KPMG cops massive blow as Macquarie quits audit contract and retains PwC
With most of its executive leadership now replaced, including a fresh CEO issuing constant mea culpas on the firm’s behalf, KPMG might just have been hoping to move on from its current mess.
KPMG has been dealt a massive blow as the fall-out from its client confidentially breach continues, with Macquarie Group ditching its previous plans to switch what is the country’s largest audit contract from PwC – a potential loss of up to $1 billion in receipts over a decade.
While the exact figure is unknown, KPMG was expected to take over the current $70 million annul gig from 2028, but the Macquarie board has instead ironically chosen to retain PwC for at least a further five years, with PwC having also earned $25 million last year in peripheral audits.
“The board currently holds concerns in respect of KPMG and its audit practice in two of the key criteria considered in the tender completed in late 2025, namely its capacity to deliver the audit given several key members of the proposed team have departed; and culture, including a culture that transparently discloses issues,” the bank said in its public notification.
KPMG’s former audit boss Julian McPherson is among the key figures to have departed since the scandal kicked off, in addition to his predecessor and fired former COO Eileen Hoggett and senior audit partner Kim Lawry, the latter following pressure from new client Westpac. Martin Sheppard and Andrew Yates and have also made way for Michael Ebeid and John Sams as chair and CEO.
The latter was left to express the firm’s disappointment, but “respect”, for the decision: “Macquarie’s announcement is a clear reminder that the consequences of our past failings are real. I recognise that this will be difficult for many of our people, particularly those who worked on the tender and transition, but we will rebuild confidence by facing these issues directly,” Sams said.
The tender process for the lucrative contract has been one of the KPMG bids under scrutiny, due to longtime former partner Michelle Hinchliffe being a director at the bank. Meanwhile, it’s unclear if PwC’s own recent scandal had any impact on the decision-making, but KPMG according to reports effectively won by default after Ernst & Young was ruled out from the final presentation.
While PwC did make that cut, the firm’s more than three consecutive decades serving as Macquarie’s auditor had exceeded contemporary governance practices, a concern which now seems to have been brushed aside for the sake of convenience, with the board noting in its statement on PwC’s retention that the next comprehensive review wouldn’t be conducted until 2031.
One decades-long contract PwC supposedly did lose in part due to its previous misdeeds was that of Westpac, to KPMG, with that bid also subject to the whistleblower’s complaints that the number of former KPMG partners in key roles at the bank had undermined the integrity of the process. One-time KPMG Australia chairman Peter Nash has since resigned from the Westpac board.
Damage control mode
Ultimately, the full extent of the damage to KPMG remains untold, and although Wespac has so far said it’s sticking fat, the Macquarie reversal represents the biggest financial blow to KPMG’s future accounts to date following the likely exit of Lendlease after 60-plus years. The firm will also have to pay out dozens of fleeing partners, some 75 so far, including people chief Dorothy Hisgrove.
Moreover, the Macquarie announcement came barely a day after KPMG’s own that it was cutting 360 local employees, most of them from the firm’s struggling consulting division. While it was expected a hefty number of audit workers would soon follow – after the current busy season shortly wraps up – the contract termination could now put additional staff at risk of losing their jobs.
