‘Breaks every rule’: What the KPMG scandal is all about

Summary

Podcast Summary: “Breaks every rule”: What the KPMG scandal is all about

Podcast: The Morning Edition (The Age & Sydney Morning Herald)
Date: June 15, 2026
Host: Benjamin Price (filling in for Samantha Selinger-Morris)
Guest: Colin Kruger (Business Journalist)

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Episode Overview

This episode investigates the recent KPMG scandal shaking the Big Four accounting sector in Australia. Sparked by whistleblower allegations, KPMG faces scrutiny for breaching its core principles of integrity, independence, and confidentiality—accusations that strike at the heart of trust in both the corporate world and public sector auditing. The discussion covers what the Big Four do, the specifics of the scandal, its impact on government contracts, the whistleblower’s role, implications for major companies and everyday Australians, how this compares to the PwC scandal, and why the upcoming Senate inquiry is pivotal.

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Key Discussion Points and Insights

1. Who Are the Big Four and the Role of KPMG?

• The Big Four Explained ([01:07])
  • The Big Four (KPMG, EY, Deloitte, PwC) are global accounting and auditing powerhouses.
  • Top corporations and government entities seek their audit services for credibility.
  • Colin Kruger: “Those are the four. If you're in the top 100 in any country globally, you want to have the services of these Big Four because no one else has their aura of credibility.” ([01:33])
• What Do KPMG Auditors Do? ([02:00])
  • Traditionally focus on auditing: reviewing company accounts to assure compliance with legal and accounting standards.
  • Expanded into tax consulting, technology consulting, but audit remains the “bedrock.”
  • Kruger joked: “Their jobs as accountants is to be the most boring person in the room.” ([02:09])

2. Nature of the KPMG Scandal

• Reputation for Integrity Breached ([03:00])
  • KPMG accused of using confidential client data—specifically internal boardroom documents from Lendlease—to potentially pitch for business with competitors.
  • The most damning aspect is the internal, whistleblower-driven exposure.
  • “As auditor, you have to be whiter than white because you have access to everything inside the big corporate clients that you audit.” ([03:32])
  • The prohibited cache of documents was accessed and shared internally—breaking firm rules and possibly laws (pending ASIC investigation).
  • “Which is just breaks absolutely every single rule. But not the law, as we talked earlier or we're not sure.” ([03:58])

3. Scope and Potential Fallout

• Massive Federal and State Contracts at Risk ([05:42])
  • KPMG currently holds about $650 million in federal government contracts (plus significant state-level deals).
  • Comparisons to PwC’s fallout: Lost over $1 billion in revenue and roughly 4,000 staff after its tax scandal.
  • KPMG’s Australian business: over $2 billion revenue, 9,000 staff—risk of similar “devastating” outcome.
  • “It's hard to imagine them not following a similar trajectory to PwC.” ([06:58])

4. The Whistleblower’s Story & Significance

• Timeline and Fallout ([07:43])
  • Whistleblower first reported the breach internally 22 months ago; KPMG didn’t act publicly until the allegations were raised in Parliament.
  • Attempts to alert KPMG International and the board, with little meaningful response.
  • Only after Senator Deborah O’Neill raised the issue did it become public: “The whistleblower went to Senator O’Neill as the final way of trying to get some action on this.” ([08:20])
• Whistleblower Protection Fails ([09:19])
  • KPMG did not recognize the whistleblower, denying legal protections.
  • Reports of KPMG remotely accessing the whistleblower’s laptop while refusing them protections.
  • KPMG allegedly interviewed neither internal staff nor affected external companies during its investigation.

5. Who Are the Victims? Why Does It Matter?

• Major Corporate Victims ([10:26])
  • Lendlease confirmed unauthorized access to its documents.
  • Westpac’s audit (~$35 million/year) implicated, along with other major companies.
  • Kruger draws a line to ordinary Australians: Audit integrity underpins the credibility of financial accounts, affecting investment and superannuation (retirement) funds.
  • Case in point: Corporate Travel’s audit anomalies caused a suspension and possible wipeout of $2.3 billion in value.
  • “That is probably the starkest example of why auditors are important and their credibility, independence, all of these things... it just goes to the bottom line.” ([12:32])

6. Contrast and Parallels with the PwC Tax Scandal

• PwC Recap ([13:24])
  • PwC exploited confidential tax law information to “market” tax avoidance to clients.
  • Was banned from government work and forced to offload its government-facing division at a nominal value ($1).
  • Kruger notes the irony: In the midst of PwC's downfall, KPMG was allegedly engaging in similar unethical practices.
  • “[At KPMG], the only thing they picked up is it's not ‘don’t misbehave,’ it's ‘don’t get caught.’ And now they've been caught.” ([15:10])

