KPMG Australia COO steps aside amid growing audit client leak scandal

KPMG Australia's chief operating officer stepped aside ​from her executive role on Wednesday, the accounting ​firm said, in the latest fallout ‌from a growing ​scandal over allegations it misused client information to win lucrative audit contracts. Eileen Hoggett will remain as an audit partner after relinquishing the executive role while ‌investigations are pending, according to an internal email from KPMG Australia interim CEO Stan Stavros that the firm shared with Reuters.

KPMG Australia's chief operating officer stepped aside ​from her executive role on Wednesday, the accounting ​firm said, in the latest fallout ‌from a growing ​scandal over allegations it misused client information to win lucrative audit contracts.

Eileen Hoggett will remain as an audit partner after relinquishing the executive role while ‌investigations are pending, according to an internal email from KPMG Australia interim CEO Stan Stavros that the firm shared with Reuters. Hoggett's withdrawal from the COO role she took on in 2023 comes days after the resignations of the ‌firm's CEO and head of audit over the mishandling of an internal investigation into a whistleblower's allegations the firm ‌misused confidential client information.

KPMG said the investigation failed to substantiate the whistleblower's claims, which were also shared with a senator from Australia's ruling Labor party. In March, Senator Deborah O'Neill told parliament the whistleblower's allegations included that confidential board papers from real estate company Lendlease were ⁠used to support ​bids for major audit ⁠tenders of Westpac and Dexus.

"Documents were taken from Lendlease by the lead partners on the account, Eileen Hoggett and Paul Rogers, and were ⁠physically secured in Ms Hoggett's locker," O'Neill said. Hoggett did not immediately respond to a request for comment via LinkedIn.

The allegations have ​brought new scrutiny to Australia's professional services sector, which was rocked by reports in 2023 that PwC ⁠shared confidential Australian government information with prospective clients. That scandal triggered parliamentary hearings and resulted in a spinoff of the firm's government consulting arm, ⁠multiple employee ​departures and tighter laws to regulate the sector.

In the email to staff on Wednesday, Stavros said it was clear the firm should have handled the whistleblower's claims differently. "I am 100% committed and will ensure ⁠we approach the issues in the right way," he said.

"I want to be open that we should all expect ⁠the heightened public scrutiny to ⁠continue for some time." The Australian Securities and Investments Commission has started a preliminary investigation into the conduct of three KPMG registered company auditors.

A parliamentary hearing into the ‌whistleblower allegations is also ‌scheduled for June 19.