KPMG Australia faces probe by corporate regulator as audit leak scandal fallout widens

The probe comes as some blue-chip clients and government agencies say they are re-examining their association with the Big Four accounting firm, three years after rival PwC Australia was rocked by a scandal that involved sharing confidential government information with prospective clients.

The Australian Securities and Investments Commission said it began a preliminary probe into KPMG in April and moved to a formal investigation after the resignation of the firm's CEO and audit chief last week.

"There are three registered company auditors that are currently within the scope of what we were looking at, but I have to say this is an ever-moving feast at the moment as more ⁠information comes our way. So I don't know that will be the end of it," ASIC Chair Sarah Court told a Senate committee on Friday.

KPMG declined to comment.

Australia's Department of Finance said it was taking the allegations "extremely seriously" and reserved the right to suspend KPMG from its panel of firms pre-approved for advisory services, or to seek an agreement for KPMG not to bid for any federal government work for a period of time.

PwC agreed not to bid for new government contracts from April 2024 to July 2025 after its scandal. The firm sold its government advisory business, which had accounted for a fifth of its revenue, for A$1 in August 2024. The renamed Scyne Advisory was then allowed to bid for new government contracts.

Whistleblower allegations

In March, Deborah O'Neill, a senator from Australia's ruling Labor party, shared with parliament a whistleblower's allegations of misconduct at KPMG. They included that confidential board papers from real estate company Lendlease were used to support bids for major audit tenders for Westpac, a large bank, and ‌Dexus, a ⁠property firm.

KPMG had conducted an internal investigation into the claims but failed to substantiate any misconduct. It has since engaged law firm Allens to conduct a new external investigation.

Court said KPMG partners Paul Rogers and Eileen Hoggett were two of the three auditors the regulator was investigating.

The pair were named by the whistleblower as the lead partners on the Lendlease auditing team who allegedly misused the company's board papers, according to O'Neill. Court did not name the third partner under investigation.

Rogers and Hoggett did not respond immediately to requests for comment via LinkedIn.

KPMG said on ⁠Wednesday that Hoggett stepped down from her executive role as chief operating officer but would remain as an audit partner.

Court said she had "deep concerns" over the alleged misconduct but ASIC did not have powers to take action against the firm due to its partnership structure, only individual auditors.

Clients place KPMG under scrutiny

The PwC scandal in 2023 prompted a number of public- and private-sector clients ⁠to freeze ties with that firm, and there are indications some KPMG clients could respond similarly.

Dexus said this week its 2026 accounts would not be signed off by Hoggett, who had previously audited the firm's financial results.

REST, a A$105 billion ($74.80 billion) pension fund that uses KPMG as its internal auditor and tax agent, said it was seeking ⁠more information from the auditing firm amid the unfolding scandal.

KPMG ran a whistleblower service for the Reserve Bank of Australia under a contract that cost A$10,000 a year, the central bank's Governor Michele Bullock said on Thursday.

"I don't think we'll be reappointing them to the whistleblower service," she said in a Senate committee hearing.

($1 = 1.4037 Australian dollars)