KPMG Australia’s chief executive has resigned after the firm admitted its handling of a whistleblower complaint and subsequent investigation fell short of its own standards.
The scandal was triggered by a whistleblower who alleged that client documents were inappropriately shared with the firm’s senior leadership team, including the chief executive.
An internal investigation was launched in response to those allegations, but it did not substantiate the claims made by the whistleblower.
An external law firm was also engaged to review the outcome of that internal investigation and similarly supported its findings.
The whistleblower then raised further complaints directly with the board, prompting the appointment of a second external law firm, Allens, to conduct a fresh and ongoing investigation into the matter.
On Friday, the firm released a statement confirming that its treatment of the whistleblower and the handling of the probe “fell short” of the firm’s expectations.
As a result, chief executive Andrew Yates and national managing partner of audit and assurance Julian McPherson both resigned with immediate effect.
In his statement, Yates said: “I have been committed to a speak-up culture in our firm, it is clear that in this case we have let ourselves down and I take accountability.”
McPherson said: “Matters have arisen for which I am responsible, and I take accountability.”
The findings from the investigations have been shared with impacted clients, professional bodies, regulators, and the Parliamentary Joint Committee.
The board appointed Stan Stavros as interim chief executive of KPMG Australia while the process to find a permanent successor to Yates continues.
Chairman Martin Sheppard issued a lengthy public apology, saying the firm “apologises unreservedly to the whistleblower” for the way the matter was handled.
“KPMG apologises to the clients whose information was not handled with the care and respect they expect from us,” Sheppard said, adding that the issues did not reflect the contribution of the firm’s broader workforce.
Sheppard confirmed that KPMG would engage an ethics consultant to review its “speak-up culture” and has committed to publishing the findings of that review.
The Big Four firm is now contacting affected clients, reinforcing data controls, and reviewing audit clients to ensure the conduct issues did not impact audit quality.
“We acknowledge we have work to do to rebuild trust. That’s why we are not asking anyone to take our word for it, and we are inviting scrutiny and challenge on our remedial actions,” Sheppard added.
KPMG Australia had previously attracted attention after a partner was fined $10,000 for using AI to cheat in an internal training course designed to test knowledge of the technology.