A major financial services firm is under scrutiny from the corporate regulator over the conduct of several registered auditors, following whistleblower allegations. The investigation was confirmed during a federal parliament joint committee hearing on Friday morning, attended by Australian Securities and Investments Commission (ASIC) commissioners, including chair Joe Longo.
Parliamentary Hearing Details
The commissioners, including deputy chair Sarah Court, Kate O'Rourke, and head of enforcement and compliance Chris Savundra, were questioned by committee chair and Labor Senator Deborah O'Neill. Senator O'Neill referred, under parliamentary privilege, to a letter received by the committee from Lendlease chief executive Tony Lombardo, which she then tabled.
The letter, she told the hearing, discussed KPMG personnel on the audit team for the major developer 'retaining and utilising access to audit tender pictures in Lendlease board papers to inform their tender for Westpac's audit'. 'Lendlease described these actions as 'not acceptable',' Senator O'Neill said.
KPMG Leadership Changes
Around the same time, media outlets including the Australian Financial Review reported that KPMG Australia chief executive Andrew Yates had resigned, drawing the attention of committee members. He is reportedly leaving immediately over KPMG's failure to deal with allegations of client data misuse. KPMG's head of audit, Julian McPherson, is also stepping away, according to reports. AAP has sought a statement from KPMG Australia.
Asked for his response, Mr Longo said there appeared to be a breach of what would normally occur between an auditor and a client. 'As the letter itself points out, this is something that Lendlease and KPMG are going to have to sort out between themselves,' he told the committee. 'No doubt there will be some further action that Lendlease will expect KPMG to take to ensure this doesn't happen again.'
ASIC Investigation Confirmed
Senator O'Neill posited that the allegations would raise alarm among users of KPMG's registered company auditor services, including the federal government. 'I can confirm that ASIC has commenced investigations, a preliminary investigation, into the allegations about the conduct of a number of registered company auditors at the firm KPMG,' commissioner Kate O'Rourke told the hearing. She stressed the investigation related to the auditors rather than the firm itself. It is believed three are involved.
'We commenced these inquiries after a meeting with KPMG on the 14th of April, and then after receiving further anonymised, in that case, information in writing, from KPMG, on the 29th of April.'
KPMG has also been conducting its own investigation. 'We have issued a number of notices to KPMG for production of information,' Ms Court said. 'We have been informed by KPMG that they intend to claim legal professional privilege.' The hearing in Canberra continues.
