KPMG chair Martin Sheppard and two audit partners to exit firm amid growing scandal
The resignations were announced by KPMG on Tuesday as part of sweeping changes to address a growing scandal over the accounting firm’s misuse of confidential client information.
KPMG chair Martin Sheppard will exit the accounting firm as part of sweeping changes to address a growing scandal over its misuse of confidential client information.
Mr Sheppard’s pending resignation was announced by KPMG on Tuesday, along with the departure of two audit partners, Paul Rogers and Eileen Hoggett, its former chief operating officer.
KPMG has also launched an “action plan” that will include the appointment of the firm’s first independent chair, an overhaul of its governance and a review of its whistleblower program.
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By continuing you agree to our Terms and Privacy Policy.Extraordinarily, KPMG has also been forced to mandate new training to ensure its staff are aware of their obligations on client confidentiality, privacy and information protection, “with additional targeted confidentiality training for all audit partners and directors”.
KPMG has been under pressure since a whistleblower, a former executive frustrated at the lack of action by the firm, took his claims that KPMG misused board papers from Lendlease to support bids for audit work to Labor Senator Deborah O’Neill in March.
Senator O’Neill aired the claims in Parliament before hauling Mr Sheppard and other senior KPMG staff before a day-long parliamentary inquiry on Friday.
The scandal, coming on the heels of revelations three years ago about PwC’s misuse of Federal Government information, has renewed pressure for increased regulation of Australia’s big accounting and audit firms.
KPMG interim chief executive Stan Stavros, who stepped in after the forced departure of Andrew Yates two weeks ago, said the changes promised by the firm on Tuesday were “necessary and immediate”.
“We did not meet the standards expected of us, and we recognise the impact this has had on the whistleblower, our people, our clients and the community,” he said.
“We are acting where it matters: changing leadership, strengthening independent governance, commissioning external reviews, improving whistleblower oversight, tightening controls and reinforcing accountability across the firm.
“Trust will only be rebuilt through sustained action and demonstrable change.
“We are determined to confront what went wrong, act transparently and ensure these failings are not repeated.”
Despite its words, KPMG failed to properly investigate the whistleblower’s allegations and tried to downplay the extent of its governance failures and block outside scrutiny even after Senator O’Neill’s intervention.
Appearing before Friday’s hearing by the Joint Parliamentary Committee on Corporations and Financial Services, Mr Sheppard invoked legal professional privilege and repeatedly refused to hand over documents requested by the committee until changing his position at the end of the day.
More to come.
Originally published as KPMG chair Martin Sheppard and two audit partners to exit firm amid growing scandal
