KPMG to beef up penalties for serious misconduct

KPMG Australia recently updated its action plan since first releasing it on 23 June 2026, which provides an update on the accounting giant’s existing commitments and new and updated actions stemming from third-party reviews of its alleged misconduct in auditing, breaches of independence, misuse of confidential information, and alleged mistreatment of the whistleblower who initially levelled the allegations against the firm.

The action plan has arisen following reviews and recommendations made by Principia Advisory, Andrews Group, Chartered Accountants Australia and New Zealand (CA ANZ), and Dr Kerry Schott.

KPMG said it will review and strengthen its conduct and consequences framework to further discourage misconduct and ensure that appropriate sanctions and other consequences are applied if misconduct occurs.

“This will include strengthening financial consequences for serious misconduct and increased oversight by the board of the consequences framework’s application to address the findings and recommendations of the third-party reviews,” the report said.

In addition, KPMG said it will consider ways to improve transparency of consequences for misconduct and share insights and lessons from ethical conduct matters through leadership communications and training. It would also look to change partnership agreements to implement these changes, if necessary, it said.

KPMG also said it will update its whistleblower policies and procedures following damning findings from Principia Advisory that fear was rife among employees that speaking up, raising concerns, and challenging leadership could result in dire consequences, including impacts on performance processes, diminished access to work and progression opportunities, reputational harm, professional isolation, and deterioration in workplace relationships.

The firm said it will provide clear guidance and requirements for how whistleblower disclosures must be identified, escalated, and governed, and for how whistleblowers should be “managed”.

“This will include a comprehensive update of our entire whistleblower program to address the third-party review findings and recommendations, including redesign of the end-to-end whistleblowing and speak-up framework and review of our investigation processes (including the appointment and use of external investigators),” the action plan said.

“As part of this we will seek to clarify who are eligible recipients on behalf of KPMG.”

Furthermore, KPMG said it will implement a firm-wide program of training to help partners and staff understand whistleblower legislation and KPMG’s policies. This includes individuals’ rights when raising concerns and the requirements for people to whom concerns are raised.

The targeted training will support partners, eligible recipients, and others with whistleblower program responsibilities, including to help differentiate between ethical and other whistleblower matters and workplace issues, it said.

KPMG said it will publish the updated whistleblower program

Principia’s review stated that it heard feedback about team members under-reporting actual time worked often due to implicit or explicit pressure from partners and team members.

It also noted that there was a perception that partners or others took credit internally for winning client projects to increase their sales metrics when their role may have been smaller than what was recorded in the internal client management system.

Some qualitative evidence found that some people reported that increasing commercial pressure posed greater difficulty in challenging or escalating concerns, particularly where commercially important clients were involved.

To address the third-party review findings and recommendations, KPMG said in its action plan that it will review its learning and development programs to promote ethical decision-making and the exercise of strong professional judgment, including through ethical decision-making frameworks.

It also said it will simplify, clarify, and integrate ethical expectations, including in relation to non-negotiables.

As part of its action item on audit quality, the firm said it will undertake a review to confirm that any current or new conduct matters identified in the future do not adversely impact audit quality. It will write to each audit client impacted to confirm the outcome of this review, it said.

It will also review and amend its audit tender policies and any other related firm-wide policies and procedures to strengthen ethical barriers, it said, including the use of audit client information.

Principia’s review found that there was a lack of clarity on where the line of acceptable behaviour should lie around the sharing of confidential information.

KPMG said in its action plan that it will review, strengthen, and clarify its confidentiality policy to ensure it provides guidance on when information may be shared internally, including articulating what constitutes a legitimate “business need”, and update the policy and supporting guidance accordingly.

KPMG Australia CEO John Sams and independent chair Michael Ebeid said following revelations by the Parliamentary Joint Committee into Corporations and Financial Services inquiry on the firm’s failings, including unethical behaviour by senior personnel and the alleged mishandling of the whistleblower, “we are now focused on ensuring none of this happens again”.

“We need to own and address these issues. These related to our use of confidential client information, integrity and objectivity of senior personnel, our engagement with a whistleblower and our oversight and management of these issues,” they said.

“We have not met our own expectations, or those of the whistleblower, clients and broader stakeholders. These failings do not reflect the values of KPMG. We owe it to our people, clients and other stakeholders to understand these failings, learn from them and address them. We are committed to doing so.”

The action plan will continue to evolve as further findings and recommendations are finalised and considered, KPMG Australia said in its action plan.

A recent review by CA ANZ found no deficiencies within KPMG’s systems and processes for the storage and handling of confidential information of audit clients within its audit department, despite the firm currently being investigated for allegations of serious misconduct.