KPMG hinted at internal investigation to Westpac in 2025

The major bank has provided its responses to questions taken on notice during the appearance of its board audit committee chair, Michael Ullmer, at the Parliamentary Joint Committee on Corporations and Financial Services on ethics and professional accountability at KPMG on 14 August.

Earlier this year, KPMG admitted that a partner accessed Lendlease documents without authorisation while pitching for a major Westpac contract.

A whistleblower previously alleged that confidential Lendlease board papers were taken and circulated internally within KPMG and used to pursue a major $32 million-a-year audit tender at Westpac.

In March this year, Labor senator Deborah O’Neill raised concerns about alleged misconduct at KPMG following a whistleblower tip-off, including breaches of independence and misuse of confidential information.

Responding to a question on when Westpac was notified by KPMG of whistleblower allegations, the bank said Ullmer became aware of them following O’Neill’s statement in parliament in March.

However, Westpac noted that in the first half of 2025, Yates “verbally notified” Nash of a confidential internal matter KPMG was investigating.

Yates made reference to Westpac’s audit tender but did not raise any issues of concern in relation to KPMG’s audit relationship with Westpac, the bank said.

It also added that Yates said he would contact Nash if he had any further information about the matter affecting Westpac.

“KPMG’s notification did not provide any specific details on the allegation,” Westpac said in its responses.

“Mr Nash then verbally informed the Westpac chairman of the substance of his conversation with KPMG.”

Nash worked at KPMG for 25 years and was the chair from 2011 to 2017, before becoming Westpac’s board audit committee chair.

In June, The Australian Financial Review reported that Nash sat in on meetings and “engaged in questioning” when KPMG, EY, and Deloitte pitched for the bank’s audit tender despite assurances that he was not involved in the tender.

The following month, Westpac announced Nash's retirement from its board, effective 1 July 2026.

Westpac chair Steven Gregg said at the time that with the spotlight on Nash’s former roles and relationship at KPMG, “he has decided now is the right time to retire from the board to limit any ongoing distraction for the company”.

He also described Westpac’s audit tender process as robust.

“Peter declared his past connections with KPMG and was not on the selection committee. However, he acknowledges the perception of bias that may have been created by his relationships.”

Ullmer was subsequently appointed chair of the board audit committee.

The parliamentary committee also asked Westpac to explain what steps it is taking to ensure these events do not repeat and that it has enough trust to fulfil its responsibilities to the Australian Prudential Regulation Authority (APRA) and the market.

The major bank responded that it remains actively engaged with KPMG to ensure full transparency of the accounting firm’s remediation program, including changes to leadership, governance, culture, and controls. Further, it said it is monitoring the performance of KPMG’s Westpac audit engagement team to ensure it meets its expectations.

“In this regard, we will remain in active dialogue with KPMG’s global leadership team to ensure their ongoing support to the audit engagement team in terms of personnel and resources. We are keeping our regulators informed on this matter,” Westpac said.

It added that it has not calculated the costs of KPMG’s audit scandal to the bank (including reputational impacts) but noted that it has been reviewing the matter since March to assess the implications.

“A key focus has been to ensure that there is no distraction to KPMG completing our FY26 external audit in an effective and competent manner,” the bank said.

Yates stepped down as CEO in May this year and was replaced by new CEO John Sams in July.

KPMG’s former partner, audit and assurance, Kim Lawry, departed the firm after Westpac demanded that she be removed from the tender bid.

The parliamentary hearing uncovered Lawry’s role in KPMG’s alleged misconduct in its audit practices, including taking a screenshot of confidential Lendlease board documents. The documents contained sensitive commercial information about KPMG’s rival firms ahead of its successful tender bid for Westpac’s audit contract.