KPMG Australia Review Finds Culture of Cheating

An independent review of KPMG Australia released earlier this month found that commercial pressure to win business and increase revenue fueled a culture of internal cheating, while weaknesses in leadership and governance contributed to widespread fears of retaliation among employees who raised concerns about unethical behavior, as reported by the Australian Financial Review.

Conducted by consultancy Principia Advisory, the review identified practices including partners taking credit for others’ sales, under-costing proposals, and pressuring staff to underreport hours worked. Drawing on interviews with nearly 500 partners and staff, a survey of 3,400 personnel, and reviews of whistleblower cases, Principia also found that employees feared raising concerns could affect performance assessments, career progression, access to work, and professional relationships.

Principia identified a significant gap between KPMG’s formal ethics framework and day-to-day practice. Although the firm had invested substantially in ethics systems and processes, these were often complex and fragmented. Former senior leadership was perceived as insular and resistant to challenge, while weaknesses in governance and oversight limited the firm’s ability to identify and address misconduct by leaders. The report said the disconnect between stated values and leadership behavior “shifted behavioural incentives and created a strong signal as to what is expected and valued.”

The findings follow a separate investigation into KPMG’s treatment of a whistleblower who alleged that audit partners misused confidential client information to secure contracts. That review concluded that the firm had systematically mistreated the whistleblower and handled his allegations through an ineffective process affected by conflicts of interest.

Principia made 14 recommendations, including strengthening board independence, improving ethical decision-making training, giving ethical behavior greater weight in performance evaluations, and reinforcing conduct oversight. KPMG Chief Executive John Sams and Chairman Michael Ebeid accepted the findings and committed to incorporating all recommendations into the firm’s reform plan, acknowledging that ethical failures had been “compounded by structural weaknesses in our governance and oversight.”