and large public sector clients, for a consideration of 14 million. Intangible assets of 8 million
relating to customer relationships and goodwill of 2 million were recognised in accounting for this acquisition.
Rokade AS: the group acquired 100% of the shares in Rokade AS, a consultancy company in Norway specialising in M&A and
business integration/turnarounds, for consideration of 1 million. Goodwill of 1 million was recognised in accounting for this
acquisition.
BrainNet AG: the group acquired 100% of the shares in BrainNet AG, a Swiss based group providing consultancy services in
supply chain management, for consideration of 23 million of which 10 million is deferred, payable in 2014. Intangible assets
of 5 million relating to customer relationships and goodwill of 10 million were recognised in accounting for this acquisition.
During the period since the acquisition of BrainNet, further information was obtained relating to the assets and liabilities
acquired. This resulted in a reduction of the goodwill, from 10 million provisionally recognised in June 2012, to 6 million (see
note 12).
Acquisitions - year ended 30 September 2013
During the year ended 30 September 2013, the group continued with its strategy of acquiring third party entities, where the
activity and client base of those entities were such that the group could expect to benet from synergies to be obtained in
enhanced client service delivery and cost efciency. The group made the following acquisitions during the year, as set out below.
a) UK
On 30 June 2013, the group acquired 100% of the shares in Makinson Cowell Limited, a UK-based group providing capital
markets advice to European and American companies, for consideration of 12.3 million.
Revenue and loss after taxation of 2.4 million and 0.4 million respectively for the period from acquisition to 30 September 2013
are included within these consolidated nancial statements in respect of these entities.
b) The Netherlands
On 1 February 2013, the group acquired the Financial Transformation practice of ConQuaestor Beheer B.V. for consideration of
1.1 million.
On 1 April 2013, the group acquired 100% of the shares in Bridging Solutions B.V., a consultancy company in the Netherlands
focusing on Oracle software advisory, for consideration of 1.4 million.
Revenue and prot after taxation of 3.3 million and 0.9 million respectively for the period from acquisition to 30 September
2013 are included within these consolidated nancial statements in respect of these entities.
c) Germany
On 15 October 2012, the group acquired 100% of the shares in Dr. Geke & Associates GmbH, a German based company
specialising in HR consulting, for consideration of 2.2 million.
On 28 December 2012, the group acquired the Sales and Marketing practice of Tell Sell Consulting GmbH, a German based rm,
for consideration of 1.6 million.
In both cases, immediately following acquisition, internal mergers were such that the business of the acquired entities was not
separately identiable and therefore neither revenue nor prot after taxation for the period from acquisition to 30 September 2013
is separately disclosed.
d) Norway
On 1 January 2013, the group acquired 100% of KPMG Accounting AS, a Norwegian accounting rm, for consideration of 1.0
million.
Revenue and prot after taxation of 2.1 million and 0.02 million respectively for the period from acquisition to 30 September
2013 are included within these consolidated nancial statements in respect of these entities.
33/KPMG Europe LLP
Annual Report 2013

Acquisitions continued
These acquisitions had the following impact on the groups assets and liabilities at the date of the acquisitions:
Recognised at date of acquisition
Netherlands
Germany
Norway
m
m
m
Note
UK
m
12
(5)
(5)
Deferred tax liabilities
(1)
(1)
12
12
20
Intangible assets
Net identiable assets, liabilities and contingent

liabilities
Goodwill on acquisition
12
Consideration, being cash paid
Total
m
Amounts acquired in respect of trade receivables are net of impairment provisions of nil million for those receivables that were
expected to be uncollectable at the acquisition date. In all cases, the fair values disclosed above approximate the contractual
amounts receivable, due to their short maturity.
Goodwill is attributable to the skills and knowledge of the workforce and the synergies expected to be achieved from integrating
the acquired entities, which are not assets recognisable under IFRSs.
Disposals
Disposals year ended 30 September 2012
There were no disposals during the year ended 30 September 2012.
Disposals year ended 30 September 2013
As a result of the change in focus towards KPMG in the Europe, Middle East and Africa (EMA) region, the nature of the underlying
agreement between ELLP and KPMG Norway changed on 30 September 2013. KPMG Norway took the opportunity to exercise
its option under the original merger agreement to exit the ELLP group. A new ownership structure was put in place, giving ELLP
a majority voting right through share ownership. Whilst the new agreement continues to give ELLP inuence over operational and
nancial policies within KPMG Norway, it did not allow ELLP to obtain benet from the activities of KPMG Norway. Hence, the
relationship between ELLP and KPMG Norway is assessed to have changed from subsidiary to associate on 30 September 2013.
Subsequently, in April 2014, this agreement was terminated and ELLP transferred the remaining share back to local members for
nil consideration.
Accordingly, this transaction is considered to be a disposal under IFRS 3 and the net assets of KPMG Norway have been
deconsolidated at 30 September 2013. The income statement includes consolidated results of KPMG Norway for the full year
ending 30 September 2013, including revenue of 144 million.
As with each merger, the terms of disposal are such that the assets and liabilities of the merged rm are returned to the local
partners for the equivalent consideration to that paid by ELLP originally. Hence, Norwegian partners paid 48,000 for return of the
assets and liabilities of KPMG Norway in exchange for which, ELLP repaid members capital totalling 44,000 to the Norwegian
partners. No consideration was payable for the new class of share taken by ELLP on 30 September 2013.
34/KPMG Europe LLP

Annual Report 2013

Disposals continued
This disposal had the following impact on the groups assets and liabilities at the date of the disposal:
Note
Derecognised at
date of disposal
Total
m
Property, plant & equipment
11
Intangible assets
12
10
31
2
(49)
(2)
Deferred tax liabilities

Net identiable assets, liabilities and contingent liabilities
Consideration received
Decit on disposal
1
12
Goodwill capitalised on original merger
Foreign exchange translation recycled
Total decit on disposal
The total decit on disposal of 3 million is charged directly within equity, since it arises as a result of a disposal to members, and
therefore, represents a transaction with owners.
10
Tax expense
Group companies are subject to a variety of income taxes based on their taxable prots at rates between 20% and 34%.
Subsidiary partnerships, however, are not subject to taxation; rather their members are subject to personal income tax, mainly in
the UK, which is a personal liability of the members individually.
The tax expense recognised in the income statement is analysed as follows:
2013
m
Restated
2012
m
Current year
33
26
Adjustment in respect of prior years
(1)
Deferred tax credit (note 14)
(8)
(11)
24
21
(12)
(14)
12
Current tax expense
Compensation payment to be received from members of KPMG LLP

Total tax expense in income statement
Corporation tax charges in the group arise largely as a result of the impact of UK transfer pricing legislation. The compensation
payment is a payment made by the members of KPMG LLP in order to compensate the UK subsidiaries for this increased
corporation tax charge.
35/KPMG Europe LLP

Annual Report 2013
10 Tax expense continued

The group is required under IAS 12 Income taxes to present the following tax reconciliation in respect of group prots:
2013
m
Restated
2012
m
518
430
(468)
(380)
Prot before taxation arising in group companies
50
50
Tax at 25.6% (2012: 26.5%) being the average rate of corporate taxes levied on the prots of group
companies
13
13
UK corporation tax arising on UK transfer pricing arrangements
12
14
Impact of tax exempt items, including differences between prots under adopted IFRSs and prots under
local tax legislation, net of relevant deferred tax
(1)
(6)
Prot before taxation, less remuneration for current salaried members

Less prot arising in partnerships, on which tax is payable by the members personally
Taxes payable by subsidiary undertakings

