By Christine Chen and Renju Jose
SYDNEY, June 19 (Reuters) – Australian lawmakers on Friday suggested further regulation of the Big Four accounting firms could be necessary as they grilled KPMG executives over allegations of misconduct — the second big scandal in the country’s industry since 2023.
KPMG has been accused by a whistleblower of misusing confidential company board papers from real estate company Lendlease to support bids for major audit tenders for Westpac, a large bank, and Dexus, a property firm.
The accusations have led to the resignation last month of the CEO of its Australian unit, Andrew Yates, as well as its audit chief. KPMG has admitted it has mishandled the whistleblower complaint and has launched a fourth investigation after its previous ones failed to substantiate any wrongdoing.
KPMG’s current and former executives as well as its lawyers have all been hauled before parliament to give evidence during a day-long public hearing.
KPMG QUESTIONED OVER WHETHER PARTNERSHIP STRUCTURE WORKS
Greens Senator Barbara Pocock accused KPMG of having “leapt over any ethical consideration” in pursuit of commercial gain, and drew parallels to the high-profile PwC tax leaks scandal in 2023.
She questioned whether further changes were needed to tighten oversight of the firms that are regulated as partnerships instead of companies.
That means they are not subject to supervision by the Australian Securities and Investments Commission, which has strict reporting requirements. Instead they are regulated by state-based laws.
“Is the partnership structure now non-functioning in this circumstance? We are here the second time around, PwC and now you,” Pocock asked.
Deborah O’Neill, a senator from the ruling Labor party, echoed those sentiments and asked if there were bad apples in the firm or “is the whole barrel rotten?”
“I don’t see myself as a bad apple,” Yates replied.
“And nor do I see the firm to be full of bad apples. We are a large, complex organisation and we’re fallible.”
Asked why it took so long to share the complaint with the firm’s senior leadership, Yates said he felt reluctance at the time to share the issue with 680 partners.
O’Neill responded that under a company structure, there would have been an executive responsible for such matters.
“But the structure you have means everybody is responsible for everything that you do, jointly with you.”
KPMG ACCUSED OF TREATING WHISTLEBLOWER HORRIBLY
Members of the joint parliamentary committee on corporations also heard how after the whistleblower complained to the firm, their computer was repeatedly searched and they were not given legal protections.