KPMG Audit Scandal Australia: Major Clients Question Firm’s Integrity

The KPMG audit scandal Australia deepened Friday as executives from Macquarie Group, Westpac, Optus and Dexus told a parliamentary inquiry they had doubts about the accounting firm's trustworthiness following revelations that audit partners misused confidential client data, according to ABC News.

The Parliamentary Joint Committee on Corporations and Financial Services, chaired by Labor Senator Deborah O'Neill, questioned corporate leaders about how KPMG audit partners allegedly used confidential Lendlease board papers to help win audit tenders from Westpac and Dexus. Senator O'Neill first raised the whistleblower's allegations in parliament in March, ABC News reported.

Macquarie chairman Glenn Stevens told the inquiry the bank was reviewing whether KPMG should retain its audit contract, worth more than $75 million annually. Macquarie had faced investor pressure after it emerged that Michelle Hinchliffe, a former senior KPMG partner who chairs the bank's audit committee, attended meetings while Macquarie was deciding on its auditor. KPMG was formally awarded the contract in November, with work due to begin in 2028 pending the review, according to the report. The scrutiny of major financial institutions' governance comes as global markets continue to navigate a period of volatility, seen recently in currency market fluctuations such as the Indian rupee's weekly decline.

Former KPMG chief operating officer Eileen Hoggett faced repeated questioning over why she stored printed copies of confidential Lendlease documents in her locker. She told the committee she did not recall doing so, despite evidence showing it occurred, and denied the documents were shared broadly or used to win new work, ABC News reported.

Former KPMG partner Kim Lawry said she was unaware that a screenshot of Lendlease board papers she had taken, which detailed how rival audit bids were ranked, was confidential. Liberal Senator Paul Scarr disputed her characterisation, comparing the conduct to burglary, according to the report.

Senator O'Neill said there were "many, many more" whistleblowers raising concerns with the committee about alleged misconduct at KPMG. New KPMG chair Michael Ebeid said he had spoken with the original whistleblower by video call two days before the hearing, ABC News reported.

The inquiry also examined how legal firms Ashurst and Allens investigated the whistleblower's complaint. Parliamentary documents released this week showed KPMG had provided incomplete information to Ashurst, while a later 61-page investigation by Allens concluded the allegations were unsubstantiated. Former KPMG chief executive Andrew Yates told the hearing a board subcommittee, not him, had overseen what information was given to Allens, according to the report.

Westpac board member Michael Ullmer said the bank's board was not informed of the allegations until Senator O'Neill's parliamentary statement in March, despite a warning having reportedly been given earlier to fellow director Peter Nash, a former KPMG partner who resigned last month. Ullmer said Westpac had experienced a "drip feed of information" from KPMG since then, ABC News reported.

Dexus chairman Warwick Negus disclosed that former KPMG chief executive Andrew Yates played golf with former Dexus chief executive Darren Steinberg during the audit tender process. Negus said KPMG should have engaged a separate law firm to investigate the allegations, according to the report.

Optus chairman John Arthur said the company was watching KPMG "like a hawk" following what he described as an egregious breach of professional responsibility involving Optus's confidential information. It was separately revealed that KPMG has paid for legal and public relations advice for some former partners facing questioning, including Hoggett, Julian McPherson and Lawry, ABC News reported.

The Parliamentary Joint Committee on Corporations and Financial Services continues its inquiry, with the federal government also examining whether the audit and accounting functions of Australia's Big Four firms should be structurally separated, according to the report.