7. What’s Next: The Senate Inquiry

• Key Questions for KPMG ([15:32])
  • Role and accountability of former CEO.
  • Timing and recognition of whistleblower status.
  • The conduct of internal investigations—how could they find “no evidence” for two years?
  • Credibility of KPMG’s client communications and brand in Australia at large.
  • Kruger: “There is just so much to unpack on Friday and I just think it's fascinating what it says about the culture inside these big firms.” ([16:40])
  • With two of the four Big Four under clouds, “this is a real problem for Australia and something really needs to be done.” ([17:31])

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Notable Quotes & Memorable Moments

• On the Scale of the Breach:

  “They access these documents, they shared it internally, which is just breaks absolutely every single rule.” — Colin Kruger ([03:54])

• On Whistleblowing:

  “If ethical walls are breached, confidential audit information is misused and independent safeguards become performative rather than substantive… the regime falls in practice.” — Senator Deborah O’Neill, quoting the whistleblower ([08:45])

• On Impact to Ordinary Australians:

  “What we really rely on, whether you own shares directly or superannuation… is the credibility of the financial accounts which are presented… and you can see what goes wrong.” — Colin Kruger ([11:52])

• On the Industry’s Future:

  “If you've got half of the industry with a name that's tarnished… this is a real problem for Australia and something really needs to be done.” — Colin Kruger ([17:31])

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Important Timestamps

• 01:07: The Big Four, their global dominance, and why they’re indispensable for major companies
• 03:15: Specific allegations against KPMG and nature of the breach
• 05:42: Extent of KPMG’s government and corporate contracts
• 06:58: Projected fallout, comparing KPMG’s risks to PwC’s downfall
• 07:50: Whistleblower: timeline, obstacles, and resorting to the Senate
• 09:19: Lack of whistleblower protections; KPMG’s internal response
• 10:30: Identified victim companies and practical consequences for the public
• 13:24: Key differences and similarities between KPMG and PwC scandals
• 15:39: What the Senate inquiry needs to clarify; questions of accountability and industry risk

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Conclusion

The episode powerfully illustrates why the KPMG scandal isn’t just a matter for corporate and political elites. With government and institutional trust at stake—and the wider public’s retirement and investment security also on the line—the hosts and guest underscore the urgent need for transparency and accountability in Australia’s most powerful professional services firms. The upcoming Senate inquiry is set to be a defining moment for industry reform.

Transcript

[A]

They are one of the big four accounting firms. Government agencies and major corporations trust them to audit their books and ensure everything is above board. But what happens when the auditor itself is accused of a catastrophic failure of integrity? KPMG will face this question and many others when it fronts a Senate inquiry this week. The explosive claims emerged after a whistleblower brought allegations the firm misused confidential client data to potentially win business with other companies. I'm Benjamin Price filling in for Samantha Sellinger Morris, and this is the MORNING EDITION today. Business journalist Colin Kruger joins us to explain why this scandal extends well beyond the big end of town and might affect anyone with an investment or super fund. It's Tuesday, June 16th. So, Colin, help us set the scene here. Who are the Big Four and what do they do?

[B]

Okay, the Big Four, they're kind of like the accounting auditing super giants. It used to be the big eight, probably before that the big 12. And they've slowly just merged with each other to the point where you've got four corporate giants across the globe. And if you're one of the top companies in any given market for your credibility, you want to have the services, especially the auditing services of one of the big four, EY, Deloitte, KPMG and PwC, although that has had its name tarnished in recent years here. But really Those are the four. If you're in the top 100 in any country globally, you want to have the services of these Big Four because no one else has their aura of credibility.

[A]

For all those people out there who don't know who are kpmg, what do their staff do? What do they do on a daily basis?

[B]

Well, their jobs as accountants is to be the most boring person in the room. So it really starts with audit because that was the whole backbone of all of these major firms, where you're going in and you are going through the company accounts and making sure they are, you know, everything is in line in terms of the meeting all the accounting standards, meeting all the legal standards that they are meant to, you know, literally provide assurance from all that work. From there, they've branched out into other services. So they do tax consulting, tech consulting now. But the bedrock of all of these firms is their audit work, providing the assurance that the accounts reflect what the company is doing.

[A]

In a feature you wrote earlier this month, you described KPMG's financial superpower as a reputation for integrity, independence and ironclad confidentiality. But what are they accused of doing here?