Compensation payment to be received from members of KPMG LLP
Total tax expense in income statement
24
21
(12)
(14)
12
2013
m
Restated
2012
m
(25)
(29)
(25)
(29)
The tax credit recognised in the statement of comprehensive income is as follows:
Actuarial gains and losses on dened benet pension plans
Included in non-current assets is tax receivable of 13 million (2012: 16 million) which represents the current value of tax refunds
in Germany, receivable over four years.
36/KPMG Europe LLP

Annual Report 2013
11 Property, plant and equipment

Computer and
Leasehold land communications
and buildings
equipment
m
m
Ofce furniture,
ttings and
equipment
m
Motor vehicles
m
Total
m
Cost
312
99
273
16
700
Additions
26
44
74
Disposals
(21)
(28)
(6)
(55)
27
18
53
339
111
307
15
772
Additions
38
17
59
Disposals
(23)
(24)
(3)
(50)
Disposal of subsidiary
(14)
(14)
Exchange movements
Exchange movements
(16)
(4)
(17)
(1)
(38)
323
122
269
15
729
54
63
130
Depreciation and impairment

Charge for the year
24
43
76
Disposals
(18)
(22)
(4)
(44)
Exchange movements
10
65
88
172
Charge for the year
28
40
77
Disposals
(21)
(22)
(3)
(46)
(5)
(5)
Exchange movements
(1)
(4)
(7)
(12)
18
68
94
186
At 1 October 2011
306
45
210
570
At 30 September 2012
326
46
219
600
305
54
175
543
13
Net book value
The leasehold land and buildings at 30 September 2013 relate entirely to the groups leasehold premises at 15 Canada Square,
London. The leasehold interests, including land, at Canada Square falls to be classied as a nance lease, since it has a term of
999 years and so represents the majority of the useful economic life of the asset. This lease is pledged as security for
therevolving credit facility (see note 23c). The net book value of assets owned under a nance lease was 305 million
(2012:326 million).
37/KPMG Europe LLP

Annual Report 2013
12 Intangible assets
Goodwill
m
Customer
relationships
and similar
items
m
Internally
generated
software
m
Purchased
software and
licences
m
Total
m
Cost
19
44
107
177
Acquisition of subsidiaries
13
13
26
Additions
10
Disposals
(4)
(1)
(5)
32
57
116
214
Acquisition of subsidiaries
12
19
Disposal of subsidiaries
(3)
(10)
(13)
Additions
14
20
Disposals
(5)
(1)
(6)
Exchange movements
(4)
(4)
41
54
121
14
230
35
45
Amortisation charge for the year
17
25
Disposals
(4)
(1)
(5)
Exchange movements
Amortisation and impairment losses
Exchange movements
12
52
70
Disposal of subsidiaries
(2)
(2)
Amortisation charge for the year
16
28
Impairment loss for the year
Disposals
(5)
(5)
Exchange movements
(3)
(3)
19
60
94
At 1 October 2011
19
39
72
132
32
45
64
144
35
35
61
136
Net book value
38/KPMG Europe LLP

Annual Report 2013
12 Intangible assets continued

Internally generated software mainly comprises components of the SAP-based ERP system, which have remaining amortisation
periods of three to six years (2012: four to seven years).
Goodwill and customer relationships at 1 October 2011 represented balances arising on the merger with certain entities of the
KPMG member rms in Belgium and Norway, together with amounts arising on third party acquisitions. As set out in note 9,
goodwill and customer relationships arising in the year ended 30 September 2012 relate entirely to third party acquisitions,
including the acquisition of BrainNet AG. The goodwill of 10 million arising on BrainNet was subsequently adjusted following
further review of the underlying assets acquired, resulting in an impairment loss of 4 million. This was charged to the income
statement within Other operatingexpenses.
Further goodwill and customer relationship amounts have been recognised in the year ended 30 September 2013, relating to third
party acquisitions as set out in note 9. These amounts included 2 million goodwill on Dr Geke & Associates GmbH which was
subsequently subject to impairment loss. This charge was similarly expensed within the income statement, within Other
operating expenses.
The recoverable amount of the goodwill has been determined using the value in use basis; the recoverable amount is based on
the anticipated prots to be generated by the relevant cash generating unit (assessed individually for each acquisition), assuming
growth rates reecting past experience but adjusted to reect current market conditions. Other than the impairment losses on
BrainNet and Dr Geke & Associates GmbH set out above, no further goodwill impairment arises.
As set out in note 9, the loss of control of KPMG Norway has resulted in deconsolidation of the assets and liabilities, including
11million net book value of intangible assets, as shown above, representing 8 million of customer relationships and similar
items and 1 million of goodwill arising on original merger in the year ended 30 September 2011 and 2 million of goodwill arising
on subsequent acquisitions in Norway.
13 Other investments
The net book value of investments held by the group were as follows:
Other investments
2013
m
2012
m
11
10
11
10
Other investments represent the groups investment in non-consolidated entities, including associates of the group. At 30
September 2013, the groups investments and share of net assets of associates totalled 6.4 million (2012: 4.1 million).
Summary nancial information in respect of the associated undertakings is set out in note 27.
39/KPMG Europe LLP

Annual Report 2013
14
Deferred taxes
Recognised deferred tax assets and liabilities relating to the following assets and liabilities were:
Assets
2013
m
Liabilities
2013
m
Restated
Assets
2012
m
Liabilities
2012
m
Assets
Non-current assets
Intangible assets
(7)
(11)
(1)
(1)
Other non-current assets
(5)
(4)
Trade receivables
(11)
(11)
Receivables for unbilled services
(19)
(19)
117
89
(2)
(1)
(3)
(3)
22
(8)
16
(6)
(38)
38
(29)
29
Current assets
Liabilities
Pensions and similar obligations
Other provisions
Current liabilities
Other provisions
Other liabilities
Offsetting
Offset of tax losses available to be carried forward
Balance at 30 September
112
(18)
87
(27)
Deferred tax assets have not been recognised in respect of tax losses totalling 7 million (2012: 7 million) given the uncertainty
of generating future prots against which to allocate these losses in the legal entities concerned.
40/KPMG Europe LLP

Annual Report 2013
14 Deferred taxes continued

Movements during the year were:
Opening
balance
m
Acquired/
disposed
during the
year
m
Deferred tax
credit/
(expense)
m
Credit/
recognised
in equity
m
Closing
balance
m
Assets
Non-current assets
(10)
(6)
(1)
(1)
Other non-current assets
(3)
(2)
(5)
Intangible assets
Current assets
Trade receivables
(11)
(11)
Receivables for unbilled services
(19)
(19)
Liabilities
89
25
117
(1)
Other provisions
(2)
(2)
Other liabilities
10
14
60
25
94
2013
m
2012
m
Pensions and similar obligations

Other provisions
Current liabilities
Offset of tax losses available to be carried forward

Total
15 Non-current loans and receivables
Loans
Other non-current receivables
14
18
16
19
2013
m
2012
m
16 Trade and other receivables
Trade receivables
921
962
527
486
84
79
Other prepayments
Other receivables
51
72
Amounts due from other KPMG International member rms
49
48
1,632
1,647
Trade and other receivables are due within 12 months.
41/KPMG Europe LLP

Annual Report 2013
16 Trade and other receivables continued

Group trade receivables are shown net of impairment losses amounting to 33 million (2012: 34 million); the movement for the year
is recognised in Other operating expenses. An aged analysis of overdue trade receivables and the movement in the allowance for
impairment in respect of trade receivables are given below.
Impairment losses
The ageing of receivables that were overdue at the reporting date was:
Gross
2013
m
Impairment
2013
m
Gross
2012
m
Impairment
2012
m
Trade receivables
Overdue 1-30 days
146
162
Overdue 31-180 days
155
175
More than 180 days
47
31
44
29
348
33
381
34
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
2013
m
2012
m
34
30
Impairment losses reversed
(6)
(4)
Exchange difference
(1)
(1)
33
34
2013
m
2012
m
Balance at 1 October
Impairment loss recognised through the income statement
17 Other investments
Bonds
Fair value through prot & loss
42
61
Equities
18
16
Derivative nancial assets
61
78
2013
m
2012
m
18 Cash and cash equivalents
Short-term deposits
Bank balances
42/KPMG Europe LLP

Annual Report 2013
234
162
129
165
363
327
19 Trade and other payables

2013
m
2012
m
Accruals
642
615
Amounts billed on account
327
269
Other taxes and social security
148
156
Other payables
86
120
Trade payables
47
43
Amounts due to other KPMG International member rms
26
28
1,276
1,231
Other
m
Restated
Total
m
Included in accruals are amounts payable to staff in respect of bonuses.

