KPMG scandal sparks push to mandate 10-year audit tenders
Jun 26, 2026
Australia’s big corporations should put the audit of their company accounts to tender every decade, adopting a practice similar to that in the United Kingdom and Europe, says an influential shareholder advisory firm following the scandal engulfing KPMG.
Ownership Matters said the allegations against KPMG also meant company boards that used the auditing firm should question the quality of its work and seek assurances from the firm about data security.
KPMG has audited 19 companies for 20 years or more, including Lendlease for 68 years. Bethany Rae
KPMG Australia has been in crisis since a former employee alleged that the firm’s auditors had misused client data from some of the country’s biggest companies and had used insider information to win auditing work.
The scandal has claimed the scalps of the most KPMG senior executives, with the departure of former chief executive Andrew Yates, former chairman Martin Sheppard and three senior auditors – Eileen Hoggett, Paul Rogers and Julian McPherson – since the whistleblower’s concerns became public when they were read into federal parliament by Labor senator Deborah O’Neill in March.
Now, Ownership Matters, one of the nation’s most influential proxy advisory firms, is pushing for listed Australian companies to move to mandatory tendering for audit firms every decade and mandatory rotation of the audit firm every 20 years.
If these conditions applied to KPMG today, the firm would lose almost a third of the 69 top companies it audits from the S&P/ASX300.
Ownership Matters said moving to mandatory rotation of auditors would reduce the incentive for audit firms to cheat to win the initial contract and better preserve auditor independence.
The federal government is sitting on a set of audit sector reforms that include recommendations to introduce mandatory audit firm rotation and, potentially, to have the sector regulated by the Australian Securities and Investments Commission.
“We think that the UK and EU rules for compulsory tendering every 10 years, and compulsory auditor rotation at 20, are a no-brainer,” said Dean Paatsch, co-founder of Ownership Matters, which advises big institutional investors.
“Better tendering behaviour will emerge if the lifetime value of the contracts is reduced.”
Separately, the federal Department of Finance has announced that former senior public servant Ian Watt would conduct a review of KPMG’s culture and ethics regarding the data-misuse allegations.
KPMG has agreed to refrain from bidding for federal government work until after the end of September, when the review is expected to be completed.
A real dilemma
In a note to clients, Ownership Matters said investors in companies audited by KPMG should expect boards to ask tough questions following the revelations of data misuse.
“Investors are depending on people to act ethically in the preparation of a company’s accounts, knowing that they have acted unethically in private,” said Paatsch. “That’s a real dilemma for shareholders.”
[Australian Financial Review]
