NSW and Victoria flag KPMG concerns amid public-sector scrutiny

KPMG staff on NSW and Victorian government accounts are now working under a heavier cloud. The two states have formally raised concerns about the firm’s conduct, a move that points to more review layers, tighter contract scrutiny and a real risk that reputational damage will follow KPMG teams into future public-sector pitches.

On 3 June 2026, the NSW Government said it was seeking assurances from KPMG about how confidential information was being handled and whether any personnel under investigation were currently working on NSW Government contracts. NSW said the firm’s response would inform any further action it may take. The state also said it had already strengthened procurement rules, tightened conflict-of-interest safeguards and cut reliance on consultants across government, including multi-million-dollar penalties introduced in September 2023 for individuals, corporations or other organisations caught using or disclosing confidential government taxation information.

Victoria has been conducting its own review of KPMG contracts in an environment where consultant spending has become politically toxic. The Victorian Auditor-General found that the state’s spending on consultants and contractors reached $4.2 billion in 2021-22, up 50 per cent over four years. It also found that KPMG, Deloitte, EY, PwC and Boston Consulting Group collectively received $434 million over six years from Victorian government work. ABC analysis showed KPMG alone accounted for almost 20 per cent of that consultant spend and took in $22.5 million in the last financial year alone.

For KPMG employees in public-sector practices, the consequences go beyond the current contracts. Every audit trail, document request and partner review is likely to carry more weight now, especially on matters touching confidential data and government procurement. That is a difficult backdrop for teams trying to protect margins, win renewals and make partner track in a business where access to government work can be a career accelerator.

The pressure on KPMG has been building for months. A review of Defence’s $100 million One Defence Data project said the contract had been retrospectively designed, riddled with governance failures and left Defence exposed to significant risk. The same review said KPMG had been forced to offer credits back after being caught charging twice for the same work. In late May 2026, KPMG Australia chief executive Andrew Yates resigned effective immediately after the firm said its treatment of a whistleblower fell short of expectations, and the board appointed Stan Stavros as interim CEO.

The backlash is also part of a wider reset around the Big Four in Australia. ABC analysis showed NSW spent $504 million in four years on EY, Deloitte, KPMG and PwC, while Victoria spent $844 million. A 2024 Senate committee report said the consulting sector had operated in the shadows for too long and called for tougher contract clauses and more transparency around consultants’ public-interest obligations. For KPMG, the warning from NSW and Victoria suggests the firm is no longer just managing a public-relations problem. It is managing whether governments still want to trust it with their work.