[B]

Well, pretty much breaching all of the above, which is why they're in such trouble. So it really comes down to, and the really damning thing is that it's from one of their own insiders, one of their own auditors who said what they've done is access documents and boardroom documents. I mean, this is the problem. As auditor, you have to be whiter than white because you have access to everything inside the big corporate clients that you audit. And in this case for Lend Lease, that included access to boardroom documents. Incredibly sensitive stuff. Imagine if they're talking about a merger or takeover of another multi billion dollar business and as auditor you've access to that. And in this case there was a separate cache of documents because at that stage they were looking at potentially putting their audit work out to another auditor. So you imagine, and that's why they expressly forbade them from looking at those documents to see whether, you know, are you about to be replaced as auditor of this company with $10 million worth of business a year? And what appears to have been confirmed is that they access these documents, they shared it internally, which is just breaks absolutely every single rule. But not the law, as we talked earlier or we're not sure. ASIC is investigating this. So basically everything they've told us up until now is up for grabs because even they're saying we're not sure what will be uncovered by further investigation. And especially this Friday where they will have to go before the Senate and they will have to answer some pretty brutal questions like why did this take two years to be uncovered and why did it all happen only so quickly after Senator Deb o' Neill revealed it all in Parliament?

[C]

What I want to bring to the attention of the Senate tonight is evidence from a whistleblower, a former senior executive working at KPMG Australia, that reveals a very different reality to that which Mr. Yates was spruiking here in the Senate.

[A]

So how much does the federal government rely on KPMG for their auditing and other work?

[B]

Well, Greens Senator Barbara Pocock, she put out a, I think it was using government figures on Friday saying that they currently have about $650 million worth of federal government work. Now keep in mind that's just federal government, the Victorian government and New South Wales, and I dare say every other state government is reviewing their relationships with KPMG as we speak. And that would also just be a massive amount of business, I imagine.

[A]

And we're talking about big bucks here, aren't we? So how much does KPMG itself stand to lose as a result of this?

[B]

Well, we know Just looking at what happened to PwC and it's different, but there are a lot of things similar. So PwC, when that tax scandal happened, and remember that was using their consultations with government on sensitive tax changes and peddling it to their clients, their business. They lost more than a billion dollars in revenue in the two years that followed that. And they lost roughly 4,000 staff over the same period, which includes spinning off the government business because they were banned from any further government business. So when you look at KPMG with more than $2 billion in revenue and 9,000 staff, it will be, it is almost certainly going to be devastating because it's hard to imagine them not following a similar trajectory to PwC.

[A]

After the break.

[B]

The victims that we know so far are some of the biggest corporations in Australia.

[A]

And why did Labor Senator Deborah o' Neill raise these allegations in the Senate earlier this year?

[B]

Pretty simply, she raised it because it appeared that. And remember by this stage, we're talking about 22 months after the whistleblower first raised it internally. After a year where the whistleblower. We don't know when the whistleblower appears to have been forced out of kpmg. But more than a year afterwards, the whistleblower tried going to KPMG International to get them to intervene and they refused. Went to the board, including Cricket Australia Chairman Mike Baird, and kudos to them. They appear to have tried to have done something from August last year. But between August last year and March this year, still nothing publicly from kpmg. So finally the whistleblower went to Senator o' Neill as the final way of trying to get some action on this.

[C]

Why does it all matter? Well, I'll leave it to the last words here from the actual whistleblower. If ethical walls are breached, confidential audit information is misused and independent safeguards become performative rather than substantive. If evidence given to Senate inquiries is inaccurate or incomplete, parliamentary oversight is undermined, the regime falls in practice. Is this the really the best that the public can expect from the new so called leader of the pack?

[A]

What can you tell us about the whistleblower in this case? Because their identity at this stage is anonymous, isn't it?

[B]

Yeah. We know very little about the whistleblower other than that they were a senior auditor within KPMG and that it appears that they were forced out. But we don't know the details for sure because KPMG is refusing to say anything. What we do know is that KPMG refused to recognize them as a whistleblower, possibly until the end of last month so that there were no legal protections, nothing. And there's been even very interesting reports out of the Financial Review because KPMG is saying, well, we couldn't really do too much because we just didn't have the information from this whistleblower. But according to these reports, they were secretly accessing this person's laptop who they refused to recognize as a whistleblower. So one would imagine they would have had access to all of this information. And it looks like they didn't really interview any of their own staff, let alone the external companies, on these allegations.

[A]

So who are the victims at the centre of these allegations?

