KPMG consultant admits to ‘gaps’ in its whistleblower report

The authors of a report designed to document KPMG’s whistleblower failings qualified their findings on the basis that they were unable to interview key staff – including the whistleblower – and found gaps in the accounting firm’s records of crucial meetings.

Boutique advisory Andrews Group, which penned the report published on Thursday, said it conducted interviews and relied on public and internal documents from KPMG, but admitted this exercise, “despite providing rich information, still left gaps”.

“Some individuals who were associated with and played a pivotal role in the disclosures were, for a variety of reasons, unable to be interviewed. This included the whistleblower,” they said.

The report found that KPMG adopted an overly legalistic approach to the complaints levelled against the firm and failed to uphold its core values, which led to the poor treatment of the whistleblower.

KPMG has been under siege after admitting that some of its staff accessed confidential information from corporate clients to win business – a serious breach of the trust in the world of auditing that is essential to the integrity of financial markets.

The consultancy confirmed that former employees associated with the whistleblower scandal were unable to be interviewed. The firm has yet to respond to this masthead’s question of whether current employees declined to talk to the report’s authors.

The report, which had been commissioned and paid for by the embattled accounting firm, noted there were multiple discussions, meetings and decisions within KPMG Australia relating to the handling of the whistleblower and their disclosures “for which records have not been kept”.

“Given these gaps, rather than document findings which would need to be unequivocal, hypotheses were developed,” the report’s authors said. These hypotheses were strongly supported by the weight of evidence and “therefore, despite not being proven or true, are difficult to refute”.

Andrews Group said the report didn’t have to determine accountability, but was meant to identify lessons to be learnt from KPMG’s failure to deal with the whistleblower allegations for almost two years.

The scandal cost it some of its most lucrative contracts, with Lendlease and Macquarie Group both dumping KPMG as their external auditor.

And it won’t be the end of the matter for the firm. The Australian Securities and Investments Commission told a parliamentary hearing last month that it is conducting its investigations in relation to the whistleblower scandal.

This includes looking into documents that KPMG had lodged with the regulator last year to determine if they contained any false or misleading statements.

“Initial inquiries are focused on the basis for statements made in that report, including the statement that there were no whistleblower complaints related to audit quality,” ASIC said in a submission to the parliamentary hearing last month.

The scandal first came to light in March – almost two years after the whistleblower made their initial complaint to KPMG – when Labor senator Deborah O’Neill read out the whistleblower’s allegations in parliament.

It led to an exodus of KPMG’s most senior executives, including CEO Andrew Yates and chairman Martin Sheppard, and also prompted the sacking of former chief operating officer Eileen Hoggett, who has lodged action to sue the firm.

Former KPMG board member Kim Lawry resigned, but is still negotiating her exit after an investigation found screenshots on her phone of confidential Lendlease board documents. She was due to retire last month.

KPMG reiterated its apologies to the whistleblower in the report, saying “senior people in our organisation behaved in a manner that was unacceptable and not in line with our values, and when someone had the courage to raise their concerns, we did not respond as we should have.”

The report made recommendations to help remedy KPMG’s whistleblower failings by establishing an independent integrity office at the firm, and appointing a dedicated whistleblower protection officer.

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