KPMG allegations, ASIC response centre of parliamentary investigation

As related to recent coverage of the KPMG whistleblower probe and the resignation of chief executive Andrew Yates in Accounting Times’ sister brand, Accountants Daily, ASIC remains engaged in public hearings conducted by the Parliamentary Joint Committee on Corporations and Financial Services as it continues its inquiry into the Oversight of ASIC, the Takeovers Panel and the Corporations Legislation.

On Friday’s (29 May) hearing – and the joint committee's fifth since the matter was referred on 24 July 2025 – ASIC chair Joseph Longo and ASIC commissioners clarified the organisation’s current understanding of the situation, where it was most concerned, and what actions it is expected to take in the ongoing investigation.

Incidentally, the committee was informed of Yates’ resignation approximately 50 minutes into that hearing. When asked about his perspective on Lendlease’s advice to KPMG that its employees’ actions were “not acceptable”, Longo said: “It’s entirely understandable from Lendlease’s perspective that what happened was, to use Lendlease’s word, unacceptable”.

“There’s clearly a breach of what would normally occur between an auditor and its client here.”

Longo also said that the resignation of the firm’s head of audit, Julian McPherson, as well as that of Andrew Yates, was made independently of ASIC.

However, chair of the joint committee, senator Deborah O’Neill, said that the structure of firms such as KPMG meant all partners could be held jointly liable for any liabilities.

In his introductory comments, senator Paul Scarr noted the quality of the whistleblower’s detailed disclosure.

“Now we’re seeing repercussions flowing from that which would not have flown but for the actions of the whistleblower, which underlines the importance of whistleblowers and the great good they perform for our community.”

When directly asked by O’Neill whether he was aware of the allegations that she raised in March, Longo said: “I’m generally aware that whistleblower allegations have been made.”

Regarding possible actions ASIC can take to investigate and sanction KPMG, ASIC commissioner, Kate O’Rourke, said: “I can confirm that ASIC has commenced investigations, a preliminary investigation into the allegations about the conduct of a number of the registered company auditors at the firm KPMG”.

“Just to be clear, it’s in relation to the registered company auditors rather than the firm itself.”

Then-incoming ASIC chair Sarah Court said: “Just to put a bit more on the record … we started those enquiries in April, we’ve had further anonymised information, as Commissioner O’Rourke said, late in April. We have issued a number of notices to KPMG for production of information. We’ve been informed by KPMG that they intend to claim legal professional privilege over much of their investigation material … so while that’s not uncommon, that is something we’ll have to navigate as we work our way through the investigation”.

O’Neill responded: “We have considered legal professional privilege abuse, and the overreach of legal professional abuse and its impediments, the impediments that it places on ASIC doing their job in the public good.”

“I’ll put that on the public record that with regard to KPMG, if we have reached a point where there is sufficient interest in these breaches and sufficient acceptance that there’s a failing to lose the CEO and the head of audit, it would be incumbent then upon those remaining at KPMG to corporate fully with ASIC and not seek to abuse legal professional privilege in the way we have seen as a technique in the past”.

“We do expect the basis of any claims to be properly articulated,” Court said.

O’Neill also urged KPMG to act with moral integrity on all matters raised by the whistleblower.

“The facts matter when companies are doing their finances and auditors are there to make sure there’s truth telling. I think we’ve seen a remarkable failure of that.”

“And I cannot see how partners at KPMG, despite your lack of a regulatory hawk, can consider themselves absolved of what’s happened. They took money from the profit that’s been made by these behaviours.

“They can’t run and hide now, despite a lack of a regulatory hook”.

In the same vein, O’Neill cited the relevance of past ASIC cases to the current KPMG situation, namely, where an ex-partner audit firm had become the office holder at the client. Describing this situation as “policing your best mate”, she noted that ASIC’s report noted the failure in audit independence.

“That’s why we are particularly concerned. This has been an area of focus for ASIC over the last couple of years. This report is very clear about us seeing these as threats to independence,” Court said.

“You note some auditors stated they did not consider that the relationship characteristics described above created a conflict of interest situation,” O'Neill said.

“That is like alarm bells absolutely ringing in my ears. To actually manage a conflict of interest, you’ve actually got to see it first.”

O’Neill also praised the whistleblower’s tenacity “despite two years of attempting to bring this to the attention of a range of entities, including KPMG itself”.

Further, upon receipt of two documents – one provided to ASIC by KPMG that morning and one to the Committee from Lendlease – it was suggested that the firm was aware of its misconduct at least weeks before it filed the official breach notice with ASIC.

When questioned about this conflicting timeline, ASIC noted that KPMG eventually provided information in late April, albeit in the form of anonymised written details rather than an official report.

However, both a lack of transparency and timeliness were suggested at this time.

O’Neill added: “I’m a little concerned by the last part of the letter, which is where it differs from the one that’s been received by ASIC where the letter signed by Martin Shepphard, the Chair of KPMG, begins to advise the Committee on the way in which we should proceed”.

“Can I be very clear? The Committee will follow its own processes and we expect full cooperation in every way with the requests of the Committee for both attendance and the provision of all documents.”

Further, a committee member drew attention to a portion of the newly received correspondence suggesting that KPMG has previously reported to professional bodies and regulators, with three partners having been sanctioned as a result.

Bucholz asked ASIC whether they were aware of who these partners were and where the investigation was up to, to which it was noted by O’Rouke that: “I think we gave evidence earlier around that information being anonymised and the fact we took action to seek the details of the particular people involved under notice”.

The information was taken on notice at this point.

“We’re aware that KPMG have told us that they’re conducting their own investigation and that they have determined to sanction four individuals. Those are individuals I don’t have the name of in front of me as we’re speaking. Three of those individuals are registered company auditors, and ASIC has jurisdiction in relation to registered company auditors,” Court said.

“So we have now commenced our own investigation into those allegations about the conduct of those registered company auditors."

“We would hope that KPMG will divulge to us in full what they find out as a part of their own investigation so that that can feed into the work that we are doing. And then we will make a decision, once we’ve concluded our work, as to whether there are any formal sanctions or enforcement activity that we might wish to take in relation to those three registered company auditors."

A secondary finding of misconduct associated with a separate inappropriate sharing of documents, identified in the letters received on 29 May, was recently covered by Accounting Times.

Both matters and the parliamentary joint committee are ongoing, with more information likely to be revealed at the newly announced 19 June public hearing specifically into KPMG matters.

In the meantime, it remains to be seen whether the situation will face the same degree of scrutiny as PwC did in 2023.