20 Provisions
Annuities
m
Restated
Obligations to
employees
Property
(other than
provisions
pensions)
m
m
68
27
36
67
198
Utilised during the year
(5)
(4)
(9)
(10)
(28)
10
31
54
- Provisions released during the year
(5)
(5)
- Unwinding of discounted amounts
Exchange differences
(3)
(1)
(1)
(5)
72
28
37
82
219
Non-current
67
24
29
43
163
39
56
72
28
37
82
219
Income statement:
- Provisions made during the year
Current
The provision for former members annuities reects conditional commitments to pay annuities to certain former members (and
dependants) of KPMG LLP or its predecessor partnership, and is recorded gross of basic rate tax (see note 1).
The provision for former members annuities is expected to be utilised as follows:
2013
m
2012
m
Between one and ve years
16
16
Between ve and fteen years
28
27
In more than fteen years
23
20
72
68
Within 12 months of the year end
43/KPMG Europe LLP

Annual Report 2013
20 Provisions continued
The principal actuarial assumptions used in assessing the provision for former members annuities are that increases in annuities
payable will continue to follow the retail prices index as this is the specic obligation set out in the underlying commitment and
that, after application of mortality rates, the resulting amounts are discounted at the rates set out below:
2013
%
2012
%
Discount rate
4.30
4.40
Ination rate (retail price index)
3.45
2.80
The mortality tables used for the former members annuities provision at both 30 September 2013 and 2012 were consistent with
those applied in respect of the UK dened benet pension plans (see note 21).
The assumed discount rate and ination rate both have a signicant effect on the provisions. The following table shows the
sensitivity of the value of the member annuities to changes in these assumptions.
Assumption
Change in assumption
Impact on annuity provision increase/(decrease)

m
%
Discount rate
Increase by 0.25%
(2)
(3)
Ination rate (retail price index)
Increase by 0.25%
Property provisions represent the cost of ofce space which is not currently used by the group or will become redundant as a
result of steps to which the group is committed and dilapidation costs anticipated on exiting those properties. Provision is made
for the net obligation under such leases: property provisions of 4 million (2012: 3 million) will be utilised within 12 months and
the balance is expected mainly to be utilised within the next ve years.
Obligations to employees mainly comprise obligations arising in Germany from part-time early retirement working arrangements.
Provisions of 8 million will be utilised within 12 months and the balance between one and ve years. These provisions are valued
under IAS 19 Revised, at rates consistent with those applied in respect of the German dened benet pension plans (see note
21). As set out in note 1, following the adoption of IAS 19 Revised, the opening balance of provision for obligation to employees
was restated, reducing by 14 million.
Other provisions represent provisions for partner disability costs and for negligence claims brought against the group by third
parties. Where appropriate, provision is made for the uninsured cost (including related legal costs) to the group of settling
negligence claims. Separate disclosure is not made of insured costs and related recoveries on the grounds that such disclosure
would be seriously prejudicial to the commercial interests of the group. These provisions are expected mainly to be utilised within
ve years.
21 Retirement benets
The cost of retirement benets included within staff costs for the year was:
2013
m
2012
m
Contributions to dened contribution schemes
94
94
Current service cost for dened benet pension plans
35
30
129
124
Cost of retirement benets
The net nancing cost of 13 million (2012: 14 million) and remeasurement losses of 50 million (2012: 127 million) relating to
dened benet pension plans are also considered to be a part of the net cost of retirement benets.
44/KPMG Europe LLP

Annual Report 2013
21 Retirement benets continued

The closing net assets and liabilities in respect of retirement benets were as follows:
2013
m
Assets
2013
m
2012
m
Restated
liabilities
2012
m
12
11
UK dened benet plans
(165)
(187)
German dened benet plan
(177)
(127)
Other dened benet plans
(2)
14
13
(342)
(316)
Capitalised value of reinsurance policies

Capitalised value of risk insurance policies
The capitalised value of pension-related risk insurance policies relates to claims against an insurance company which provides
cover under certain risk insurance policies for certain employees. On the death of an employee before reaching pensionable age,
KPMG AG is obliged to pay pre-dened lump sums to surviving dependants. The insurance company reimburses KPMG AG for all
such payments made. The reimbursable amounts are recognised as an asset at the level of the corresponding liability which is
reected in the dened benet obligation below.
Dened Contribution Plans
The group has two dened contribution pension plans operating in the UK: the stakeholder pension plan; and the KPMG Staff
Pension Fund - post-April 2000 fund, which is closed to new entrants. The charge for the year for these plans represents those
contributions payable to them in respect of the accounting period.
The group also has a dened contribution plan operating in the Netherlands, open to all employees, and a dened contribution
plan operating in Norway, open to all employees born after 1951 and/or employed by KPMG from March 2003. The charges for
the year for both plans represent those contributions payable in respect of the accounting period.
Employers contributions paid in Germany under state social security legislation are made to separate legal entities which manage
such contributions and payments to current and future pensioners. Because KPMG AG has no future obligation to make good any
shortfalls in the funding of these entities beyond these xed contributions, these payments meet the denition in IAS 19 of
contributions to a dened contribution pension plan and so fall to be disclosed above.
In Belgium, contributions are paid by each KPMG entity to insured pension schemes under terms that permit these schemes also
to be treated as dened contribution plans.
Group entities in other ELLP member countries do not operate any pension plans.
The assets of the groups dened contribution plans are held by independent trustees. No contributions to the dened
contribution pension plans were outstanding at the end of either nancial year.
Dened Benet Plans
The group has several dened benet pension plans. For disclosure purposes, these are grouped by geography, according to size
of underlying asset and obligations.
In accordance with UK trust and pensions law, German labour law, Swiss LPP/BVG law, the pension plans have appointed
Trustees who are independent of the group. The Trustees of the pension plans are required by law to act in the best interests of
the plans participants and are responsible for setting certain policies (including investment, contribution and indexation policies)
of the plans. The assets of the UK pension plans are held separately from those of the group, administered by AON Trust
Corporation Limited as independent trustee. Non-current assets of the German pension plan have been transferred to KPMG
Pension Trust e.V and KPMG Partner und Mitabeiter Vermgensverein e.V. The assets of the other dened benet plans are held
within independent pension foundations.
45/KPMG Europe LLP

