Macquarie Bank backflips on KPMG’s audit suitability

Macquarie Bank has announced that its board will no longer recommend KPMG at its 2027 Annual General Meeting and will continue its engagement with PricewaterhouseCoopers (PwC) for auditing services.

“Macquarie has reconfirmed PwC’s ongoing capacity to deliver its global audit in line with its high-quality tender proposal,” the bank said in a statement on Wednesday (26 August).

“The Boards currently hold concerns in respect of KPMG Australia and its audit practice in two of the key criteria considered in the audit tender completed in late 2025, namely capacity to deliver the audit given several key members of the proposed KPMG Australia audit team have departed; and culture, including a culture that transparently discloses issues,” it added.

Macquarie Group chairman Glenn Stevens and the bank’s chief financial officer Frank Kwok previously appeared before the Parliamentary Joint Committee on Corporations and Financial Services at the KPMG ethics and accountability public hearing on Friday (14 August).

Falling through the ‘set criteria’

The bank’s policy is to review its audit firm partner every five years and tender for audit services at least every 10 years.

“The decision we took as a board was to put to the shareholders [that] in July 2027 … that [KPMG Australia] become the auditor. The decision we took to that end as a board was based on our assessment of capability. And I think at that point, no reservations about culture and so on,” Stevens said at the hearing.

Also speaking at the hearing, Kwok described the bank’s set criteria for audit tenders. He said that culture, experience in auditing large firms, understanding of the financial sector, and the team, specifically the partnership across the globe and lead partner.

“Because we want the best quality … price obviously is not really a consideration … that’s at the end. It’s an equal weighting with all of the other matters that I mentioned,” Kwok said.

The committee grilled the chair and chief financial officer on the board’s proposal to put forward KPMG as an auditor for its next review.

“I can’t commit to a date when this will be finalised, but we are expecting to receive information quite soon, and we, as a board, need to either have confidence to proceed with the current plan to move ahead with KPMG, or it’s conceivable that we can revisit that decision,” Stevens added.

This follows legal advice from Allens that “no further action was needed” by KPMG in light of allegations made by a whistleblower against it.

In light of the Allens advice, Stevens said: “I think, as Frank said, this is a tractable, feasible, and appropriately configured inquiry that was asked of us to be done. I don’t think it is open to us to appoint a law firm and then just say go and review KPMG’s materials. They’re KPMG’s materials. They’re not ours to review.”

“We will be relying on the quality of that assessment,” Stevens added.

“It seems to me that you’re putting to us the view that you are willing to spend $75 million on auditing capacity for KPMG, but you don’t trust them with regard to scoping legal advice. So that is a fundamental disconnect. You are allowing them to determine the access to information internally themselves. You’ve outsourced their assessment of themselves to themselves,” senator Deborah O’Neill said.

In its latest statement, the bank acknowledged that the decision originated from the continued scrutiny of the firm’s audit practice.

“It also follows Macquarie’s formal enquiries of KPMG to consider its capacity to deliver the audit, as well as the nature and impact of ongoing issues at KPMG Australia,” the bank said.

“The next comprehensive [audit provider] review falls due by 2031,” it added.