KPMG Australia CEO exits as investigation into whistleblower allegations continue

The firm conducted an initial internal investigation which did not verify the allegations reported by the whistleblower. The firm admits that the internal investigation “was in hindsight not conducted with the necessary rigour required.” This triggered extended communications and allegations from the whistleblower which led to the appointment of an external law firm to examine the internal investigation. The outcome of the external legal review supported the internal investigation which exacerbated the whistleblower’s concerns with the process and prompted them to raise it with independent members of the KPMG Australia Board and other stakeholders.

A Board Sub-Committee, led by the Deputy Chair and three independent directors, appointed Big Law firm, Allens to carry out an additional external legal investigation. The outcome of that investigation is still pending.

The Board acknowledged a number of shortcomings in relation to the “management of the whistleblower and their concerns, the rigour of the investigations and action by leadership regarding the allegations raised.”

KPMG had previously disclosed and reported to professional bodies, regulators and the Parliamentary Joint Committee on Corporations and Financial Services about a matter involving client documents being ‘inappropriately shared internally.’ Three partners were sanctioned as a result and all three self-reported to the appropriate professional bodies. Inquiries relating to this matter are still ongoing.

The firm also referred to another matter involving an inappropriate remark in a team environment over the “sharing of client information.” Disciplinary conduct was undertaken and investigations are still ongoing.

Ongoing inquiries have also exposed another incident where internal documents containing client information was inappropriately shared internally and KPMG Australia’s investigations into this matter are ongoing.

Julian McPherson, National Managing Partner Audit and Assurance has stood down from his role effective immediately and will also leave the firm after a handover of his client responsibilities.

Andrew Yates, CEO of KPMG Australia, has resigned from his role effective immediately. As CEO, he was responsible for management of the whistleblower process and management-led inquiries. “I have been committed to a speak-up culture in our firm, it is clear that in this case we have let ourselves down and I take accountability,” he said.

KPMG Chairman Martin Sheppard sais, “we apologise unreservedly to the whistleblower.” The firm has committed to learning from this process to ensure a safe environment for concerns to be raised and acted upon. The firm also apologised to it clients and staff and announced the appointment of Principia Advisory, a global expert in ethical culture, to review the firm’s “speak up culture” as well as the policies and processes that support this.

Sheppard said, “KPMG is committed to transparency and will publish the findings of the Principia review. We will move swiftly to act upon their recommendations. We are reinforcing and strengthening the controls that protect client confidentiality, and we will set out for our clients the specific steps we are taking to keep their information protected. For each of our audit clients we will confirm that any conduct matters do not impact the quality of their audits.

“We acknowledge we have work to do to rebuild trust. That’s why we are not asking anyone to take our word for it, and we are inviting scrutiny and challenge on our remedial actions.”

Stan Stavros has been appointed interim CEO until a successor for Yates is appointed.