Annual Report 2013

Dened Benet Plans continued
The Trustees invest the assets of the plans with the aim of ensuring that all members accrued benets can be paid. The Trustees
of the plans make all major strategic decisions including, but not limited to, the plans asset allocation and the appointment and
termination of fund managers. When making such decisions, and when appropriate, the Trustees take proper written advice. The
Trustees in each country determine the most appropriate structure (for instance, separate Investment Committee) to monitor the
operation of the plans investment strategy, make day-to-day decisions as necessary for the smooth running of the plans, and
make recommendations to the Trustees on overall strategy. These structures have been established in order to ensure that
decisions are taken by those who have the appropriate training and expertise.
Dened benet pension plans in the UK
There are two dened benet pension plans in the UK. The UK partnership is sponsoring employer for both plans. Both pension
plans are HM Revenue & Customs registered pension plans and subject to standard UK pensions and tax law. This means that the
payment of contributions and benets are subject to the appropriate tax treatments and restrictions and the plans are subject to
the scheme funding requirements outlined in section 224 of the Pensions Act 2004.
The KPMG Staff Pension Fund pre-April 2000 fund
The KPMG Staff Pension Fund pre-April 2000 fund (the pre-2000 fund) provides benets based on members average salary. It
was closed to new entrants and ceased future service accrual on 1 April 2000. The weighted average duration of the dened
benet obligation for the pre-2000 fund is approximately 17 years.
The most recent full triennial actuarial valuation of the pre-2000 fund was undertaken by Punter Southall Limited, the scheme
actuary, as at 31 March 2011 using the projected unit method. This valuation resulted in the actuarially assessed funding decit of
54 million. The Trustees of the pre-2000 fund and the group agreed a decit recovery plan of payments of 7 million per year
from 1 April 2012 until 30 April 2019 in order to address this decit.
In addition, expenses and administrative costs (including levies paid to the Pension Protection Fund and other bodies) are payable
directly by the group.
The KMG Thomson McLintock Pension Scheme
The KMG Thomson McLintock Pension Scheme (the TMcL plan) is a dened benet plan, closed to new entrants, providing
benets based on nal pensionable pay. The plan is contributory for members and the groups contributions are the balance of the
cost of providing the benets. The weighted average duration of the dened benet obligation for the TMcL plan is approximately
16 years.
The most recent full triennial actuarial valuation of the TMcL plan was undertaken by Punter Southall Limited, the scheme actuary,
as at 31 March 2011 using the projected unit method with a 3 year control period. This valuation resulted in an actuarially assessed
decit of 11 million. The Trustees of the TMcL plan and the group agreed an employer contribution rate in respect of future
service of 29.8% of pensionable salaries and past service decit recovery payments of 1 million per year from 1 July 2012 until
31 March 2020.
In addition, expenses and administrative costs (including levies paid to the Pension Protection Fund and other bodies) are payable
directly by the group.
Dened benet pension plan in Germany
A dened benet pension plan is operated in Germany covering employees in substantially all the German entities. The plan,
which is closed to new entrants, provides benets based on nal pensionable pay and is non-contributory for members. No
pre-dened amounts are set for the groups contributions.
The weighted average duration of the dened benet obligation for the pension plan is approximately 16 years.
There is no legal requirement under German law to perform triennial actuarial valuations of the pension plan and nor does a
contractual obligation exist to make contributions into the fund. For the purposes of nancial reporting, an actuarial valuation is
performed on an annual basis.
Expenses and administrative costs are payable directly by the group.
46/KPMG Europe LLP

Annual Report 2013

Other dened benet pension plans
A pension plan is operated in Switzerland which falls to be treated as a dened benet pension plan. The plan provides for either a
lump sum payment on retirement or a pension, computed after taking account of the Swiss state social security pension. Although
the pension provided is a predetermined percentage of the accumulated fund for each member of the plan and the contributions of
both employee and employer are pre-dened (varying with seniority within the rm, age and the class of membership), the group is
liable for the cost of intervening interest and accordingly the plan ranks as a dened benet plan under IAS 19.
The weighted average duration of the dened benet obligation for the pension plan is approximately 19 years.
There is no legal requirement under Swiss law to perform triennial actuarial valuations of the pension plan. For the purposes of
nancial reporting, an actuarial valuation is performed on an annual basis. The most recent actuarial valuation of the pension plan
was undertaken by Mercer Switzerland (SA), the scheme actuary, as at 30 September 2013 using the projected unit method. This
valuation resulted in the actuarially assessed funding surplus of 13 million. As the plan is in surplus, a decit recovery plan of
payments is not required.
Expenses and administrative costs are payable directly by the group.
Dened benet pension plans valuation and disclosure
Valuations of the dened benet pension plans have been provided on an IAS 19 Revised basis as at 30 September 2013 and
2012 by KPMGs professionally qualied in-house actuaries in the UK and by independent external actuaries in Germany and
Switzerland.
The group has determined that, in accordance with the terms and conditions of the dened benet plans, and in accordance with
statutory requirements (such as minimum funding requirements) of the plans, the present value of the refunds or reductions in
future contributions is not lower than the balance of the total fair value of the plan assets plus the present value of the required
decit recovery contributions under the minimum funding requirement less the total present value of obligations. This
determination is made on a plan-by-plan basis. As such, no increase in the dened benet obligation is required at 30 September
2013 (2012: nil).
Risks
The pension plans expose the group to several key risks, the most signicant of which are detailed below:
Investment risk the pension plans invest a proportion of assets in return-seeking assets. There is a risk that the higher returns
targeted through such a strategy are not achieved in practice, therefore increasing the decit and potentially requiring further
contributions from the group at the next funding valuations. There is also a risk that the investment strategy does not match the
cashows and liabilities of the scheme, or the risk of not being able to reinvest the assets at the assumed rates. These risks are
managed by investing in assets which are expected to perform in excess of the liabilities over the long term, and also by investing
in a suitably diversied portfolio of assets with the aim of minimising (as far as possible) volatility relative to the liabilities. The
Trustees of the plans review the investment strategy on a regular basis to minimise these risks.
Yield risk a fall in government bond yields will lead to an increase in both the assets and liabilities of the plans, although this is
likely to have a greater impact on the liabilities. Therefore a fall in government bond yields would be expected to increase the
funding decit in the plans, potentially, if relevant, requiring further contributions from the group at the next funding valuations.
Mortality risk the assumptions adopted by the group make allowance for future improvements in life expectancy. However, if life
expectancy improves at a faster rate than assumed, this would result in greater payments from the plans and consequently
increases in the liabilities. The group and Trustees of each plan review the mortality assumptions on a regular basis to minimise
the risk of using an inappropriate assumption.
Other matters
The next full actuarial valuations is to be prepared at 31 March 2014 for the UK plans. There is no requirement under German or
Swiss law for a full actuarial valuation. Subject to arrangements to be made with the Trustees of the plans, the group expects to
contribute approximately 68 million (2012: 58 million) to its dened benet pension plans in the next nancial year. Apart from
the equivalent contributions, there were no other transactions between the group and the pension plans during either year. No
contributions were outstanding in respect of any plan at the end of either nancial year.
47/KPMG Europe LLP

Annual Report 2013

Other matters continued
Because taxation in the partnership is a personal liability of the individual members, no deferred tax on the UK pension plans
balances falls to be recorded in the group nancial statements. However, deferred tax assets of 117 million in respect of the
German plans obligations (2012: 89 million) and nil million in respect of the other plans (2012: nil million) are reected in the
group nancial statements, as shown in note 14.
The fair values of the plans assets, which are not intended to be realised in the short term and may be subject to signicant
change before they are realised, and the present value of the plans liabilities, which are derived from cash ow projections over
long periods and thus are inherently uncertain, were:
Plans and liabilities
UK plans
2013
m
German plans
Restated
2012
m
2013
m
Other plans
Restated
2012
m
2013
m
Restated
2012
m
Quoted in an active market

Equities
World developed
319
287
62
23
121
104
Emerging markets
37
40
18
17
122
127
87
202
18
24
68
70
234
26
31
118
137
28
23
Fund of hedge funds
66
67
Global macro fund
32
33
Distressed debt fund
19
15
Property
70
66
Insurance linked securities
13
193
319
26
15
Capitalised value of reinsurance policies
75
74
692
663
654
618
410
394
Present value of funded dened benet obligations
(857)
(850)
(831)
(745)
(397)
(386)
Present value of net obligation
(165)
(187)
(177)
(127)
13
(13)
(10)
(165)
(187)
(177)
(127)
(2)
Bonds
Domestic Corporate
Domestic Government, Index-linked
Global bonds
Other
Active currency fund
Not quoted in an active market
Fair value of plans assets
Actuarial gains not recognised due to impact of

asset ceiling
Net liability in the statement of nancial position
48/KPMG Europe LLP

