Lead

KPMG Australia's chief executive, Andrew Yates, has resigned effective immediately, and audit partner Julian McPherson has also stepped down, following revelations that the firm mishandled whistleblower allegations and inappropriately shared confidential client documents. The firm has admitted its initial investigations "fell short of the firm's expectations" and apologized to the whistleblower. The Australian Securities and Investments Commission (ASIC) is conducting a preliminary investigation into the conduct of several registered company auditors at the firm.

Coverage comparison

Reporting from ABC Australia and The Guardian — World broadly agrees on the key events: Yates's resignation, McPherson's departure, and the firm's acknowledgment of failure in handling whistleblower concerns. However, the coverage varies in depth and focus. ABC Australia's reports provide extensive details, including the number of federal government contracts (almost 300, valued at $653 million, according to parliamentary library data), the involvement of external law firm Allens, and the resignation of Chief Operating Officer Eileen Hoggett. The Guardian's report focuses primarily on the leadership changes and the ASIC investigation, with less detail on the contract figures.

Key claims

  • Resignations: KPMG Australia's CEO Andrew Yates resigned effective immediately, and audit partner Julian McPherson also stepped down. The Guardian reported McPherson would leave the company after an orderly transition of client responsibilities. ABC Australia added that Chief Operating Officer Eileen Hoggett would step aside while investigations are pending, with CFO John Sams assuming her role.
  • Whistleblower allegations: A whistleblower raised concerns in May 2024 — as reported by ABC Australia — that KPMG partners misused confidential board papers from construction firm Lendlease to pitch for and win audit contracts from Westpac and Dexus. The claims were initially dismissed by KPMG, and an internal investigation did not substantiate them, with a further external legal firm also supporting the original outcome. However, after further complaints, an external law firm, Allens, was appointed to conduct another investigation, which is ongoing. According to ABC Australia, Allens found secondary instances of inappropriate document sharing.
  • KPMG's admission: KPMG said the initial investigations were not conducted with the "necessary rigour required" and "fell short of the firm's expectations." In a statement, Chairman Martin Sheppard said: "We apologise unreservedly to the whistleblower." KPMG also committed to engaging an ethics consultant to review its 'speak-up culture'.
  • Regulatory scrutiny: ASIC, the corporate watchdog, is investigating KPMG over claims of misusing confidential client information and mistreating the whistleblower. The Guardian reported ASIC told a parliamentary committee it was conducting a preliminary investigation into the allegations.
  • Government contracts: According to ABC Australia, data from the parliamentary library shows KPMG has almost 300 active contracts with the federal government, totaling $653 million. The federal government entered into 31 contracts after the scandal was revealed, and the government will examine all of its contracts with KPMG. ABC also reported the Department of Finance had previously taken action against PwC for a similar breach, effectively shutting it out of new federal contracts.

Perspectives

  • KPMG: The firm has admitted responsibility for mishandling the whistleblower's allegations, apologized to the whistleblower and clients, and committed to reviewing its internal culture.
  • Parliamentary scrutiny: Labor Senator Deborah O'Neill, who chairs the parliamentary joint committee, publicly revealed the whistleblower's claims under parliamentary privilege, framing them as a serious breach of trust that warranted public exposure.
  • Regulators: ASIC has confirmed it is conducting a preliminary investigation into the conduct of KPMG auditors, signaling that the matter is subject to formal regulatory oversight.
  • Government: The federal government has indicated it will review all of its contracts with KPMG, reflecting concern about the firm's conduct and its fitness as a government contractor.