Board director allegedly helped former employer, KPMG, win Macquarie audit
A Macquarie Group board director is facing fresh allegations that she helped accounting giant KPMG prepare its successful, but later rescinded, bid for the financial group's audit contract.
Michelle Hinchliffe, who spent 37 years at KPMG before joining Macquarie's board in 2022, allegedly shared commercially sensitive information with her former employer and advised the firm on how to tailor its pitch well before the formal tender process opened, according to documents supplied by a whistleblower to a parliamentary inquiry and reported by the Australian Financial Review (AFR).
The whistleblower alleged that as early as 2023, Hinchliffe told KPMG which areas of expertise and geographies would be critical to Macquarie when selecting an auditor. She also allegedly recommended specific international KPMG partners and shared internal Macquarie data showing how much the company spent with each of the four major accounting firms.
Hinchliffe further allegedly recommended KPMG partner Rachel Gatt as the preferred choice for lead audit partner and suggested areas in which Gatt should strengthen her credentials ahead of the pitch.
Macquarie maintains compliance with processes
Macquarie said it remained confident proper processes had been followed.
"We remain confident that the process was followed correctly, including Michelle Hinchliffe recusing herself from any scoring of the firms and in the decision to appoint KPMG," a spokeswoman said as quoted by the AFR.
During the formal tender process, Hinchliffe was the only Macquarie director to attend management-level pitching meetings with competing firms, sessions not typically open to board members. Teams from EY and PwC were reportedly taken aback by her presence, and were not informed she had recused herself from scoring, according to the news outlet.
Macquarie chairman Glenn Stevens told investors at the company's annual shareholder meeting in July that Hinchliffe had attended presentations equally across all bidding firms.
"Michelle attended an equal number of presentations for each tendering firm, but she recused herself from scoring any of the firms and from the decision process where the board came to a decision to appoint KPMG," he said.
Stevens, however, later told the parliamentary inquiry that Hinchliffe's direct contact with KPMG personnel during the tender process had breached internal protocols.
Investigations by law firm Allens, appointed by KPMG to review the whistleblower's allegations, are continuing. The matter is also before a parliamentary inquiry.
Awarded, then rescinded audit contract
KPMG was awarded the audit contract in November but lost it in August after scrutiny from investors, the parliamentary inquiry, and regulators. Macquarie said it would retain PwC, its auditor since at least 1993, for at least five more years.
Macquarie's decision cited concerns about KPMG's capacity to deliver the audit after several key members of its proposed team departed, as well as concerns about what the company described as "a culture that transparently discloses issues."
Macquarie's policy required a comprehensive audit review every five years, with the next due by 2031.
In a separate statement, KPMG chief executive John Sams acknowledged the outcome, saying the decision was "a clear reminder that the consequences of our past failings are real."
Sams said KPMG had commenced a review of its culture, strengthened its governance, and was making substantial changes to leadership under what the firm described as an Action Plan.