Annual Report 2013

The plans assets do not include any of the groups own transferable nancial instruments, property occupied by, or other assets
used by the group.
Movements in the present value of the funded dened benet obligations for the plans were as follows:
UK plans
2013
m
German plans
Restated
2012
m
2013
m
Other plans
Restated
2012
m
2013
m
Restated
2012
m
(850)
(705)
(745)
(609)
(386)
(363)
(1)
(1)
(15)
(11)
(19)
(18)
(35)
(36)
(30)
(30)
(8)
(9)
(11)
(5)
(33)
(57)
(74)
(125)
(2)
(12)
Actuarial loss arising from experience on the plans

liabilities
(6)
(1)
(15)
(3)
Benets paid
25
25
33
31
31
31
(12)
(13)
Exchange movements
40
(65)
(4)
12
(857)
(850)
(831)
(745)
(397)
(386)
(23)
(21)
337
305
287
270
Of which: amounts owing to deferred members
(609)
(604)
110
85
Of which: amounts owing to pensioner members
(225)
(225)
384
355
110
116
Current service cost
Interest on obligations
Actuarial gain/(loss) arising from changes in demographic
assumptions
Actuarial loss arising from changes in nancial
assumptions
Employee contributions
Of which: amounts owing to active members
Movements in present value of obligations

During the reporting period there have been no plan amendments, curtailments or settlements.
Movements in the fair value of the plans assets were as follows:
Movements in fair value of assets
UK plans
2013
m
German plans
Restated
2012
m
2013
m
Other plans
Restated
2012
m
2013
m
Restated
2012
m
663
552
618
599
394
351
Interest income
27
28
25
24
Return on plan assets excluding interest income
48
48
12
25
30
(25)
(25)
(31)
(30)
(31)
(31)
10
30
16
18
19
12
13
Exchange movements
(31)
51
(4)
(12)
692
663
654
618
410
394
Benets paid
Contributions by employers
Employee contributions
49/KPMG Europe LLP

Annual Report 2013

The amounts recognised in the consolidated income statement in respect of the dened benet schemes are as follows:
Components of pension expense in the consolidated income statement
2013
m
Restated
2012
m
Staff costs:
- Current service cost
35
30
13
14
Finance expense:
- Net interest on net dened benet obligations
Remeasurements recognised in the consolidated statement of comprehensive income:

UK plans
2013
m
German plans
Restated
2012
m
2013
m
Other plans
Restated
2012
m
2013
m
Restated
2012
m
(11)
(5)
(33)
(57)
(74)
(125)
(2)
(12)
Actuarial loss arising from experience on the plans

liabilities
(6)
(1)
(15)
(3)
Return on plans assets, excluding interest income
48
48
12
25
30
(10)
12
(20)
(62)
(117)
10
Actuarial gains/(loss) arising from changes in demographic

assumptions
Actuarial loss arising from changes in nancial
assumptions
Actuarial gains not recognised due to impact of asset

ceiling
Total remeasurements recognised in the statement
of comprehensive income
Actuarial gains and losses arise as a result of a change in assumptions or represent experience adjustments. Actuarial gains and
losses are recognised in the consolidated statement of comprehensive income in the period in which they occur.
Assumptions
Under IAS 19 Revised measurement of scheme liabilities must be calculated under the projected unit method, which required
certain demographic and nancial assumptions. The assumptions used are applied for the purposes of IAS 19 Revised only.
The signicant nancial and other assumptions used to calculate the liabilities over the life of the plans on an IAS 19 Revised were:
UK plans
2013
%
German plans
2012
%
2013
%
Other plans
2012
%
2013
%
2012
%
Discount rate
4.30
4.40
3.40
4.00
2.29
2.10
Future salary increases*
4.45
3.80
3.00
3.00
1.00
1.00
Increase in pensions in payment** (RPI linked)
3.25
2.75
2.00
2.00
Increase for deferred pensioners (CPI)*
2.45
1.80
* Not relevant for the UK pre-2000 fund or other plans.
** For the UK, this relates to post-April 1997 service only there are no increases in pensions in payment for pre-April 1997 service.
50/KPMG Europe LLP

Annual Report 2013
Actuarial assumptions
Assumptions continued
All plans have been valued using mortality assumptions which retain prudent allowance for future improvement in longevity. The
mortality tables used for the UK plans at 30 September 2013 were SAPS Light tables with CMI 2013 projections projected by year
of birth for both current and future pensioners, with an allowance made for future improvements via the medium cohort effect
and a mortality improvement oor (1.25% for males, 1.00% for females) (2012: SAPS Light tables with CMI 2011 projections,
1.25%/1% long term trend rates).
The German plans have been valued using R2005G mortality tables at both 30 September 2013 and 30 September 2012. The
other plans have been valued using BVG 2010 generational mortality tables (Switzerland) at 30 September 2013 and 30
September 2012.
These tables lead to life expectancies for pensioners as follows:
2013
Years
2012
Years
Retiring today at age 60
Males
21-29
21-29
Females
24-30
24-30
Males
23-30
23-30
Females
26-31
26-31
Retiring in 15 years now aged 40
Sensitivity analysis
The principal actuarial assumptions all have a signicant effect on the valuation of the dened benet obligations. The following
table shows the sensitivity of the value of the plans liabilities to changes in these assumptions.
Assumption
Change in assumption
Impact on scheme liability

increase/(decrease)
UK
plans
m
German
plans
m
Other
plans
m
Discount rate
Increase by 0.25%
(33)
(25)
(11)
Future salary increases
Increase by 0.25%
Increase of pensions in payment (RPI linked)
Increase by 0.25%
24
Increase for deferred pensioners (CPI)*
Increase by 0.25%
Life expectancy
Increase by 1 year
19
30
* Applies to UK only.
These sensitivities are based on a change in one assumption while holding all other assumptions constant, so that
interdependencies between the assumptions are excluded. The methodology applied is consistent to that used to determine the
recognised pension liability.
51/KPMG Europe LLP

Annual Report 2013
22 Equity, members capital and other interests

a) Equity
Equity includes members other reserves comprising certain amounts retained from prots arising in previous years pending their
allocation to members. Also included in members other reserves are remeasurement gains and losses arising on the dened
benet pension plans (see note 21). Other movements in members other reserves mainly represent compensation amounts
payable to UK subsidiary undertakings for corporation tax liabilities arising from the impact of UK transfer pricing legislation (see
note 10).
Equity also includes the translation reserves, being those exchange differences arising on the translation of non-euro subsidiaries.
b) Members capital
The group is nanced by members capital. In addition, the short-term working capital requirements of the group will be met by
the bank facilities (see note 23c). The phasing of partner distributions may also be altered to give further exibility to meet nance
requirements. The groups capital structure is regularly reviewed to ensure it remains relevant for the business.
Movements in members capital are as follows:
m
146
19
Capital introduced by members

Repayments of capital
(20)
Exchange movements
150
Capital introduced by members
(6)
Repayments of capital
(17)
Exchange movements
(4)
132
c) Other interests
Members other interests comprise amounts due from/(to) members as follows:
2013
m
2012
m
150
156
Amounts due to members: non-current
(19)
(20)
(330)
(356)
(199)
(220)
Amounts due to members: current
Amounts due from members largely relate to drawings and on-account prot distributions paid to members of partnerships.
Amounts due to members that are classied as current liabilities relate to tax withheld from allocated prots for members of
partnerships and contractual amounts due to members in other group entities. Amounts due to members that are classied as
non-current liabilities relate to partner loans. In the event of a winding up of an LLP, amounts due to members may be set-off
against amounts due from members but would otherwise rank (with members capital) after other unsecured creditors. The
52/KPMG Europe LLP