[B]

The victims that we know so far are some of the biggest corporations in Australia. So lendlease, you know, which appears to have confirmed that it had the auditors access and share some of it, you know, sensitive boardroom documents. But it goes as far as, you know, all of these corporations which tried to follow a very set process to make sure they got a proper auditor in place and, you know, went through all the checks and it may have been compromised by the behavior of the KPMG staff. So this includes Westpac, which I think their audit work is worth north of $35 million a year and with access to sensitive information, which meant that there wasn't a level playing field with other auditors. Now, that's all within the audit community and that doesn't really matter too far. But I guess the issue for your average person is that what this says about the credibility of the audit work which is done, because, remember, what we really rely on, whether you own shares directly or superannuation, as Senator o' Neill pointed out, is the credibility of the financial accounts which are presented, which can change dramatically a company's valuation. Now, the company, of course, you know, they have the incentive to present themselves in the best light, which is why you're meant to have an independent auditor going through the numbers and assuring everyone that, yes, they have followed the accounting standards, they have reported things as they should, their numbers are credible and you can see what goes wrong. One of the companies I mentioned as an example is Corporate Travel. And they were doing very well for years, and then in August last year they had to suspend their shares with the company worth roughly $2.3 billion because there were anomalies in its accounts which the new auditor had picked up. That anomaly was that they had received hundreds of millions of dollars from the British government of which they had not actually given any services. Now, the company may be worth zero. That is probably the starkest example of why auditors are important and their credibility, independence, all of these things, you know, it just goes to the bottom line. So if you're super fund or if you own shares in corporate travel, your, you know, those shares may now be worthless. It's just, it's the starkest example you can have of why their work is important.

[A]

So how does this scandal differ from what happened to the other big four firm, PwC?

[B]

Well, PwC, that was a major tax scandal in that they were meant to be helping the government, advising them on new laws that would help tax their, you know, your big tech giants. Now, what appears to have happened, and we haven't got to the bottom of it even now, is that this information was being shared internally and used to set up tax structures and that would help circumvent these laws and were being marketed around to try and pick up fresh business. So that was just a massive lapse on their part and clearly that's what led to them being banned from government work. So they had to sell off their whole government business for $1 because the whole thing was going to implode anyway. And it absolutely destroyed their credibility with corporate Australia because their brand was so badly tarnished, it carried over even into their audit business. So they lost a lot of business like westpac and they lost it to firms like kpmg. And I mean, that's the real irony where all of that was playing out. PwC was losing business as a result of that scandal. And we're hearing of some of this misbehavior that is alleged from KPMG staff happening at exactly the same time. And as they're watching PwC lose accounts like Westpac and it's like the lesson they learned is don't get caught. You know, that appears to be, you know, the only thing they picked up. It's don't misbehave, it's don't get caught. And now they've been caught. And this Friday they face some really brutal questions in Canberra with the Senate inquiry.

[A]

Tell us what you're looking out for at the Senate inquiry this Friday. And what would you like to learn about this scandal?

[B]

There is just so much to learn because they've given us so little information. So, you know, the former CEO was there and they kind of said, oh yes, well, he had to resign because ultimately he had to take responsibility for this. Well, is he directly responsible for this? When did he learn about the whistleblower? Why did he not recognize the whistleblower as a whistleblower? And we're hearing from all of the firms involved. You know, it's not just KPMG that's implicated in this. You've got two major law firms and an internal investigation which apparently found no evidence of wrongdoing for two years. How is that possible? How was it that the first internal investigation found no evidence of wrongdoing? How is it that it was only after Deb o' Neill stood up in Parliament and and aired all these allegations that KPMG went back to one of these clients and said, oh, you know how we said there was these allegations from a former staff member and there was nothing to it? Well, there was something to it. So that only came out after Deb o' Neill stood up in Parliament. Why was that the case? What does that say about the credibility of kpmg? There is just so much to unpack on Friday and I just think it's fascinating what it says about the culture inside these big firms. And the problem is when you've only got four of them that you're relying on as a top corporate in Australia, PWC has tarnished its name to the point where you would still hesitate to lose them. KPMG appears to be going through the same process. It's great news if you're at Deloitte or ey, but clearly if you've got half of the industry with a name that's tarnished to the point that corporate Australia would hesitate to use them, this is a real problem for Australia and something really needs to be done.

[A]

Thanks so much for your time, Colin.

[B]

It's been a pleasure.

[C]

I say to the partners, almost 700 at KPMG, very many of you are honest, ethical, intelligent, professional people. What will you now do to redress the matters that I have raised here tonight?

[A]

In other news today, opposition leader Angus Taylor's plan to slash income taxes and link immigration rates to housing has been backed by voters. According to a new poll, the daughter of one of the so called ISIS brides has begun attending public school in Victoria after arriving back in Australia from Syria with her mother earlier this year. And former labor leader Mark Latham is selling his sprawling family home as mounting legal bills and defamation damages threatened to cost the rogue MP more than a million dollars. You'll find these stories and more on our websites theage or smh.com Today's episode was produced by Josh Towers. Our executive producer is Tammy Mills and our podcasts from are overseen by Lisa Muxworthy and Tom McKendrick. If you like our show, follow the Morning Edition and leave a review for us on Apple or Spotify. Thanks for listening.