Key facts
- KPMG Australia is facing a governance crisis due to whistleblower allegations of partner misconduct.
- Partners are accused of misusing confidential client data to win corporate audit contracts.
- Federal and state governments are reviewing all KPMG contracts and seeking data security assurances.
- Australia's corporate regulator, ASIC, has launched a formal investigation into KPMG and two of its partners.
- The scandal could have a more significant impact than the PwC tax leaks affair due to its effect on auditing trust.
KPMG Australia is embroiled in a significant governance crisis following allegations that partners misused confidential client information to secure lucrative audit contracts. The scandal, brought to light by a former audit director in May 2024, claims that internal documents from Lendlease were used to win external audits for Westpac and Dexus, and that inside information was also leveraged for work with Macquarie Group and Westpac.
The firm has admitted to "mishandling" the whistleblower's allegations, with Chair Martin Sheppard issuing an apology. The fallout has led to several senior resignations, including Chief Executive Andrew Yates, Head of Audit Julian McPherson, and former Chief Operating Officer Eileen Hoggett.
Australia's corporate watchdog, ASIC, has launched a formal investigation into KPMG and two registered auditors, Paul Rogers and Eileen Hoggett, confirming this at a Senate estimates hearing. ASIC chair Sarah Court stated that initial inquiries began in April, but a formal investigation commenced this week.
The crisis has prompted a widespread review of KPMG's government contracts across federal, state, and local levels. The federal Department of Finance has classified the incident as a "significant event" under procurement rules, potentially leading to contract suspensions. Assistant Treasurer Daniel Mulino indicated that all government contracts would be scrutinized, and states are reportedly seeking assurances regarding data security. The situation is being compared to the PwC tax leaks scandal, with concerns that the breach of trust in KPMG's core auditing business could be more damaging.