The corporate watchdog has launched an investigation into major consulting firms following allegations of wrongdoing at KPMG.
The Australian Securities and Investments Commission on Thursday confirmed it had launched surveillance action against audit conduct complaints received by KPMG, along with major firms Deloitte, EY and PwC.
The investigation was triggered by whistleblower allegations KPMG partners had accessed confidential information from client Lendlease in order to pitch for and win lucrative audit contracts.
The allegations led to its chief executive resigning, as well as national chair and audit partners also leaving the company.
The ASIC investigation will cover whistleblower complaints received by major consulting firms about external audit services.
Complaints relating to auditor misconduct and the misuse of confidential information will also be the subject of the inquiry.
ASIC chair Sarah Court said the allegations levelled at KPMG were serious.
“ASIC will use the existing suite of limited powers available to us, while continuing to engage constructively with the government’s reform process,” she said in a statement.
“Whistleblower protections should be extended to people seeking to make disclosures about partnerships such as KPMG. Strong protections are essential if misconduct is to be identified, escalated and addressed.”
The investigation into the sector more broadly will run at the same time as its probe into its standalone inquiry into KPMG.
Ms Court said current laws meant the watchdog had gaps in its ability to respond to misconduct allegations.
“ASIC’s jurisdiction in relation to audit firms, as opposed to individual auditors, is limited. We can generally only investigate certain individuals within a partnership, registered company auditors, and only in relation to their conduct of an audit,” she said.
“We have recently called for reforms to extend provisions of the Corporations Act to audit firms and to increase the sanctions available for breaches.”
Treasury is consulting on options to bolster regulation of larger accounting and consulting firms, which could pave the way for a broader role for the corporate regulator in investigating misconduct.
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