KPMG scandal deepens Big Four accounting firms’ woes in Australia

[SYDNEY] KPMG’s audit-leak scandal is set to further dampen the prospects in Australia of the Big Four accounting firms, with data showing their new business revenue from the federal government already fell by almost half after a similar leak at PwC three years ago.

A Reuters analysis of government tenders showed that new contracts the Big Four firms KPMG, PwC, Deloitte and EY signed with the federal Australian government slumped to A$348 million (S$313.2 million) in 2025 from A$637 million in the prior year.

That underscores the scale and speed at which the government is prepared to distance itself from the bigwigs of the A$1.8 billion industry and gives a sense of the potential impact that KPMG, its biggest professional services contractor, may face.

KPMG is embroiled in a scandal after allegedly sharing confidential company information with prospective private-sector clients to bid for auditing work. Its CEO and top auditor have quit after the firm admitted it mishandled a whistleblower complaint about the alleged misconduct, and it hired its own third-party governance consultant to review its practices as it races to contain a client exodus.

The Australian government said on Tuesday (Jun 16) KPMG will not bid for new federal work until Sep 30. And the Reserve Bank of Australia has said it would likely not reappoint KPMG to run its whistleblower hotline.

KPMG has about A$650 million of active federal contracts, from anti-slavery supply chain audits to cybersecurity services, according to a Reuters review of published information that was verified by lawmakers.

PwC was rocked in 2023 by revelations it shared confidential tax policy details to win clients, forcing it to forgo new government contracts for more than a year and sell its government advisory business, which had accounted for a fifth of its revenue, for a paltry A$1.

Brendan Lyon, a former KPMG partner, said government work is a big portion of the Big Four’s revenue and losing hundreds of millions annually could threaten the firms’ financial health.

“It’s undoubtedly going to have impacts and that’s been discussed by government politicians and various government departments,” Lyon said.

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KPMG, PwC, Deloitte and EY declined to comment.

PwC’s revenue fell 26 per cent in the 2024 financial year following the fire sale of its government advisory business.

If the claims against KPMG are proven, the firm could likely face a similar fate, said Stephen Bartos, a former deputy secretary at the Department of Finance.

“It gives rise to apprehensions by government agencies that there might be misuse of confidential materials from government. And therefore, government agencies will be more reluctant to use KPMG,” he said.

“They could be facing state governments cutting back as well. Collectively, it amounts to more than federal government work.”

Parliamentary inquiries

Australia, the world’s 12th-biggest economy, had spent years building ties to contractors to satisfy public appetite for a smaller government sector. With the scandals increasing, there could be a further roll-back of those moves now.

Last year, Deloitte apologised after academics found a report it prepared for the Department of Employment and Workplace Relations contained AI-generated fabrications.

The Big Four’s controversies are not limited to Australia. In recent years, they have each been sanctioned over audit misconduct in the UK. In the US, EY agreed to pay US$100 million in 2022 to settle charges its staff cheated on accountant exams.

Parliamentary enquiries in Australia triggered by the PwC scandal resulted in dozens of recommendations to close regulatory loopholes, including a cap on partner numbers to improve accountability and a ban on providing both audit and consultancy services to prevent conflicts of interest.

The recommendations for major changes, however, have not been implemented.

“It’s time to force these ungoverned multi-million-US dollar partnerships to adopt the same disciplines as large corporations,” said Barbara Pocock, a Greens senator who has campaigned for tougher regulation of Big Four consultancies.

“They have lost their social licence to special treatment on tax, transparency, and treatment of whistleblowers. It’s time to break them up and properly regulate them as parliamentary enquiries have repetitively recommended.”

Richard Colbeck, a conservative senator who chaired an inquiry on use of external consultants, said successive scandals at PwC and KPMG suggested “there’s probably a bit of a shake-up coming in that section of the market”.

“Every government department is being asked by one or other of my colleagues how many contracts they have with KPMG. And every single department that I’ve heard asked has said, ‘we’re reviewing our contracts’,” he added. REUTERS