One firm. One whistleblower. One very inconvenient question. Why is the government still paying $27.4 million to an auditor now under criminal investigation? Australia wants answers.
Image Source: KPMG
The Anthony Albanese government in Australia is reviewing all KPMG contracts across the federal public service as a whistleblower-driven data misuse scandal forces regulators, states, and senators to act.
The federal government holds dozens of active audit contracts with KPMG worth a combined $27.4 million across multiple departments, according to the government’s own AusTender procurement portal.
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Among those contracts is a $6.4 million arrangement with the Australian National Audit Office, the agency responsible for overseeing public expenditure.
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Beyond the audit contracts, the federal government will put more than $270 million in total KPMG contracts under scrutiny as a growing data-misuse scandal threatens to engulf the professional services industry. The Department of Finance has formally declared the crisis a “significant event.”
The crisis erupted after a whistleblower alleged KPMG partners misused confidential Lendlease board papers to secure lucrative corporate audits for Westpac, Dexus, and Macquarie Group.
KPMG Australia has now confirmed that its treatment of the whistleblower and internal investigations into those allegations “fell short.” The firm stated: “We apologise unreservedly to the whistleblower. We commit to learning from this process to ensure we create an environment where it is safe and easy to surface concerns.”
KPMG Chairman Martin Sheppard accepted the resignation of CEO Andrew Yates, effective immediately, as the executive with ultimate responsibility for management of the whistleblower process. The chairman also accepted the resignation of Julian McPherson, National Managing Partner Audit and Assurance, who will stand down from his role and resign from the firm after an orderly transition of client responsibilities.
KPMG Australia’s Chief Operating Officer, Eileen Hoggett, who was directly named by the whistleblower, stepped down from the COO role on 3 June 2026. She will remain an audit partner while investigations continue, according to an internal email from interim CEO Stan Stavros.
ASIC chair Sarah Court appeared before a Senate Estimates hearing on 5 June 2026 and confirmed the regulator had commenced a formal investigation. “We’ve now commenced a formal investigation this week in relation to KPMG and a number of the registered company auditors that sit within it,” she said.
ASIC is actively investigating audit partner Paul Rogers and former COO Eileen Hoggett, both of whom have been stood down from key accounts. A parliamentary hearing is scheduled for 19 June 2026.
The fallout has also expanded globally following revelations that KPMG International refused to protect the whistleblower, instead directing him back to the local arm.
Finance officials told parliament they had to chase KPMG multiple times for information the firm should have volunteered, turning routine engagement into something far more confrontational. A casual “meet and greet” with the firm’s chief executive reportedly turned into a formal questioning session focused squarely on the data misuse allegations.
Finance’s deputy secretary has since written directly to KPMG’s leader seeking detailed answers so the department can decide its next steps.
Finance deputy secretary Marisa Purvis-Smith said her department holds 10 contracts with KPMG, including eight consultancy contracts worth $27 million on AusTender and two non-consultancy contracts worth $4.8 million. She said the department is considering a range of options in response to the scandal, including close monitoring of KPMG, a mutual agreement that the firm not bid for Commonwealth work for a set period, and suspension from the management advisory services panel.
Purvis-Smith said the department expected almost continuous disclosure of significant issues from major suppliers, rather than just getting notification after problems aired in parliament or the media.
KPMG is the Industry Department’s internal auditor under a $1.7 million contract expiring in mid-2026. However, the department had already decided to part ways with the firm before the latest scandal broke.
A tender process began months ago, with the department successfully selecting Sententia and Cobalt to take over the work under new contracts worth a combined $2.5 million.
Industry acting secretary Julia Pickworth said that the allocation of funding within the department “is a matter for the department and the department decision makers.”
Greens finance and public sector spokesperson Senator Barbara Pocock said: “It’s clear that KPMG’s rot spans far and wide in government. Repeated scandals show they are unfit for government work, yet Labor has given them millions of dollars in contracts. Why would the government hire a firm that’s been accused of sharing confidential client information to audit its books?”
Senator Pocock also questioned why the federal government could not follow the states. “If the NSW government can call for a ban on KPMG, why can’t the Federal Government?” she said.
NSW Treasury escalated pressure on KPMG by demanding written assurance that staff linked to the firm’s recent audit scandal are not working on any state government contracts. The demand zeros in on personnel risk rather than processes alone. Industry sources say those connected to the scandal now face a likely exclusion from future NSW government work.
Under strict transparency rules introduced after the PwC tax leaks scandal, public sector clients can now demand that KPMG guarantee no personnel working on government projects have link to the misconduct.
Assistant Treasurer Daniel Mulino confirmed the severity of the allegations has prompted him to revisit stalled recommendations to overhaul partnership structures. Those recommendations include capping partner numbers at 400 and bringing major firms under the Corporations Act to grant ASIC enforcement powers over entire entities.
KPMG’s Canberra operations face a looming June 30 revenue cliff, where $330 million in separate government contracts are expiring. Internal fears are mounting that standard contract extensions will be blocked, accelerating moves by Canberra-based partners to exit the firm ahead of the June 19 parliamentary enquiry.
The scandal draws direct comparisons to the PwC tax leaks controversy of 2023, when confidential government information floated with clients, triggering a sweeping informal freeze on PwC Australia’s Commonwealth work. Whether KPMG faces the same outcome is now a central question for the Albanese government.
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