A leadership shake-up is KPMG’s latest response tosustained criticism over the mishandling of confidential client documents and the alleged poor treatment of a whistleblower, with KPMG Australia chair Martin Sheppard to resign, along withtwo partners at the centre of the scandal.
The news follows Sheppard’sacceptanceof the resignations of then-CEO Andrew Yates and audit head Julian McPherson in late May.
Sheppard is also retiring from his regional board responsibilities and will leave KPMG following a short transition period, withthe firm intending to appoint its first independent chair.
As recentlyreported, his submission of a letter to the Parliamentary Joint Committee on Corporations and Financial Services – which claimed professional privilege and allegedly differed to the letter submitted to ASIC – was criticised by committee chair Senator Deborah O’Neill.
“I’m a little concerned by the last part of the letter signed by Martin Sheppard, thechairof KPMG, which begins to advise the Committee on the way in which we should proceed,” O’Neill said at the time.
Further to their stepping down from their roles aschief operating officerand lead partner, respectively, two senior audit partners at the centre of the controversy, Paul Rogers and Eileen Hoggett, have confirmed they would be leaving KPMG.
KPMG also noted that the process of appointing a new chief executive was ongoing, with an external third party to be appointed to conduct a lessons-learned review of the whistleblower matter.
In astatement,KPMG describeditsaction plan as a “live” document that would be updated as findings, recommendations, and information become available, noting its intention to follow third-party assessments of its plan’s progress.
Interim chief executive Stan Stavros said: “The decisions announced today are necessary and immediate.”
“We are acting where it matters: changing leadership, strengthening independent governance, commissioning external reviews, improving whistleblower oversight, tightening controls and reinforcing accountability across the firm.”
Referencing issues highlighted by the Parliamentary Committee, Stavros added: “We are determined to confront what went wrong, act transparently and ensure these failings are not repeated.”
KPMG said it intended to co-operate fully with the Department of Finance’s independent review.
Stavros said: “Our responsibility now is to ensure stronger systems, clearer accountability and better leadership. We will keep clients, people and stakeholders updated on our progress and hold ourselves accountable as we drive meaningful, lasting change.”
GreensSenator and member of the Joint Parliamentary Committee, Barbara Pocock, said: “Throughout the hearing, KPMG’s senior leaders hid behind ‘legal professional privilege’ to avoid accountability. Their lack of transparency is an insult to the parliament and to the Australian people.”
“The chairperson was completely embedded in KPMG’s failed decisions and must take responsibility as a senior leader.”
Pocock has claimed that more action is needed to “fix the rot throughout KPMG and the regulatory failure of the big four”, including apparent loopholes in regulation and compliance. Ascoveredrecently, she suggested to former KPMG chief executive, Andrew Yates, that the firm’s partnership structure was now non-functioning.
In light of the latest resignation, she said: “KPMG must have a proper corporate structure with clear lines of responsibility and a board that is truly independent to take responsibility for actions within the firm.”
“As the inquiry demonstrated, there is an urgent need for corporate whistleblower protections to extend to the Big 4 and for a new whistleblower authority that actually supports and protects whistleblowers.”
“The big four firms must be prevented from donating to political parties and held to account for their behaviour.”
Editor’s note: This story has been updated since it was first published to include additional commentary.
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