Regulator Investigates KPMG Partners for Data Breach

Australia's corporate regulator, the Australian Securities and Investments Commission (ASIC), has initiated a formal investigation targeting three KPMG Australia partners. This action follows preliminary probes that began in April and intensified after the recent resignations of the firm's CEO and audit chief.

ASIC Chair Sarah Court stated that compulsory notices have been issued to KPMG throughout the investigation. The inquiry is examining whistleblower allegations that the accounting firm improperly utilized confidential client data to gain an advantage in securing major audit contracts. Specific concerns involve the alleged misuse of board papers from Lendlease for bids concerning Westpac and Dexus.

KPMG conducted an internal review that did not substantiate the misconduct claims but has since commissioned a new external investigation. ASIC expressed "deep concerns" regarding the alleged misconduct. However, due to KPMG's partnership structure, ASIC's regulatory power is limited to individual auditors, not the firm itself.

The Reserve Bank of Australia has decided not to reappoint KPMG to a whistleblower service contract, which cost approximately A$10,000 annually. Another contract with KPMG for foreign employee recruitment will also be put out for tender.