IAG shuts KPMG out of $11.6m audit job as scandal costs accounting giant major corporate clients

Insurance giant IAG has sensationally dumped KPMG as its next auditor after 26 years, stripping the scandal-hit accounting giant of another lucrative contract as its corporate clients desert it.

Insurance Australia Group told investors on Friday it would seek a new auditor this financial year, shutting KPMG out of the tender for a job that earned the firm $11.6 million in annual fees.

The insurer said it had been “well served by KPMG as external auditor” since its stock market listing in 2000, but the board cited the length of the relationship in its decision.

“With the focus on tenure, KPMG will not be invited to participate,” IAG said.

Property giant Lendlease has already severed its 68-year relationship with KPMG, costing the firm an account that generated $10.9m in audit fees last financial year.

Macquarie Group followed in August, scrapping plans to hand KPMG an audit worth $74.9m to incumbent PwC in 2025 before the accounting giant even got its foot in the door.

Dexus is weighing keeping KPMG after allegations confidential information from its internal audit work could have given it an advantage in winning the property group’s external audit.

Westpac has kept KPMG for its 2026 audit despite questions over its tender process, while Optus has retained the firm after accusing it of sharing confidential material with staff chasing rival Telstra’s business.

The scandal has claimed KPMG’s former chief executive Andrew Yates and chair Martin Sheppard, while a parliamentary inquiry continues to probe the firm’s handling of client secrets.

KPMG has also agreed not to bid for new Federal Government work until October 31, with a separate agreement keeping it out of new WA Government tenders until at least September 30.