ASIC Launches Probe into Big Four Whistleblower Treatment

The Australian Securities and Investments Commission (ASIC) has launched an investigation into how the big four accounting firms handle internal complaints, as reported by the Australian Financial Review.

ASIC will use compulsory information-gathering powers to require KPMG, Deloitte, EY, and PwC to produce documents relating to their treatment of internal complaints. The probe follows allegations that KPMG failed to adequately address a whistleblower’s concerns about its audit division, and that the firm bullied the whistleblower for raising them. The regulator is separately scrutinizing three registered auditors over the alleged improper access of client data.

“The allegations concerning KPMG are serious,” said ASIC chair Sarah Court. “ASIC will use the existing suite of limited powers available to us, while continuing to engage constructively with the government’s reform process.” Court noted that the current law leaves significant gaps in the regulator’s ability to respond to firm-level misconduct, as ASIC's jurisdiction extends to individual registered company auditors, not to audit firms themselves. She further argued that whistleblower protections should be extended to those making disclosures about partnerships. “Strong protections are essential if misconduct is to be identified, escalated and addressed,” she said.

The KPMG matter has now drawn scrutiny from five external bodies, including the Tax Practitioners Board, the federal Department of Finance, the NSW government, and Chartered Accountants ANZ. KPMG is separately funding four reviews of its own, including an investigation by law firm Allens, a review of its whistleblowing policies by Principia Advisory, a lessons-learned review, and a cultural overhaul program.

In our latest "Weekend Reading" article, Starling Founder & CEO Stephen Scott reflects on the crisis facing KPMG in Australia and elsewhere, arguing that, for an assurance firm, a failure of accountability is existential. ▸ Read More