KPMG faces reckoning as ASIC probes partner misconduct allegations

Accounting firm KPMG is embroiled in a scandal involving allegations of misuse of confidential client documents by senior partners. The crisis has prompted resignations, demotions, and a formal investigation by the corporate watchdog, ASIC.

The allegations, initially raised by an internal whistleblower, claim that confidential board papers from construction giant Lendlease were used improperly to win audit contracts from other firms, including Westpac and Dexus. While initial internal and external investigations did not substantiate the claims, further complaints led to a new investigation by law firm Allens, which has uncovered secondary instances of inappropriate document sharing.

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I thought this would be in the public interest.

This scandal has significant implications given the crucial role the "big four" accounting firms play in advising businesses and government. These firms have secured billions in taxpayer-funded contracts over the past decade. The federal government alone has hundreds of active contracts with KPMG worth hundreds of millions of dollars.

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Ernst & Young, Deloitte, KPMG and PWC have earned about $21 billion in taxpayer-funded contracts over the past 10 years.

The situation at KPMG echoes a similar scandal involving rival firm PwC, which was found to have misused confidential government information. This led to PwC selling off its public contracts arm and being barred from bidding for federal government contracts.

ASIC's formal investigation into three registered auditors involved in handling the whistleblower's complaint underscores the seriousness of the matter. The fallout has already seen KPMG's chief executive Andrew Yates and audit partner Julian McPherson resign, while chief operating officer Eileen Hoggett was demoted.

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fell short of the firm's expectations