KPMG chief resigns over botched whistleblower investigation
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KPMG Australia chief executive Andrew Yates has resigned following revelations of client document misuse and the firm’s treatment of the whistleblower who raised the alarm.
Chairman Martin Sheppard also accepted the resignation of Julian McPherson, national managing partner of audit and assurance, who will stand down effectively immediately and will end his tenure at the firm following a transition of his client responsibilities.
Stan Stavros has been appointed interim CEO.
Both resignations were a result of the firm’s treatment of a whistleblower who revealed two incidents of client documents being internally shared inappropriately and one incident of an inappropriate remark about the sharing of client information.
“I have been committed to a speak-up culture in our firm, it is clear that in this case we have let ourselves down, and I take accountability,” Yates said in a statement shared on Friday, 29 May.
The whistleblower’s complaints were not substantiated in an internal investigation, which was then supported by an external legal review.
By the time he escalated to the board, a sub-committee – led by the deputy chair and supported by three independent directors – appointed Allens to conduct a further investigation, which is ongoing.
Disciplinary action has been taken over the inappropriate remark.
The board said KPMG fell short in its management of the whistleblowers and their concerns, the rigour of the internal investigations, and actions taken by leadership regarding the claims.
Sheppard said the firm “apologises unreservedly” to the whistleblower.
“We commit to learning from this process to ensure we create an environment where it is safe and easy to surface concerns that will be acted upon,” Sheppard added in a statement to media.
“KPMG apologises to the clients whose information was not handled with the care and respect they expect from us.
“We also apologise to our people – as these matters do not reflect the contribution they make to KPMG and our clients.”
KPMG has engaged Principia Advisory to undertake an external review into its speak-up culture, including its policies and processes.
It has also committed to reinforcing and strengthening controls that protect client confidentiality, and will inform clients of these steps.
KPMG said the quality of audits would not be impacted by conduct matters.
“We acknowledge we have work to do to rebuild trust,” Sheppard said.
“That’s why we are not asking anyone to take our word for it, and we are inviting scrutiny and challenge on our remedial actions.”
RELATED TERMS
Resignation is the employee-initiated termination of employment. In other words, the employee willingly decides to leave their job and informs the company of their choice.
A whistle-blower is a member of staff who reports internal practices that violate the law, the company's policies, or both. The Companies Act of 2001 provides various protections (as well as limitations) for whistle-blowers.
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