KPMG has become the second major auditor to begin exploring a sale of its UK restructuring arm in as many months, as the big four accountants prepare for unprecedented reform of the profession.
Sky News can reveal that KPMG is reviewing options for its restructuring division, which comprises dozens of partners, even as the coronavirus pandemic's impact on the economy paves the way for a significant improvement in its financial performance.
People close to the situation said the review was at an early stage, and could yet lead to a decision to retain the business.
The talks are understood to be being led by executives including Blair Nimmo.
KPMG went through a similar review process several years ago before opting to keep the unit, although industry insiders pointed out that the audit reform agenda meant that pressure over conflicts of interest had now becoming increasingly difficult to manage.
On Friday, the big four auditors will submit plans to the Financial Reporting Council (FRC) demonstrating how they intend to 'operationally separate' their audit and consulting arms during the next four years.
That push has come in the wake of accounting scandals at companies such as BHS and Carillion, which collapsed with the loss of tens of thousands of jobs.
KPMG was Carillion's auditor prior to its demise, and is likely to face a hefty regulatory fine in the coming months as the Financial Reporting Council concludes its investigation.
The firm's restructuring arm has handled a number of prominent insolvency processes during the COVID-19 crisis, including the administration of Intu Properties, the shopping centre-owner.
News of its review comes just days after Sky News revealed that hundreds of partners at KPMG UK are braced for reduced payouts as the firm postpones the release of its annual results until it has a clearer view of the UK's economy prospects.
The firm told roughly 600 partners earlier this year that they could see their 2020 pay packages reduced by around 25%, saying that they "will and should feel a greater impact" - while also warning that the wider workforce should expect to receive "significantly reduced…or no bonuses this year and it would be wise for people to plan for that eventuality".
During the summer, KPMG abandoned proposals to slash the sums it pays into thousands of employees' pension pots following the threat of legal action.
The firm said it had launched the pensions consultation in July as "part of a broader range of measures to reduce overall costs in FY21 and to protect jobs in an unpredictable economic environment".
Bill Michael, KPMG's UK chairman, has described the pandemic as "an economic disaster".
KPMG has also sold its pensions advisory business to a private equity-backed buyout, providing a possible template for a transaction involving its restructuring arm, according to insiders.
Last month, Sky News revealed that Deloitte, its rival 'big four' firm, had begun talks about the sale of its UK restructuring division.
It remains in discussions with its global network about a potential sale process, although formal talks have yet to get underway.
New rules restricting consulting work for firms' audit clients have led to frustration across the restructuring market.
KPMG declined to comment.
Sourced from SKY News