Annual Report 2013
amounts payable to members from the member rms in other countries would rank either in preference to unsecured creditors or
alongside unsecured creditors on liquidation of those entities.
23 Financial instruments
Financial instruments held by the group arise directly from its operations. Members capital and amounts due to and from
members also fall to be treated as nancial instruments. The main purpose of these nancial instruments is to nance the
operations of the group. It is, and has been throughout the period under review, the groups policy that no trading in nancial
instruments shall be undertaken.
The group has exposure to market risk, credit risk and liquidity risk arising from its use of nancial instruments. This note presents
information about the groups exposure to each of the above risks and the groups objectives, policies and processes for
measuring and managing risk.
The Board has overall responsibility for the establishment and oversight of the groups risk management framework. The groups
risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reect
changes in market conditions and the groups activities. The group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and
obligations.
Further quantitative disclosures are included throughout these consolidated nancial statements.
a) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
groups income or the value of its holdings of nancial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.
The group uses derivatives on a case-by-case basis in order to manage market risks. The group does not hold or issue derivative
nancial instruments for trading purposes.
Interest rate risk
The group faces interest rate risks from investing and nancing activities. The positions held are closely monitored by the Treasury
function and proposals are discussed to align the positions with market expectations. The group uses interest rate options to
manage exposure to interest rate risk; interest rate caps were entered into during the prior year, to cap the interest arising on the
short-term borrowing facility in the UK to 4.5%. These interest rate cap contracts were still open at 30 September 2013 and had a
fair value of nil million (2012: nil million).
The nancial assets and liabilities of the group are non-interest bearing, with the exception of the following:
Note
2013
m
2012
m
Bonds
17
42
61
Loans
15
44
62
(163)
(318)
363
327
200
Fixed rate instruments
Variable rate instruments

Bank balances and short term deposits
18
Cash ow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates during the year would have increased or decreased prot by 1 million (2012: 1
million). This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
Exchange rate risk
The functional currency of the partnership is the euro. The functional currencies of each of its subsidiaries are assessed
individually and are considered mainly to be the euro, pound sterling, Swiss franc, rouble, US dollar or Norwegian krone. However,
certain expenses and charges from other KPMG International member rms or other international relationships are denominated
53/KPMG Europe LLP
Annual Report 2013
23 Financial instruments continued

a) Market risk continued
Equity price risk
Equity price risk arises from fair value through prot or loss equity securities. Material investments within the portfolio are
managed on an individual basis and all buy and sell decisions are subject to appropriate levels of approval in each country.
The primary goal of the groups investment strategy is to maximise investment returns; management are assisted by external
advisers in this regard. In accordance with this strategy certain investments are designated at fair value through prot or loss
because their performance is actively monitored and they are managed on a fair value basis.
The only nancial assets which are considered to be exposed to equity price risk are equity securities, totalling 18 million (2012:
16 million). The call options to acquire certain entities (see note 27) are not subject to equity price risk as the cost to the group
remains unchanged over time, as does the value of net assets to be acquired.
b) Credit risk
Credit risk is the risk of nancial loss to the group if a customer or counterparty to a nancial instrument fails to meet its
contractual obligations, and arises principally from the groups receivables from clients, securities and other investments.
Exposure to credit risk is monitored on a routine basis and credit evaluations are performed on clients as appropriate. The group
does not require security in respect of nancial assets.
The groups exposure to credit risk is inuenced mainly by the individual characteristics of each client. Credit risk is monitored
frequently, with close contact with each client and routine billing and cash collection for work done.
The group establishes allowances for impairment that represent its estimate of incurred losses in respect of trade and other
receivables and investments. This allowance comprises a specic loss component that relates to individually signicant items,
and a collective loss component. This component is established for groups of similar assets in respect of losses that have been
incurred but not yet identied and is determined from historical data in each country of payment statistics for similar nancial
assets updated for current economic conditions.
Impairment information is included in note 16. There are no signicant impairment provisions against the other classes of assets
except impairment losses recognised against goodwill (see note 12).
Securities, other investments and derivatives
Cash investments are made only in liquid securities, mainly xed-term deposits or Government or high-quality corporate bonds,
and are monitored regularly. Derivatives are concluded with high quality counterparties only and are also monitored regularly.
The maximum exposure to credit risk is represented by the carrying amount of the groups nancial and other assets as set out in
the table below.
Note
2013
m
2012
m
Trade receivables
16
921
962
16
527
486
18
363
327
22
150
156
15
16
19
Other receivables
16
51
72
16
Loans and receivables

Fair value through prot and loss
Total nancial assets
17
49
48
2,077
2,070
61
78
2,138
2,148
55/KPMG Europe LLP

Annual Report 2013

c) Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its nancial obligations as they fall due. The groups approach to
managing liquidity is to ensure that it will always have sufcient liquidity to meet its liabilities when they fall due without incurring
unacceptable losses or risking damage to the groups reputation.
The focus of the groups treasury policy is to ensure that there are sufcient funds to nance the business. Surplus funds are
invested according to the assessment of rates of return available through the money market or from bonds or equities.
The Treasury function monitors the groups signicant cash positions daily and it is the groups policy to use nance facilities or to
invest surplus funds efciently. Limits are maintained on amounts to be deposited with each banking counterpart and these are
reviewed regularly in the light of market changes.
The group has access to committed overdraft and revolving credit facilities which are drawn down as required.
The group has the following non-derivative nancial liabilities, measured at amortised cost:
Note
2013
m
2012
m
Accruals
19
642
615
Amounts due to members (current and non-current)
22
349
376
163
318

Members capital
22
132
150
Other payables
19
86
120
Trade payables
19
47
43
19
26
28
14
19
1,459
1,669
Other non-current liabilities
The groups only nancial liabilities that are interest bearing are the short-term bank borrowings (see below). Hence, the
contractual cash ows in all cases equal the carrying amount. Trade payables and accruals, amounts due to other KPMG
International member rms and current amounts due to members are repayable within one year. As set out in the accounting
policies, members capital is repayable within two months of each members leaving date. Other non-current liabilities, including
non-current amounts due to members, are repayable within two to ve years.
Committed borrowing facilities of 587 million (2012: 609 million) were available at 30 September 2013 to the group. Actual
amounts drawn were 163 million (2012: 318 million). Of these facilities available at 30 September 2013, 58 million (2012: 56
million) expires in one year or less, 50 million (2012: 50 million) had no xed expiry date and the revolving credit facility of 479
million (2012: 503 million) was due to expire in December 2014. Although the revolving facility was due to expire in December
2014, the short-term bank borrowings drawn from time to time under the facility usually have a maximum term of three months.
The availability of this revolving facility was dependent on certain conditions, including a minimum level of members capital, all of
which were satised at 30 September 2013 and 2012. The revolving credit facility is secured on the lease of 15 Canada Square,
London; the remaining facilities are unsecured. Certain of the borrowing facilities are available to all entities within KPMG
Belgium, including those not consolidated within the group.
Subsequent to year end, the group has entered into a new borrowing facility (see note 28).
d) Fair values
The estimated fair values of the groups nancial assets and liabilities approximate their carrying values at 30 September 2013 and
2012, largely owing to their short maturity. The bases for determining fair values are disclosed in note 1. The table below analyses
nancial instruments of the group carried at fair value, by valuation method.
The different levels have been dened as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (for
example, as prices) or indirectly (for example, derived from prices); and
56/KPMG Europe LLP
Annual Report 2013

d) Fair values continued
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Note
Level 1
m
Level 2
m
Level 3
m
Total
m
42
30 September 2013
Bonds
17
42
Equities
17
18
18
Derivatives
17
60
61
30 September 2012
Bonds
17
61
61
Equities
17
16
16
Derivatives
17
77
78
2013
m
2012
m
There have been no transfers between Level 1 and 2 during the year.
24 Operating leases
The groups total commitments under non-cancellable operating leases are as follows:
Non-cancellable operating lease rentals
Within one year
186
200
Between one and ve years
557
615
More than ve years
414
445
1,157
1,260
A number of ofce facilities are leased under operating leases. The periods of the leases vary; lease payments are generally
subject to rent review every ve years in the UK but normally are xed in other countries.
2013
m
2012
m
- within one year
14
15
- within two to ve years
28
32
Amounts receivable from sub-let properties:
12
19
139
136
11
12
- over ve years
Operating lease cost for the year in Other operating expenses
Operating lease income for the year in Other operating income
The group also leases certain computer equipment, ofce equipment and motor vehicles under operating leases. These leases
typically run for a period of three years.
All amounts due under the groups nance lease (see note 11) have been accounted for and no future liability arises.
57/KPMG Europe LLP

