‘I smell a rat’: Greens decry KPMG defence deal amid federal contract ban

KPMG, which has been mired in an alleged audit misconduct scandal, inked a $5.2 million defence deal despite agreeing to cease federal government bids from mid-June until the end of October, The Australian Financial Review has reported.

This followed a mutual agreement between the Department of Finance and KPMG, under which the department commissions an independent review of KPMG’s governance, culture, ethics, and integrity frameworks.

Green senator Barbara Pocock accused the government of “building loopholes” so it can continue to award contracts to and “keep doing business” with KPMG despite the freeze.

The Department of Finance is responsible for managing the Commonwealth’s response to the ethical concerns resulting from KPMG’s alleged misconduct and misuse of confidential client information to win lucrative audit contracts.

According to AusTender, the contract with the Department of Defence was executed on 1 July 2026 in the category of “management support services” to provide “delivery partner support”, and will end on 30 June 2027.

The Australian Financial Review reported that the procurement process was undertaken before the ban was imposed. The contract relates to managing health records for uniformed personnel.

Furthermore, KPMG signed a three-year deal with the Department of Veterans' Affairs (DVA) worth $121,000 on 12 August, with a contract period from 17 August 2026 to 17 August 2029 in the public enterprises management or financial services category for reporting models licence renewal.

The reason for the consultancy was stated as “need for specialised or professional skills”. It explained that an SME was not engaged because the “capability or capacity” was “not available from an SME”.

Earlier this year, KPMG agreed with the Commonwealth that, during the Department of Finance's review of its ethical soundness, it would temporarily stop new contract engagements with Australian government entities subject to the Commonwealth Procurement Rules (CPR) from 16 June to 30 September 2026.

However, the freeze has been extended to 31 October as the timeframe for the independent review has been extended to 9 October to allow time to consider other reviews into KPMG, which will report by 30 September, according to the Department of Finance.

Under this agreement, Commonwealth officials are forbidden from entering into any contracts with the scandal-plagued firm or making any approaches to market during the ban period. This includes new engagements (such as whole-of-Australian government panel arrangements) and/or new contracts with a third party, including KPMG being appointed as a subcontractor to that third party.

The Department of Finance pointed out, however, that this agreement to stop new contract arrangements does not apply to the following:

• Existing contracts with KPMG, including the exercise of extension options within those contracts.
• The ongoing licensing or sale of KPMG proprietary products currently in use by Australian government entities.
• Proposals KPMG submitted before the mutual agreement to pause (mid-June).

Greens say Labor propping up “disgraced” KPMG

Commenting on the deals, Pocock questioned why the government failed to indicate that these contracts are extensions or amendments if that is indeed what they are.

“I smell a rat,” she told Accounting Times.

“Labor says it has put a temporary freeze on new KPMG contracts, but it’s continuing to hand KPMG new contracts at the same time. These new contracts show that the government continues to prop up a disgraced consultancy firm.”

“Since the PwC tax leaks scandal in 2023, the government has had every opportunity to properly reform the big four. Instead, we’ve got a token temporary freeze while KPMG continues to receive hundreds of millions in government contracts,” she said.

“Enough is enough. The government should review every KPMG contract and properly ban the firm out of future government work.”

Procurement followed policy, DVA says

In a statement to Accounting Times, a DVA spokesperson said the department followed stipulated policy when procuring financial reporting tools.

“In accordance with Department of Finance procurement policy advice, DVA has engaged KPMG to supply financial reporting tools that support the preparation of the department’s financial statements and financial reporting,” the spokesperson said.

“These are longstanding tools used widely across the Australian public service. In accordance with Department of Finance procurement policy advice, the procurement of these tools is specifically excluded from the ban.”

The defence and DVA contracts add to other deals worth more than $10 million in mostly defence contract extensions signed since the ban (which is permitted under KPMG’s agreement with the Department of Finance).

The firm’s temporary ban from bidding for Commonwealth contracts followed internal and external investigations as well as a parliamentary hearing on alleged audit misconduct and the unauthorised sharing of confidential client information.

It also came as the Greens placed more pressure on the federal government to ban KPMG from all government contracting work.

In July, the Victorian government said it has banned KPMG from having contracts with its government body while the review is underway and has told it to withdraw from current tender processes.