KPMG: Labor-affiliated public sector union pushes Federal Government to stop outsourcing work to audit giant

The Labor Party is facing fresh pressure from within its own ranks to stop outsourcing Commonwealth auditing work after KPMG fined its own partners and senior staff up to $180,000 for misusing confidential information from Optus to win contracts.

Ahead of Labor’s national conference this week, the ALP-affiliated Community and Public Sector Union is leading the push for the Department of Finance to have auditing work done in-house rather than outsourcing it to a big four giant like KPMG.

Melissa Donnelly, the CPSU’s national secretary who is also aligned with Prime Minister Anthony Albanese’s left faction as a member of Labor’s national executive, has criticised the Federal Government for relying on auditing firms like KPMG, which has lost both its chairman and chief executive because of scandals since late May.

“This scandal is another example of how risky it can be for government departments and agencies to outsource public sector work to consultants,” she told The Nightly.

“Public sector workers deliver essential services Australians rely on, but too much public money is still being funnelled to expensive consultants.

“Australians deserve public services delivered by trained, trusted public sector workers — not outsourced to firms pocketing millions.”

The CPSU made the call after KPMG confirmed it had levied fines of up to $180,000 on individual partners, related to an incident in May this year when confidential information from telco Optus was unsuccessfully used to tender for work with rival Telstra.

“The investigation confirmed internal documents containing client information were inappropriately shared between individuals within KPMG,” a KPMG spokeswoman said.

“The conduct is unacceptable and inconsistent with our values, policies and obligations to protect client information.”

The seven individuals including Julian McPherson, KPMG’s former national managing partner of audit and assurance, were fined following an investigation by law firm Allens.

“We have apologised to the clients affected. After Allens provided its investigation report, board-endorsed sanctions have been actioned against seven individuals,” the spokeswoman said.

KPMG gave an undertaking last month to refrain from tendering for Department of Finance contracts until after September 30, the day when a government review into KPMG is due to be completed.

But Greens finance spokeswoman Barbara Pocock, a member of Parliament’s corporations and financial services committee, said the Federal Government needed to stop hiring KPMG for auditing work.

“Labor keeps giving KPMG a free pass despite its unethical conduct. The Government is hooked on KPMG,” Senator Pocock said.

“The Government should tear up the Big Four consultancy playbook, review every KPMG contract, lock unethical firms out of government work, establish a consultant watchdog, and impose tougher penalties.”

Max Markson, a four-decade veteran of public relations and crisis management, said KPMG needed to hire someone from outside the auditing giant to run the operation in Australia instead of just imposing fines on its partners.

“They need to bring fresh talent in who are senior, I mean seriously senior, and pay them a chunk of money, because that’s what they do for a living, and introduce the new face of KPMG,” he said.

“They’ve got to get a new member at the top. They’ve got to take someone from outside KPMG, they’ve got to think above their normal world.”

KPMG lost its former chief executive Andrew Yates in late May, following a revelation KPMG had used confidential information from construction company Lendlease to secure work with the Westpac bank and property management group Dexus.

Martin Sheppard resigned as chairman less than four weeks after KPMG’s role in misusing Optus data was revealed before a parliamentary committee.