Annual Report 2013
25 Commitments and contingencies

Capital commitments for contracted purchases of property, plant and equipment at the end of the nancial year, for which no
provision has been made, were 11 million (2012: 4 million) for the group. These commitments are expected to be settled in the
following nancial year.
The partnership has given a guarantee in favour of the bank providing borrowing facilities to the groups associated entities in
Turkey of US $10 million (7 million). Subsequent to the year end, this guarantee was released following repayment of a signicant
proportion of the bank borrowing and replacement guarantee being given by KPMG International.
In addition, the UK LLP has given a guarantee in favour of the bank providing borrowing facilities to the groups associated entities
in Kuwait for a value of US$5 million (4 million).
26 Related parties
The group has a related party relationship with its key management, considered to be the Board members of the partnership
pages 4 and 5.
Transactions with key management
The average 23 (2012: 28) members of the Board during the year are responsible for planning, directing and controlling the
activities of the group. They are all members of the partnership. Those members of the Board who are members of subsidiary
partnerships share in its prots; both the partnership and subsidiary partnerships divide prots amongst members only after the
nancial statements have been nalised and approved by members. Other members of the Board are entitled to remuneration
and performance bonuses under employment or service contracts with other subsidiary entities.
The estimated total salaried remuneration, performance bonuses and prot entitlement due to the key management in respect of
the current year totalled 30 million for the group. The actual salary, bonus and prot allocated in respect of the previous year was
36 million. The estimated cost of short-term employment benets provided to the key management was 0.3 million for the
year (2012: 0.3 million) and the estimated current service pension cost was 0.5 million (2012: 0.6 million).
There were no balances due to or from key management at 30 September 2013 or 2012 save in respect of relevant shares of
prot (or related taxation), performance bonuses and members capital. As discussed in note 1, members of the LLPs receive
monthly drawings and other distributions representing payments on account of current year prots. These amounts are classied
as Amounts due from members until allocation of the current year prots. In addition, performance bonuses and amounts that
are retained from allocated prots in respect of taxation liabilities that fall on individual members are classied as Amounts due to
members and are expected to be paid in the short-term.
Amounts outstanding from/(to) key management are as follows:
2013
m
Amounts due from key management

Amounts due to key management
2012
m
(18)
(14)
(16)
(12)
Total members capital invested by key management amounted to 2.2 million at 30 September 2013 (2012: 1.9 million).
A member of key management is one of three shareholders who held a controlling interest in KPMG Rechtsanwaltsgesellchaft
GmbH (RAG), the separate KPMG member rm in Germany, providing legal services, which is not controlled by the partnership.
The group provides resources and support services to RAG, the value of which is immaterial from a group perspective.
Cooperatie KPMG U.A. (the Co-operative) is an entity registered in the Netherlands, through which the Dutch partners provide
their services to KPMG Netherlands. Transactions with the Co-operative totalled 72 million during the year (2012: 86 million).
63 million was outstanding as amounts payable to the Co-operative at 30 September 2013 (2012: 85 million) and as these
amounts are ultimately due to the Dutch members, the balance was classied as Amounts due to members.
58/KPMG Europe LLP

Annual Report 2013
26 Related parties continued

Transactions with associates
During the year ended 30 September 2013, member rms of the ELLP group traded with entities considered to be associates of
the group (see note 27). These transactions are not eliminated on consolidation, and so are summarised below:
2013
m
2012
m
Transactions with associates:

Revenue
Other operating income
(4)
(4)
(3)
(15)
Other operating expenses

Balances outstanding with associates at the year end:
27 Subsidiary and associated undertakings

At 30 September 2013 the principal subsidiaries and associates of the group are those listed in the table below. A full list of
subsidiaries is led at Companies House alongside the ELLP annual return.
% of ordinary
shares held
Subsidiary undertakings
Incorporated in
Principal activity
KPMG Armenia CJSC
Armenia
Audit, tax and advisory services
502,4
KPMG Advisory BCVBA
Belgium
Advisory services
100
KPMG LLP
England
100
KPMG Audit Plc
England
Statutory audits and related services
100
KPMG United Kingdom Plc
England
Advisory services
100
KPMG UK Limited
England
Employment company
100
KPMG Sourcing Limited
England
Advisory services
100
KPMG CIO Advisory Limited
England
Advisory services
100
Makinson Cowell Limited
England
Advisory services
100
KPMG CIS Limited
Guernsey
Audit, tax and advisory services in Georgia
100
KPMG Limited
Guernsey
Tax and advisory services in Russia
100
Queen Street Mutual Company PCC Limited
Guernsey
Insurance
100
KPMG AG Wirtschaftsprufngsgesellschaft
Germany
KPMG Audit LLC
Kazakhstan
Audit services
100
KPMG Tax and Advisory LLC
Kazakhstan
Tax and advisory services
100
KPMG Bishkek OOO
Kyrgyzstan
100
KPMG Luxembourg Srl (formerly KPMG Lux Srl)
Luxembourg
100
KPMG Accountants NV
Netherlands
Audit services
100
KPMG Advisory NV
Netherlands
Advisory services
100
KPMG NV
Netherlands
Support services
100
EquaTerra BV
Netherlands
Advisory services
100
EquaTerra Sourcing Management BV
Netherlands
Advisory services
100
Plexus Medical Group NV
Netherlands
Advisory services
100
ZAO KPMG
Russia
492,4
KPMG Al Fozan & Al Sadhan
Saudi Arabia
Audit services
nil5
KPMG Auditores SL
Spain
Audit services
100
KPMG Abogados SL
Spain
Tax services
100
100
59/KPMG Europe LLP
Annual Report 2013
27 Subsidiary and associated undertakings continued

% of ordinary
shares held
Subsidiary undertakings
Incorporated in
Principal activity
KPMG Asesores SL
Spain
Advisory services
KPMG SA
Spain
Support services
KPMG AG/SA
Switzerland
KPMG is ve Yonetim Danismanligi AS
Turkey
Advisory services
KPMG Audit Limited
Ukraine
Audit services
302,4
KPMG Ukraine Limited
Ukraine
Tax and advisory services
100
Associate undertakings
Incorporated in
Principal activity
KPMG Belastingconsulenten en Juridische Adviseurs

BCVBA
Belgium
Tax and legal services
58
KPMG Resource Centre Private Limited
India
Support services for KPMG rms
50
KPMG Global Services Private Limited
India
Advisory support services for KPMG rms
33
100
100
100
100
% of ordinary
shares held
KPMG Sa Al-Mutawa & Partners
Kuwait
Audit services
nil
KPMG Advisory WLL
Kuwait
Advisory services
nil
KPMG Al-Kawasmy and Partners Co
Jordan
nil
KPMG AS
Norway
531
Akis Bagimsiz Denetim ve SMMM AS
Turkey
Audit and advisory services
nil
Yetkin SMMM AS
Turkey
Bookkeeping services
nil
Yetkin YMM AS
Turkey
Tax services
nil
1. Percentage of voting rights held.

