KPMG Under Scrutiny Over Audit Role in Private Credit Market Downturn

KPMG is confronting claims that its audit work failed to flag risks that later contributed to a sharp decline in private credit markets. Critics argue that shortcomings in the firm’s review process may have allowed vulnerabilities to go unchecked, raising questions about the reliability of audit standards in the fast‑growing alternative‑credit sector. The controversy arrives as KPMG’s regional hubs in Prague, Lisbon, Barcelona, Madrid and the City of London recorded client activity that surpassed the five‑year average for the first half of the year. Those offices, which serve a mix of institutional investors and mid‑market borrowers, have seen a surge in demand for advisory and assurance services despite the broader market turbulence. While the allegations remain under investigation, the episode highlights the delicate balance auditors must strike between thorough risk assessment and the pressure to retain high‑value clients. Industry observers note that the private credit space, already under heightened regulatory focus, could face tighter oversight if the claims are substantiated. Investors and fund managers with exposure to private credit instruments are closely watching the developments, as any formal findings could reshape due‑diligence practices and audit expectations across the sector. Regulators in Europe and beyond are expected to monitor the situation, potentially prompting revisions to audit guidelines for non‑bank lenders. KPMG has declined to comment on the specifics of the allegations, but the firm’s continued strong client uptake in key European markets suggests that demand for its services remains robust, even as the audit profession grapples with heightened scrutiny.