Federal government has contracts worth more than $650m with embattled KPMG

It has been revealed the federal government has almost 300 active contracts with scandal-embroiled KPMG, for a total value of $653 million, according to data from the parliamentary library.

KPMG is being investigated by the corporate watchdog ASIC over claims it misused confidential client information and then mistreated an internal whistleblower.

In 2024, a whistleblower raised concerns with the firm's senior leadership that confidential board papers from construction giant Lendlease were used to pitch for and win audit contracts from other firms including Westpac and Dexus. 

An internal investigation did not substantiate the claims, with a further investigation by another external legal firm also supporting the original outcome.

However, after the whistleblower raised further complaints with the board, a different external law firm, Allens, was appointed to look into the claims, which is ongoing.

It uncovered secondary instances of inappropriate document sharing. 

The scandal claimed the CEO's scalp

The scandal was publicly revealed by Labor senator Deborah O'Neill in March under parliamentary privilege. 

In late May, KPMG chief executive Andrew Yates and audit partner Julian McPherson resigned, with KPMG admitting the investigations "fell short of the firm's expectations" and apologising to the whistleblower.

Chief operating officer Eileen Hoggett was also demoted.

In early June, under questioning at Senate estimates, ASIC revealed it had begun a formal investigation into KPMG and revealed two of three registered auditors it was looking into: Eileen Hoggett and audit partner Paul Rogers.

Next Friday will be a day of reckoning for a stream of senior KPMG former and current leaders, who will be among 30 witnesses grilled by senators, which will also include the firm's clients, regulators and industry bodies.

Federal government entered contracts after scandal was revealed

As one of the "big four" accounting firms, KPMG has contracts across governments and corporates for consulting and accounting work such as auditing.

Thirty-one government contracts, worth nearly $24 million, were signed with KPMG after the scandals became public on March 24. 

These include with ASIC and the Bureau of Meteorology, as well as the Finance, Defence and Attorney-General's departments.

"This government is completely addicted to KPMG," said senator Barbara Pocock. 

"The government must review all current contracts and ban KPMG from any future contracts until they've been properly investigated."

KPMG's scandal comes after fellow accounting giant PWC was found to be misusing confidential government information to help multinationals avoid tax. 

The arm dealing with public contracts was sold off for a dollar in 2023 and it currently does not bid for any federal government contracts due to a non-compete clause.

Government and corporates reconsidering KPMG contracts

Since the scandal broke, a number of public and private organisations have revealed they are considering future relationships with KPMG.

Assistant Treasurer Daniel Mulinio said the government would examine all of its contracts with KPMG and the Treasurer Jim Chalmers has been contacted for further comment.

The Reserve Bank said the firm would no longer run its whistleblower hotline.

The Victorian government is reviewing all KPMG contracts, while Queensland, NSW, the ACT and South Australia have sought more information from the firm. 

Lendlease, which is so far the only client to publicly confirm KPMG misused its documents, will put its external auditing contract (worth $10 million annually), out to tender next year.