Australian regulator reviewing 551 audit misconduct complaints at Big Four firms

Australia's corporate regulator is examining ​551 complaints of potential audit misconduct at ‌the ​country's Big Four accounting firms, a parliamentary committee heard on Friday. The Australian Securities and Investments Commission (ASIC) will review each complaint before launching an official investigation, its chair, ‌Sarah Court, told a Sydney hearing.

The Big Four — KPMG, PwC, Deloitte and EY — have been plagued by a number of scandals in the country, and ASIC's review of hundreds of complaints could intensify concerns about misconduct in the sector. KPMG ‌is at the centre of a regulatory and political investigation after a whistleblower alleged the firm shared confidential ‌company information with prospective private-sector clients to bid for auditing work.

ASIC launched an investigation into the sector's complaints handling procedures dating back to July 2023, forcing the firms to hand over internal documents. "The volume that's being produced is significant," Chris Savundra, ASIC's executive director of enforcement ⁠and compliance, told ​the Parliamentary Joint Committee ⁠on Corporations and Financial Services.

"It's around 551 complaints at this stage, noting that our work is at an early stage and we will ⁠follow the trail. So in response to that material, we will then issue notices for further information, so that number might ​grow." ASIC is also probing the suspected misconduct by KPMG's audit partners, whether the firm breached whistleblower protections in ⁠handling the original complaint, and whether it previously filed misleading documents with the regulator.

KPMG initially said the allegations of misconduct were unsubstantiated. The ⁠firm ​has since confirmed that employees misused internal documents. Its chief executive, head of audit and chairman have also resigned since the alleged misconduct came to light in March.

Court said its early inquiries into KPMG were met ⁠with "resistance" and legal privilege claims. "We would say that KPMG's certainly become much more forthcoming since the change in the ⁠CEO," she added.

The scandal ⁠comes three years after it emerged that PwC shared confidential government tax policy details to win clients. The 2023 revelations triggered parliamentary inquiries and recommendations to close regulatory loopholes, but ‌most remain unimplemented.