Government to also carry out an independent review on KPMG
The Commonwealth government has announced that it is temporarily barring new contract engagements with KPMG Australia in the wake of the Big Four firm's audit leak scandal.
The Department of Finance ordered Australian government entities this week to cease new contract engagements with KPMG until 30 September, 2026.
"Under this agreement, Commonwealth officials should not enter into any contracts with KPMG for any approaches to market which close between 16 June and 30 September 2026," it said.
"This agreement captures new engagements (including under whole-of-Australian-Government Panel arrangements), and / or new contracts with a third party which include KPMG being appointed as subcontractors to that third party."
Entities not covered by the Commonwealth Procurement Rules are also urged to adopt a consistent approach and cease new engagement with KPMG between the announced period.
The temporary contract engagement suspension comes as the Commonwealth government carries out an independent review of KPMG's governance, culture, ethics, and integrity frameworks.
KPMG has been in hot water over the past weeks after a whistleblower accused the Big Four firm of misusing confidential client documents.
The allegations have led to the resignation of CEO Andrew Yates and Julian McPherson, KPMG Australia's managing partner of audit and assurance, over the company's management of the whistleblower process and the management-led investigations. It also prompted Eileen Hoggett to step aside as KPMG's chief operating officer.
Australia's Greens Party has since called out the Commonwealth government for remaining engaged with KPMG despite its scandal.
Citing data from the Parliamentary Library, the Greens said the Federal Labor Government has $653 million worth of 297 active contracts awarded to KPMG.
Among them include 31 government contracts worth nearly $24 million that were awarded to the Big Four firm after the scandals became public on March 24.
"Despite all the lessons of the PwC consultancy scandal, Labor's response has been woefully inadequate. Consultants continue to play by their own rule book as the latest misdemeanours by KPMG show," said Senator Barbara Pocock, Greens' finance and public service spokesperson, in a statement last week.
What happens to existing contracts?
The Department of Finance said its temporary suspension of contract engagements with KPMG does not apply to existing contracts with the firm.
It also does not cover ongoing licensing or sale of KPMG proprietary products currently in use by Australian Government entities, as well as proposals submitted by KPMG prior to 16 June.
"However, entities should continue to be mindful of the requirements to consider relevant experience and performance history, including ethical performance, when assessing value for money in all procurements, and the need to monitor the ethical behaviour of suppliers throughout the term of any contract," the department said.
It also advised entities with existing KPMG contracts to seek assurance from the firm that no individuals engaging with them are associated with the matters being reviewed.
"Note that for most contracts, there are contractual rights to request the removal of specific personnel from contracts. Entities should seek legal advice where necessary," it added.
KPMG welcomes independent review
In a statement, KPMG said it welcomes the government's independent review and accepts the temporary suspension for new contracts.
"We have voluntarily agreed not to bid for new Commonwealth work until the review is complete, which is expected by the end of September 2026," said interim KPMG CEO Stan Stavros.
"We acknowledge that individuals in our firm have made mistakes. But those failings do not reflect the overwhelming majority of our partners and people – good and talented professionals who continue to deliver high-quality work with integrity, and with a deep commitment to our values and ethics.
Stavros said KPMG is focused on finalising a clear and robust remediation plan, which will address the areas where the company fell short of expected standards.
"We must demonstrate that these issues have been properly remediated," the interim CEO said.
"We know we have work to do to regain trust. That work is already underway. We will engage constructively and cooperatively with the independent reviewer, listen carefully to feedback from our clients, regulators, stakeholders, and our people, and take the actions needed to strengthen our culture, governance and ways of working."
KPMG apologised to the whistleblower in late May, and is also carrying out its own investigation on the matter.
