Australia opens new review into KPMG's ethics and governance

The Albanese government will open a new review into KPMG Australia’s ethics, culture and governance, escalating its response to the firm’s whistleblower scandal.

Finance Minister Katy Gallagher said former Defence secretary Ian Watt would be asked to lead the review. Reporting on Wednesday said the review will examine KPMG’s ethical soundness, culture and governance arrangements.

The move comes after weeks of scrutiny over allegations that confidential client information was mishandled at KPMG Australia and that a whistleblower was mistreated. It also follows a series of internal changes at the firm as pressure from government, parliament and regulators has intensified.

How the scandal unfolded

Earlier reporting said KPMG staff leaked confidential Optus information and that executives surveilled a whistleblower’s laptop. KPMG chair Martin Sheppard later confirmed the Optus-to-Telstra disclosure and described it as part of a wider ethics breach.

The scrutiny deepened over the following days. News.com.au reported that KPMG’s chair resigned, along with two audit partners, and that the firm announced an external lessons-learned review into whistleblower failings and governance.

Other reporting said KPMG’s interim leadership acknowledged failures in oversight, governance and whistleblower handling. The firm has also said it will review its policies, audit conduct and whistleblower failings, and it has flagged plans to appoint an independent chair and more independent directors.

What the government will examine

The new review is expected to focus on whether KPMG’s internal culture and governance systems were adequate and whether the firm’s ethical standards were fit for purpose. The government has not yet formally published the review’s timetable or terms of reference.

The issue is likely to remain under close scrutiny because KPMG also faces a formal investigation from ASIC into the firm and several registered company auditors, according to earlier reporting. That makes the government review part of a broader regulatory response rather than a standalone inquiry.

Why it matters

KPMG is one of Australia’s major audit and consulting firms, with significant public-sector and commercial work. Any findings that the firm failed to handle confidential information properly, or failed to protect a whistleblower, could affect trust in its work and raise questions about existing and future contracts.

The scandal has also fed into wider public concern about the conduct of consulting and audit firms after the PwC tax-leak affair. For government, the review is a signal that the response is moving beyond internal cleanup and into formal external oversight.

What happens next

The Department of Finance is expected to formalize the review. Until then, the main unknowns are the timetable, the scope of Watt’s role and how far the review will extend into KPMG’s current government work and existing contracts.

KPMG is expected to continue implementing its announced governance changes and internal reviews while parliamentary and regulatory scrutiny continues.