Key facts
- KPMG is accused of misusing confidential board papers from Lendlease for audit tender bids for Westpac and Dexus.
- KPMG's Australian CEO Andrew Yates and audit chief resigned last month due to the allegations.
- Lawmakers questioned the effectiveness of the partnership structure for audit firms, which are not supervised by ASIC.
- The whistleblower alleged their computer was searched and they were not given legal protections after complaining to KPMG.
- KPMG admitted to mishandling the whistleblower complaint and has launched a fourth investigation.
Australian lawmakers have intensified scrutiny of the country's audit industry, specifically targeting KPMG over allegations of misconduct and mishandling of a whistleblower complaint. The firm's executives, including former CEO Andrew Yates, were grilled by a joint parliamentary committee regarding the misuse of confidential board papers from real estate company Lendlease. These papers were allegedly used to support bids for major audit tenders from Westpac and Dexus.
The scandal has already led to the resignations of KPMG's Australian CEO and audit chief. KPMG has acknowledged mishandling the whistleblower complaint and has initiated a fourth investigation after previous attempts failed to substantiate wrongdoing.
During the hearing, concerns were raised about the regulatory structure of accounting firms, which operate as partnerships rather than companies. Senators questioned whether this structure, which exempts them from the Australian Securities and Investments Commission's strict reporting requirements, is still functional. Senator Barbara Pocock drew parallels to the 2023 PwC tax leaks scandal, suggesting that further regulatory changes might be necessary.
Further allegations detailed how the whistleblower allegedly faced computer searches and lacked legal protections after reporting the issue internally. Senator Paul Scarr described the whistleblower as having suffered a "horrendous personal, mental and career cost" due to KPMG's actions. Yates admitted that the firm "didn't get it right" in handling the situation.