ASIC Confirms Formal KPMG Investigation While Retaining Eight Active Contracts
Synopsis
ASIC has confirmed it has opened a formal investigation into KPMG following allegations that confidential client information was misused to help secure audit contracts. The regulator told Senate estimates it currently has eight active contracts with KPMG worth about $3 million, including two that began after initial investigations started. ASIC also confirmed that auditors Paul Rogers and Eileen Hoggett are under formal investigation. The scandal has already led to senior executive departures and increased scrutiny from regulators, government agencies and parliamentary inquiries across Australia.
ASIC revealed it still has eight contracts with KPMG, and has confirmed a formal investigation.
Key Highlights
- ASIC has a total of eight live KPMG contracts worth approximately $3 million.
- Paul Rogers and Eileen Hoggett, two KPMG auditors, face an investigation.
- ASIC said two contracts started shortly after its investigation began.
- The RBA is also unlikely to award KPMG the contract for its whistleblower hotline.
Australia's corporate regulator has confirmed it is conducting a formal investigation into KPMG Australia after allegations that the consulting giant used confidential client information as leverage in persuading firms to award audit contracts.
ASIC chair Sarah Court gave evidence to Senate estimates, where she told the committee the investigation had been formalised this week following preliminary inquiries in April. The inquiry comes after a whistleblower scandal that has already seen the departure of former CEO Andrew Yates, audit chief Julian McPherson and chief operating officer Eileen Hoggett.
ASIC has also disclosed that it has eight live contracts with KPMG, six services contracts and two consultancy contracts valued at a total of approximately $3 million. Scott Gregson, chief executive, said none of the contracts involved KPMG's audit division, which lies at the heart of the probe.
In response to questions about why two contracts were provided after ASIC had already opened a probe into KPMG, Gregson stated procurement processes ran independently of the agency. ASIC has also received assurance that people working for KPMG on the review are not involved in contracts awarded to the auditor in other areas, he said.
ASIC said two registered company auditors were officially being investigated: Paul Rogers and Eileen Hoggett. The regulator said initial inquiries had identified other persons of interest, but these did not yet meet the standards for a formal investigation.
More recently, the scandal has engulfed Australia's financial services industry. The Reserve Bank of Australia said it is improbable to reappoint KPMG to operate its whistleblower hotline service earlier this week, while government departments are reviewing their arrangements with the consulting firm.
The inquiry is based on accusations brought by a whistleblower in 2024 who alleged KPMG partners exploited the private information of clients to secure audit business. Current and ex-KPMG partners are set to give evidence before a federal parliamentary probe on June 19.
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