Key facts
- KPMG Australia executives were questioned by lawmakers over alleged misconduct.
- The firm admitted to misusing sensitive Optus information for a Telstra audit bid.
- KPMG is also accused of using confidential Lendlease board papers for bids on Westpac and Dexus audits.
- Former CEO Andrew Yates resigned due to the allegations.
- Lendlease ended its auditor relationship with KPMG after nearly 70 years.
- Concerns were raised about the partnership structure of audit firms and their regulatory oversight.
KPMG Australia executives faced intense questioning from lawmakers regarding allegations of misusing confidential information and misconduct, widening a scandal that has already led to resignations and calls for increased regulation of the audit industry.
During a parliamentary hearing, KPMG Australia Chairman Martin Sheppard admitted that staff shared sensitive information about telecom firm Optus with an internal team bidding for an audit contract for its rival Telstra. This breach of ethics confirms whistleblower allegations that the firm had previously deemed unsubstantiated.
The firm is also under fire for allegedly misusing confidential board papers from real estate company Lendlease to support bids for major audit tenders for Westpac and Dexus. This latest admission regarding Optus information intensifies pressure on KPMG, which is already dealing with the fallout from the Lendlease allegations.
Former KPMG Australia CEO Andrew Yates resigned last month, stating that the Optus-related evidence prompted his realization that issues could have been identified earlier. Lendlease Chairman John Gillam described KPMG's actions as a "fundamental breach of trust" and announced the company would end its nearly seven-decade auditor relationship with KPMG.
Lawmakers, including Greens Senator Barbara Pocock and Labor Senator Deborah O'Neill, questioned the effectiveness of the partnership structure for Big Four accounting firms. They noted that these firms are not supervised by the Australian Securities and Investments Commission (ASIC) and are regulated by state-based laws, drawing parallels to the 2023 PwC tax leaks scandal and suggesting that further regulatory changes might be necessary.
Concerns were also raised about the time taken by KPMG to inform affected parties of the whistleblower complaints, with Lendlease only notified a year after accusations were first made internally. Yates acknowledged that the firm "didn't get it right" in handling the situation.