KPMG has closed its US government audit practice after losing a significant contract with the Army, marking a major retreat from the federal auditing sector for one of the Big Four accounting firms.

The decision to shut down the government audit division represents a strategic withdrawal from a specialized area of public sector work that requires specific expertise and security clearances to handle federal agency accounts.

The loss of the Army contract appears to have been a decisive factor in KPMG's decision to exit this market segment entirely, rather than attempting to rebuild the practice with other government clients.

Separately, testimony in an unrelated case revealed that First Brands allegedly selected BDO as its auditor because the firm was perceived as offering a 'less rigorous' audit process, according to witness statements.

The government audit market represents a specialized niche within the broader accounting industry, with firms required to meet stringent federal requirements and maintain appropriate security clearances for their personnel working on sensitive government accounts.