2. Held indirectly through intermediate holding companies.
3. The group has a 100% interest in the net assets of this company through its right to control the Board and because no other party has any entitlement to benet from future prots or to existing
retained reserves.
4. Exercisable options over 100% held.
5. Exercisable options over 75% held.
All of the subsidiary undertakings make up their accounts to 30 September and are consolidated within these nancial
statements. The associate undertakings also make up their accounts to 30 September except those incorporated in India who
provide management information at 30 September 2013 for the purpose of group reporting. All entities operate principally in their
country of incorporation, save where noted.
Whilst the partnership does not own majorities in the share capital or ownership interests of ZAO KPMG (Russia), KPMG Armenia
CJSC (Armenia), CJSC KPMG Audit (Ukraine) and KPMG Al Fozan & Al Sadhan (Saudi Arabia), these entities are nevertheless
considered to be subsidiaries of the group under IFRS since the agreements in place give the partnership the right to control,
taking account of exercisable options and the fact that the entities have each signed up to the KPMG ELLP operating protocol.
The partnership does not own any shares in three of the trading entities in Turkey or hold ownership interests in the trading
entities in Kuwait and Jordan. However, the partnership has call options to acquire 100% of the shares, although these are
exercisable only if local legislation is changed such that the partnership may acquire the shares. Under the agreements in place
with KPMG Turkey, KPMG Kuwait and KPMG Jordan, the partnership is considered to have signicant inuence and therefore,
the entities are considered to be associates of the group.
Whilst the partnership holds 58% of shares in KPMG Belastingconsulenten en Juridische Adviseurs BCVBA, the articles of
association of that entity provide that the majority of the voting rights remain with the local partners. Accordingly, the partnership
is considered only to have signicant inuence, and the entity is considered to be an associate of the group.
Similarly, following the change in the nature of the underlying agreement between LLP and KPMG Norway (see note 9) the group
holds 53% of the voting shares in the Norwegian rm. However, whilst the agreement continued to give ELLP inuence over
operational and nancial policies within KPMG Norway, it did not allow ELLP to obtain benet from the activities of KPMG
60/KPMG Europe LLP
Annual Report 2013
27 Subsidiary and associated undertakings continued

Norway. The partnership is considered, therefore, only to have signicant inuence and the entity is considered to be an associate
of the group at 30 September 2013. Subsequently, in April 2014, this agreement was terminated and ELLP transferred the
remaining share back to local members for nil consideration.
In addition, the partnership holds call options over those shares in the Belgian tax practice which it does not currently own and
over the principal entity providing audit services in Belgium; these options are not currently exercisable and they are considered to
have an insignicant fair value.
The following nancial information reects 100% of the associates of the group:
Assets
2013
m
2012
m
61
62
Liabilities
46
56
Revenues
121
116
Prot
28 Events after the year end

In November 2013, the group committed to investing 18 million in the KPMG International Capital investment fund. The fund is
being established to invest in opportunities that will generate benet across a number of KPMG International member rms and
will operate through a new entity. In exchange for its investment, it is intended that the group take a share ownership in the new
entity, equivalent to the groups share of the total investment fund. This share is expected to be approximately 25% such that
KPMG Capital will fall to be treated as an associate in the year ending 30 September 2014.
Also, in November 2013, the group renewed its borrowing facility in the UK. A new facility of 479 million is now in place and
matures on 31 January 2019. The terms and conditions of the new facility mirror those previously in place, as disclosed in
note 23c.
In December 2013, the member rm in the Netherlands reached a settlement with the Dutch Public Prosecutors Ofce in
respect of an ongoing investigation into audits of a former client during the period from 2000 to 2003. The agreed settlement of
7 million has been accounted for as a provision at 30 September 2013.
In February 2014, the member rm in the Netherlands was informed by the Dutch Public Prosecutors Ofce of an investigation
into the treatment for tax purposes of costs incurred in the construction of the property in Amstelveen, currently the head ofce
of KPMG Netherlands. The investigation centres on the nature of these costs, as to whether they were inated to depress the
rms tax costs. If the investigation were to result in an adverse nding it is likely that there would be additional tax and penalties
levied on the Dutch rm, though at this stage it is not possible to quantify what loss, if any, might arise. KPMG Netherlands are
fully co-operating with the Dutch Public Prosecutors Ofce.
In February 2014, the partnership was released from the guarantee given in favour of the bank providing borrowing facilities to the
groups associated entities in Turkey, as set out in note 25.
In April 2014, the partnership transferred its one remaining share in KPMG Norway back to local ownership for nil consideration.
Also in May 2014, the ELLP group entered into a termination agreement to transfer its ownership of the ELLP member rms in
Saudi Arabia, Kuwait and Jordan back to local ownership under the exit option existing in the original merger agreement. As a
result of the transfer of these ownership interests, the partners of these Gulf member rms who were also ELLP members will
resign as ELLP members, in exchange for repayment of their capital.
On 9 May 2014, the ELLP Board voted to demerge the ELLP group, in order to further support the transition to the newly
strengthened and optimised KPMG EMA region. This Board decision was fully supported by a subsequent ELLP member vote
concluded on the date of approval of these nancial statements, being 6 June 2014. As a result of this decision, the ELLP group is
expected to be demerged with effect from 30 September 2014, or as soon as is practical thereafter. As with the transfer of the
ownership interests in KPMG Norway during the year, the demerger will be treated as a transaction with owners and, therefore,
no gain or loss will arise in the income statement during the year ending 30 September 2014.
61/KPMG Europe LLP

Annual Report 2013

ELLP Annual Report 2013

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Contents

Report to the members

Independent auditors report to the members of KPMG Europe LLP

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated statement of nancial position

Consolidated statement of changes in equity

Consolidated statement of cash ows

KPMG Europe LLP

We continue to live in challenging times

The nal step in this transition is the

This is an exciting time to lead KPMG in

John MacLean Scott

1/KPMG Europe LLP

Report to the members

The Board presents its report together

In the UK: registered number

Events after the year end

2/KPMG Europe LLP

In Germany (in the commercial

included within the group. However, for

Report to the members continued

In light of the necessity for the ELLP

3% and 13% respectively. Our

Prot for the nancial year available for

Performance for the year

Financial position at the end of the

members capital for the purposes of

3/KPMG Europe LLP

Report to the members continued

nance is available to the group as

4/KPMG Europe LLP

is also set out in section 7 of the 2013 ELLP

Rolf Nonnenmacher (resigned 30

Corporate social responsibility (CSR)

Jaap van Everdingen Chief Operating

Report to the members continued

The Board continued

Subsequent to the year end, in March

Public Interest Committee: comprising

During its meetings, the Audit

5/KPMG Europe LLP

Report to the members continued

Professional claims: the judgements

6/KPMG Europe LLP

As noted above, the Audit Committee is

Report to the members continued

Principal risks and uncertainties

Audit failures major or multiple

A tone at the top which emphasises quality, ethics and integrity

Issuance of an incorrect audit opinion and/or poor quality auditing

Nominated individuals responsible for interaction with regulatory

Failure to maintain good relationships with our key regulators or deal

Majority of ELLP Board are Qualied Individuals with appropriate

Major litigation or regulatory investigation

General engagement quality and risk management controls

Actual or suspected failure of our services, delivered either

An established plan within ELLP for regulatory liaison

Major change in regulation impacting on our business model from

Robust IT security policies and processes

Failure to protect client condential or personal data, leading to loss

ISO 27001 accreditation in our largest rms

Appropriate budgetary challenge

Failure to achieve nancial objectives as a result of challenging