KPMG Australia CEO and Audit Chief Resigns Over Whistleblower Complaint Handling
Synopsis
KPMG Australia has announced the resignations of CEO Andrew Yates and Audit and Assurance leader Julian McPherson after admitting shortcomings in the handling of whistleblower complaints involving client documents. The firm said previous investigations found the allegations unsubstantiated but later recognised flaws in its review process. ASIC has also begun a preliminary investigation involving three registered auditors. KPMG has launched external reviews of its whistleblower policies as scrutiny of Australia's professional services sector intensifies.
KPMG Australia’s admission of failings over 2020 whistleblower complaints about client document sharing prompted CEO Andrew Yates and audit chief Julian McPherson to resign
Key Highlights
- Former KPMG Australia CEO Andrew Yates stepped down
- Audit and Assurance leader Julian McPherson also quit
- Alleged inappropriate sharing of client documents
- KPMG acknowledged previous probes fell short of expectations
- ASIC is investigating three registered auditors
KPMG Australia CEO and audit chief step down
KPMG Australia on Friday said Chief Executive Officer Andrew Yates and Managing Partner Audit and Assurance Julian McPherson had resigned, following criticism of how whistleblower complaints related to client data and documents were addressed.
He has been with the KPMG firm since 1990 and was appointed CEO in 2021. The firm said he resigned after the investigations into the allegations by the whistleblower did not meet the standards of the firm, the whistleblower and society as a whole. McPherson also chose to leave, but will remain at the firm until an orderly transition occurs.
Whistleblower complaints and investigation findings
A whistleblower had made three separate complaints that client documents were shared inappropriately, with KPMG revealing the claims. The firm previously said an internal investigation had not substantiated the complaints.
But the processes KPMG now accepts from those investigations were not up to hoped-for standards. Yates added, This is a clear case where we have let ourselves down and I take full responsibility for it. And McPherson took his share of blame, saying that matters have come to a head for which I am responsible, and I accept that.
ASIC begins preliminary probe
The Australian Securities and Investments Commission (ASIC) told a parliamentary hearing on Friday it had initially begun investigating the conduct of three registered company auditors. ASIC Commissioner Kate O’Rourke said the investigation was revealed in a hearing, but she declined to name the auditors.
At the hearing, ASIC Chair Joe Longo, expected to step down as regulator on 31 May, said ASIC had played no role in either Yates’ or McPherson’s departures. KPMG’s statement also did not name any whistleblower or say if the client or clients in question had anything to do with the concerns about sharing documents.
New scrutiny of Australia’s consulting industry
The resignations bring fresh scrutiny to the professional services sector in Australia, which had come under closer examination since 2023 when the PwC Australia scandal broke. The controversy involved the leaking of sensitive government materials and led to a demerger of PwC’s consulting arm focused on government work, as well as several high-profile resignations.
KPMG said that it hired law firms and corporate ethics consultants to examine its policies and internal procedures. Chairman, Martin Shepherd said that the company recognises that it has to work on rebuilding trust and also welcomes third parties to test their actions rather than asking shareholders to trust its words.
FAQs
- What did the whistleblower complaints actually detail?
The complaints claimed that client documents had been improperly distributed.
- Who else resigned from KPMG?
Another big departure announced today was that of the Audit and Assurance leader Julian McPherson, who also stepped down but will stay on for a transition period.
- Is ASIC investigating the matter?
The body responsible for maintaining the integrity of corporate conduct, ASIC have begun a preliminary investigation into the actions of three registered company auditors.
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