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General Electric announced Monday that it named a new independent auditor for the upcoming fiscal year and would be parting ways with KPMG, the major accounting firm that has filled the role for more than a century.

“This is a huge deal for two reasons,” said Jonathan Macey, a professor of corporate law, corporate finance, and securities law at Yale Law School. “Number one, it doesn’t happen very often. And, number two, it’s a major signal to the market.”

KPMG has reviewed GE’s financial statements and reports since 1909. Many major companies stick with the same auditor for decades, building tight-knit relationships that at times belie the auditor’s need for impartiality. In recent years, however, GE has run into accounting troubles that KPMG has failed to prevent. And as the industrial conglomerate has swapped out its top leadership, many experts believed it was only a matter of time before a new auditor took over.

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GE, once synonymous with American manufacturing might, has stumbled in recent years, slashing its dividend and missing profit targets as well as facing criminal and regulatory probes into its accounting practices.

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“GE wants to somehow signal to the marketplace that things are going to change,” with the auditor switch, said Joshua Ronen, an accounting professor at New York University’s Stern School of Business.

On Monday, GE said accounting and advisory firm Deloitte will take over as its independent auditor in 2021. Accounting experts said that the move is significant but not a surprise. The relationship between GE and KPMG was under increased scrutiny in recent years after GE’s accounting practices resulted in regulators’ investigations. In 2018, GE said it would solicit bids for an auditor amid probes by federal authorities into a $22 billion charge linked to GE’s power unit and a $6 billion charge related to its insurance operations. Phone calls seeking further comment from GE weren’t immediately returned. In previous statements, GE has said it has cooperated with the investigations.

"It has been an honor to serve as GE’s independent auditor for over 100 years and we will continue to serve GE with excellence and integrity as we complete the (fiscal year 2020)...audit,” a KPMG spokesperson said in statement. “We are proud of our audit services, powered by innovation and fueled by our values as we strive for quality in all that we do."  In 2019, GE paid KPMG a total of $79 million, with $61.1 million linked to audit fees, according to research firm Audit Analytics.  

Shareholders’ annual vote to retain auditors are typically rubber-stamp, automatic affairs. But in 2018, roughly a third of GE shareholders who cast a vote wanted to see KPMG replaced. That same year GE named its first CEO from outside its ranks in Larry Culp and in 2019, GE executives reached outside the company once again for a new chief financial officer, Carolina Dybeck Happe.