KPMG’s HR response under scrutiny at whistleblower inquiry

During the dedicated parliamentary inquiry into KPMG Australia's ethics and professional accountability on 19 June, former national managing partner of audit assurance, Julian McPherson, admitted that he went straight to HR upon discovering the whistleblower complaint.

At the inquiry,sSenator Deborah O’Neill, who initially told the Senate of the whistleblower’s allegations against the firm, said: “I’m a little shocked that the first person you went to was Human Resources, which is often, people know, a way of managing people with a problem … you looked at this and you went, oh, this guy’s a problem.”

Former chief executive of the firm Andrew Yates said: “My recollection is that these issues were presented to me in the context of the employment matters.”

During the Parliamentary inquiry, O’Neill criticised that McPherson did not give priority to the whistleblower’s allegations, suggesting it was treated as a “HR problem”.

Referring to a piece of evidence substantiating some of the whistleblower’s allegations, Yates said: “Up until the date of the document that was discovered on the 21st November, I think … the way that I talk[ed] to the team about this was about the employment elements of the challenge, and I could see that it was escalating.”

In a statement released on 19 June, the Greens said that the core issue in KPMG Australia’s handling of the whistleblower’s complaints is that they were treated as an “employment” HR problem.

“Chief financial officers and other corporate leaders play a key role in ensuring that whistleblowers in their organisations are protected, and not punished,” added Kieran Pender, associate legal director at the Human Rights Law Council, when speaking to Accounting Times.

Also speaking to Accounting Times, UNSW School of Accounting, Auditing and Taxation professor Gary Monroe said that firms that appear to cover up treat whistleblowers "very poorly".

“Often they’re ostracised; they're treated very poorly at work. Often they leave the firm…in many cases they're fired or they're given demotions or no work to do, etc. So they're definitely not being treated as if they've done the right thing, when in fact … in many cases … they have done the right thing,” Monroe said.

In addition, Swaab partner Michael Byrnes said firms “need to be fully equipped to deal with the whistleblowing complaint, … understand the policy, the process and the guardrails that need to be put in place to both properly deal with the [complaint] and also protect the whistleblower”.

“Whistleblowing legislative provisions are strong. It is a matter of enforcing their full implementation. It's really not a matter of the provisions,” Byrnes said.

“These frameworks should include effective and accessible procedures and policies, as well as facilitate trauma-informed disclosure mechanisms, training on whistleblower protections for all staff, and adequate support for whistleblowers,” Pender said.

“Whistleblower protection is critical to any governance, risk and compliance framework and should be considered by all leaders. When whistleblowers speak up, they safeguard ethics and integrity within their organisation.”

How the treatment of whistleblowers reflects on the structure of the big four remains to be seen. While the Treasury continues its consultation on the regulation of accounting, auditing and consulting firms in Australia until 12 August, the fate of whistleblowers at firms remains in the balance.

In a statement provided to Accounting Times, KPMG said that it is actively engaging with the options paper as it progresses.

"KPMG continues to support reforms that strengthen governance, transparency, auditor independence, firm-level regulatory oversight and public confidence in the profession," the spokesperson said.

"The firm has previously advocated for enhanced governance standards, greater regulatory oversight, stronger transparency measures, restrictions on non-audit services and increased accountability mechanisms for audit firms."

More to come.