The corporate watchdog has expanded its investigation into Australia’s largest accounting firms, launching surveillance into audit conduct complaints across the Big Four following allegations of wrongdoing at KPMG.
The Australian Securities and Investments Commission (ASIC) on Thursday confirmed it had begun surveillance of complaints involving external audit services at KPMG, Deloitte, EY and PwC.
The move follows whistleblower allegations that KPMG partners accessed confidential information from client Lendlease to help pitch for and secure lucrative audit contracts.
The claims prompted the resignation of KPMG’s chief executive, along with the departures of the firm’s national chair and several audit partners.
ASIC’s broader review will examine whistleblower complaints relating to external audit services across the major firms, including allegations of auditor misconduct and the misuse of confidential information.
“ASIC will use the existing suite of limited powers available to us, while continuing to engage constructively with the government’s reform process,” said ASIC chair Sarah Court in a statement.
“Whistleblower protections should be extended to people seeking to make disclosures about partnerships such as KPMG. Strong protections are essential if misconduct is to be identified, escalated and addressed.”
The sector-wide surveillance will run alongside ASIC’s separate investigation into KPMG.
Court said existing legislation limited the regulator’s ability to investigate misconduct within audit firms.
“ASIC’s jurisdiction in relation to audit firms, as opposed to individual auditors, is limited. We can generally only investigate certain individuals within a partnership, registered company auditors, and only in relation to their conduct of an audit,” she said.
“We have recently called for reforms to extend provisions of the Corporations Act to audit firms and to increase the sanctions available for breaches.”
Treasury is also consulting on options to strengthen oversight of large accounting and consulting firms, reforms that could expand ASIC’s powers to investigate misconduct across the sector.
