KPMG to lose another auditor contract amid scandal

Following the loss of auditor contracts from ANZ, Macquarie Group, IAG, and Lendlease amid allegations of audit misconduct and misuse of confidential client information, Crown Resorts has confirmed that it is also pulling the plug on its audit contract with KPMG Australia.

A Crown Resorts spokesperson told Accounting Times that “Crown is considering a change of external auditor in the normal cyclical course of business after six years of KPMG signing the accounts”.

The spokesperson added that Crown Resorts “have been satisfied with KPMG’s performance throughout this period”.

According to reports in The Australian, a KPMG spokesperson said the firm found out last month that it would no longer have the contract and Crown Resorts would look elsewhere.

The news first appeared on corporate gossip site The Aussie Corporate, which said that it had heard reports that KPMG had lost the Crown Resorts audit “effective immediately”. However, both Crown Resorts and KPMG Australia did not confirm when the contract would end.

Crown Resorts first appointed KPMG in August 2020 (effective for the 2021 financial year) to replace EY. It was charged $2.03 million in audit and related fees in its first full year, but it is not known how much it has paid in audit fees since, as Crown was taken over by US firm Blackstone in 2022.

The Australian also reported that KPMG partner Rachel Gatt – who was responsible for the $75 million audit contract of Macquarie Group that it recently lost – had been sharing restricted information about Macquarie Group with her husband.

However, the report stressed that it is not suggesting that either Gatt or her husband Steven Gatt used the information for personal or commercial gain.

KPMG is currently considering sanctions against those identified in the Allens report, including Gatt, but Gatt was not moved down a partner band during the last performance review, which took place after KPMG Australia lost the Macquarie contract.

The accounting firm has been engulfed in scandal since March this year when Senator Deborah O’Neill publicised allegations from a KPMG whistleblower of misconduct related to the firm’s audit independence, misuse of confidential information, and tender integrity failures.

Many executives have left the firm since then, including former CEO Andrew Yates, former chairman Martin Sheppard, former national managing partner of audit and assurance Julian McPherson, and audit partners Kim Lawry and Paul Rogers. Indeed, Lawry left after Westpac demanded she be removed from its file.

Former chief operating officer Eileen Hoggett was the only partner to be expelled from the partnership following evidence uncovered by Allens in its investigations into alleged audit misconduct. She has launched legal proceedings against KPMG in the Supreme Court of NSW.

During a grilling at a parliamentary hearing in August, Hoggett eventually admitted that she wrote an email to her personal assistant about confidential documents relating to the Lendlease audit, which were retained in a locker at KPMG Sydney’s office.

KPMG Australia CEO John Sams recently appointed Gayle Dickerson as chief operating officer and chief financial officer to replace Hoggett and himself in those roles respectively.

Since the allegations came to light, KPMG Australia has lost a string of audit contracts from clients including Macquarie Bank, which withdrew its recommendation to engage KPMG as auditor and retained PwC.

It said it held concerns over KPMG Australia and its audit practices, and capacity to deliver the audit as several key members of the audit team have departed.

It was also recently reported that KPMG Australia would cut up to 400 more roles later this month, as the ban on the firm from bidding for federal government contracts was extended to February 2027.