The Australian Department of Finance said KPMG Australia agreed to stay out of new Commonwealth work through February 2027 after a review faulted its handling of a whistleblower complaint and found wider governance weaknesses.
The review recommended that the government independently verify that KPMG has implemented reforms and that they are changing behavior before allowing the firm to bid for contracts again. The department’s procurement notice says the restriction covers new Commonwealth work, including some new contracts in which KPMG acts as a subcontractor. Existing contracts and certain other arrangements are exempt.
Former public servant Ian Watt led the review, commissioned by the department. The inquiry followed a whistleblower’s allegation that staff used confidential client information in bids for audit contracts. Watt’s report said KPMG handled the disclosure largely as a personnel matter, focusing more on legal and organizational risks than on testing whether the claims were true. The whistleblower had raised concerns about unethical conduct linked to commercial pressure and fear of retaliation, the report said.
The review said KPMG’s handling damaged the whistleblower’s trust and undermined confidence among clients and the public. It described the response as “misguided, fragmented, prolonged” and said clear ownership was lacking at critical points. The review did not call for a permanent exclusion from Commonwealth work, but said assurances and early signs alone were not enough to restore confidence.
KPMG had identified problems by 2020 that included financial returns taking priority, inconsistent ethical leadership, barriers to reporting misconduct and reluctance to challenge senior staff, according to the review. It found little evidence that the firm had adequately addressed them.
Commonwealth work generated A$207.1 million, or 9.5% of KPMG’s revenue in fiscal 2026, the review said. Reuters reported that KPMG lost major corporate clients and replaced its chief executive, chairman and audit chief after the allegations became public in March.
The Department of Finance said the agreement extends a pause that began in June and runs through the end of February 2027.
