Background: KPMG is one of the Big Four accounting firms that audits most of the world's largest companies. In Australia, KPMG, Deloitte, EY, and PwC collect more than 99% of the audit fees generated by ASX 200 companies, making them the de facto gatekeepers of corporate truth.

What happened: Earlier this year, a former KPMG audit director alleged that KPMG partners used information obtained from an audit of Lendlease... to pitch for audit contracts at Westpac and Dexus. They also claim insider information was used to get other work at Macquarie Group.

What else: The whistleblower also says KPMG Australia sat on the complaint for two years...until the whistleblower escalated the matter to regulators, professional bodies and politicians. And now, KPMG's global leadership has reportedly frozen partner exits ahead of the June 30 audit deadline to keep everything on track.

What's the key learning?

💡 What happens in the audit, stays in the audit (or at least it's meant to). Audit firms are given access to highly sensitive information, including board papers, financial forecasts, strategic plans, and management discussions. That information is supposed to be protected by strict confidentiality and information barriers.  

💡But for firms like KPMG, there is a big commercial incentive to cross-sell other services. That's because Big Four firms now generate a big chunk of revenue from consulting, tax, deals, and advisory services. In fact, KPMG's global audit service accounted for just 35% of KPMG's global revenue in FY25, down from 48% fifteen years ago.

💡 The allegations of misusing audit information can really damage reputation. PwC was forced to sell its government consulting arm for just $1 following its tax leaks scandal, So, it will be interesting to see how bad this scandal will hurt KPMG Australia.