)
The Federal Department of Finance has announced an independent review of KPMG Australia following whistleblower allegations of inappropriate internal sharing of client documents, with the "big four" firm voluntarily agreeing not to bid for new Commonwealth work until the review concludes.
The review, expected to wrap up by the end of September, comes after a cascading scandal that has already claimed two of the firm's most senior leaders.
KPMG Australia CEO Andrew Yates and national managing partner of audit and assurance Julian McPherson both resigned on 29 May after the firm's board found its handling of the whistleblower matter and related internal investigations fell short of expected standards.
The Department of Finance issued a procurement policy note today directing Commonwealth entities to consider the review's findings when engaging KPMG for goods and services.
KPMG's voluntary moratorium on new Commonwealth bids will remain in place until the independent review is finalised.
Stan Stavros, who was appointed interim CEO following the leadership shake-up, says the firm acknowledges the seriousness of the situation.
"Individuals in our firm have made mistakes," says Stavros.
"But those failings do not reflect the overwhelming majority of our partners and people - good and talented professionals who continue to deliver high-quality work with integrity, and with a deep commitment to our values and ethics.
"We are focused on finalising a clear and robust remediation plan, which we are committed to implementing in full. The plan will address the key areas where we fell short of expected standards.
"We must demonstrate that these issues have been properly remediated."
The crisis traces back to the sanctioning of three KPMG partners over the inappropriate sharing of client documents.
A further separate incident of inappropriate internal sharing of client information was subsequently uncovered, broadening the scope of the firm's problems.
External law firm Allens is conducting an ongoing investigation into the matters, with its scope recently expanded.
KPMG has also engaged Principia Advisory to carry out an external review of the firm's speak-up culture, a move widely interpreted as an acknowledgement that internal whistleblower channels failed.
KPMG chairman Martin Sheppard apologised "unreservedly" to the whistleblower and to affected clients in a statement issued alongside the leadership resignations on 29 May
Both Yates and McPherson issued brief accountability statements at the time of their departures, accepting responsibility for the firm's shortcomings in handling the matter.
The Federal Department of Finance today announced that it had reached a mutual agreement with KPMG Australia that the advisory firm will not bid for any new Commonwealth work until 30 September 2026.
The agreement does not apply to existing contracts with KPMG, including the exercise of extension options within those contracts, or proposals submitted by KPMG prior to today's agreement.
The fallout has not been confined to the federal level with the NSW Government seeking assurances from KPMG earlier this month regarding the management of confidential information and whether any personnel under investigation had worked on NSW Government contracts.
The NSW Minister for Finance said on 3 June this year that the government expected "the highest standards of conduct" from firms holding state contracts and would monitor the situation closely.
KPMG says it will cooperate fully with the Commonwealth review and continue to implement the recommendations arising from the Allens investigation and Principia Advisory's cultural review.
"We know we have work to do to regain trust," says Stavros.
"That work is already under way. We will engage constructively and cooperatively with the independent reviewer, listen carefully to feedback from our clients, regulators, stakeholders and our people, and take the actions needed to strengthen our culture, governance and ways of working."
)
