ASIC chair Sarah Court announces investigation into Big Four auditing firm KPMG

Australia’s corporate regulator launched a formal investigation into Big Four auditing firm KPMG in the days after its chief executive Andrew Yates resigned following a whistleblower revelation that confidential information had been misused to win lucrative contracts.

Sarah Court, the new chair of the Australian Securities and Investments Commission, confirmed the investigation in her opening statement to a Senate estimates committee on Friday morning but admitted her powers were limited.

“Finally, and I’m sure we’ll be talking about this this morning, chair, we have commenced an investigation into allegations about the conduct of several registered company auditors at KPMG that came to light after claims were first aired in the Parliament,” she said.

“Our focus is to determine whether the conduct sanctioned by KPMG may be a breach of the duties of a registered company auditor.”

KPMG, a Big Four auditing firm with Federal and State government contracts, has admitted to misusing confidential client information to score more audit work with corporate clients, after allegations of misconduct were aired in Parliament two months ago.

The Commonwealth alone has $27m worth of active consultancy contracts with KPMG, across various agencies, and KPMG donated $73,700 to the Labor Party in 2024-25, Australian Electoral Commission disclosures show.

Under questioning from Greens senator Barbara Pocock about the corporate regulator’s correspondence with KPMG chairman Martin Sheppard, Ms Court confirmed ASIC had moved to a formal investigation into KPMG this week, following an initial preliminary inquiry in April.

“Now, in terms of the correspondence that we have had with Mr Sheppard, with KPMG, there has been a significant amount of interaction between ASIC and KPMG at the most senior levels and also, Senator, some meetings,” she told the Senate economics committee.

“I can assure you that ASIC has been engaging proactively with KPMG and that that level of engagement has intensified.”

But Ms Court revealed she was unaware of why Mr Yates resigned as CEO a week ago.

“I don’t have that information with me, Senator, no,” she said.

The head of ASIC also admitted she didn’t have the power to sanction KPMG partners found to have acted improperly.

“Our jurisdiction is available, Senator, only in relation to some individuals that sit within a partnership and that are people that are registered company auditors — those senior auditors that sign off on accounts,” Ms Court said.

She also struggled to confirm if ASIC would be able to refer KPMG partners to the Commonwealth Director of Public Prosecutions for potential criminal charges.

“I might have to take that on notice, Senator, whether or not the potential contraventions that relate to registered company auditors are criminal offences,” she said. “I suspect they’re not.”

Finance Minister Katy Gallagher was also asked to explain why KPMG partner David Bradbury, a former Federal Labor MP for the western Sydney seat of Lindsay, was appointed as a part-time chair and member of the Board of Taxation on March 27 — three days after a Labor senator aired claims of KPMG misconduct in Parliament.

“It’s clearly a real risk of regulatory capture. I am very concerned about this, that KPMG, a partner is now inside the house, yet another one, advising your government on tax,” Senator Pocock said.

“What’s your response to my concern about bringing in a partner from a firm that’s clearly under a very large black cloud in terms of its culture, its practices and its ethics?”

Senator Gallagher, representing Treasurer Jim Chalmers replied: “In terms of the appointment of the honourable David Bradbury, the Government, obviously, strongly supports that appointment. He’s more than suitably qualified with 25 years of experience in law, government, tax policy. He has a very strong CV.”

Ms Court told senators ASIC had met with KPMG on April 14, a week before a preliminary investigation was launched.

KPMG then forwarded information on April 29 “which alerted us to the fact that there were some individuals that were being investigated by KPMG including three registered company auditors that it was proposing to sanction”.

“There was a flurry of activity last Friday when the then CEO and head of audit resigned,” Ms Court said.

“Since that time, we have commenced our formal investigation, earlier this week, and I should also make clear that we have issued multiple compulsory notices throughout that period to KPMG and the formal investigation is underway.

“I think it’s fair to say, Senator, there are three registered company auditors that are currently within the scope of what we were looking at.

“This is an ever-moving feast at the moment as more information comes our way. Needless to say, we have deep concerns about what has been revealed in the press and we are trying to get to the bottom of the evidence as to those various incidents.”

Mr Yates’ resignation on Friday last week occurred two months after Labor senator Deborah O’Neill told Parliament that a whistleblower who had previously worked at KPMG Australia, as a senior executive, had revealed confidential information was misused to win contracts.

“These matters concern audits and tenders involving ASX-listed and systematically important institutions,” the testimony read out in the Senate said.

“Confidential Lendlease board papers were taken and circulated internally within KPMG and used to support pursuit of major audit tenders, including Westpac and Dexus.”

Greens treasury spokesman Nick McKim said the Big Four auditing firms had a bad reputation, lumping in EY and PricewaterhouseCoopers with KPMG.

“The audit sector has been engulfed in rolling scandals for a couple of years now,” he said.

“We’ve got KPMG currently embroiled in an absolute scandal.”