KPMG Australia Fallout Deepens as RBA and Pension Fund Review Ties
Synopsis
KPMG Australia is facing increasing pressure as major institutions review their relationship with the firm following whistleblower allegations involving the misuse of confidential client information. The Reserve Bank of Australia is unlikely to renew KPMG's whistleblower hotline contract, while pension fund Rest and the New South Wales government are seeking additional information and assurances. The controversy follows the resignation of KPMG Australia's CEO and audit chief and has intensified scrutiny of Australia's consulting industry. An independent review is now underway as regulators, clients and government bodies continue to examine the firm's conduct.
KPMG Australia scandal fallout spreads as major institutions rethink relationship with firm
RBA and Pension Fund Ponder Over KPMG Ties
KPMG Australia saga deepens, more of Australia's biggest institutions review ties with accounting and consulting giant after whistleblower claims
Reserve Bank Governor Michele Bullock this week told a Senate hearing that KPMG was unlikely to be awarded the contract to operate its whistleblower hotline service again. That means the Reserve Bank will have to put the contract back out to tender. Meanwhile, pension fund Rest, which manages A$105 billion on behalf of over two million members, said it was looking to better understand the allegations against the firm.
Government Scrutiny Intensifies
New South Wales' government has also obtained assurances from KPMG over the handling of sensitive information, and whether any fined employees are currently working on government work contracts.
The allegations are that partners at KPMG used confidential documents from property developer Lendlease while bidding for major audit contracts with rival companies. The claims have led to increased scrutiny of KPMG's internal practices and procedures concerning how it handles sensitive client information.
The changes come after former KPMG Australia CEO Andrew Yates and audit chief Julian McPherson stepped down when KPMG's handling of the whistleblower complaints came under fire.
KPMG had initially denied the allegations, but later admitted failures in its internal investigation. The firm has retained an independent firm to carry out a review of the external inquiry. The episode follows a pattern of anguish for Australia's consulting industry and again raises calls for tougher oversight and supervision of the large accounting firms that dominate the sector.
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