KPMG keeps ethics training contract amid governance scandal backlash

KPMG is still being paid millions by the federal government to teach ethics to public servants even as its chief executive, audit head and chair have all been pushed out in a widening governance scandal. The firm continues to hold a $1.27 million APS Academy contract to deliver ethics and leadership training for about 300 public servants, while the broader flow of government payments linked to the firm is about $13 million.

That contract runs until December 2026 and may be extended to December 2028, leaving the government with a live ethics arrangement even as questions over KPMG’s own conduct continue to mount. The federal government has 297 active contracts with KPMG worth $653 million, and there is no ban on extending existing work, even though the Finance Department has barred the firm from bidding for new contracts until 30 September 2026.

Barbara Pocock, the Greens senator, has pushed hardest on the contradiction. She has urged Finance Minister Katy Gallagher to end the ethics and leadership training contract, called KPMG “morally bankrupt” and referred the firm to the National Anti-Corruption Commission. The temporary moratorium was tied to an independent review into KPMG’s governance, culture, ethics and integrity frameworks, but it stops short of cutting off current work.

A whistleblower formally made allegations in May 2024. Labor senator Deborah O’Neill aired the allegations in parliament in March 2026 under parliamentary privilege. The claims centered on mishandled confidential client information and the mistreatment of a whistleblower, allegations that have since helped drive hearings and a formal investigation by the Australian Securities and Investments Commission into at least three KPMG-registered company auditors.

The fallout has already moved through KPMG’s senior ranks. Chief executive Andrew Yates resigned effective immediately on 29 May 2026. Audit head Julian McPherson also resigned that day. Chief operating officer Eileen Hoggett stepped aside in early June and was later demoted, while chair Martin Sheppard said he would leave the firm. KPMG has said it will appoint its first independent chair and commission a retrospective external review of its whistleblowing system.

Assistant Treasurer Daniel Mulino said on 30 June that the government will release a Treasury options paper on regulating accounting, auditing and consulting firms, including possible separation of audit and consulting arms. At a recent parliamentary hearing, Lendlease chairman John Gillam called the alleged misuse of board papers a “fundamental breach of trust” and a “grave misuse.”