Key Takeaways
Project Vector is cutting 27 partners and around 360 employees as KPMG responds to weak Consulting demand and the fallout from its conduct and whistleblower scandal.
KPMG’s financial room is tightening: revenue has fallen for three consecutive years, it carries substantial debt, and it has reportedly sought support from KPMG International.
The accountability burden is uneven: some senior figures retain retirement entitlements, while partners reportedly uninvolved in the scandal and hundreds of employees are now losing their jobs.
KPMG Australia’s Project Vector — its cost-cutting and restructuring programme — has begun to bite. 27 partners and around 360 employees are leaving the firm, reducing its workforce by approximately 5%. Most of the affected roles are in Consulting and Business Services.
On August 24, the firm released its FY2026 results. It reported a total revenue of A$2.257 billion, which KPMG said represented a 1% year-on-year decline. Four of its five divisions recorded growth, with the standouts being Audit & Assurance, which grew by 11.0%, and Tax & Legal, which grew by 10.9%.
The one division that did not do well was Consulting, which registered a decrease in revenue of 16.9% in the year to June 2026: the newly appointed CEO pointed to the country’s economic slowdown, a reduction in government spending on consultants, and the impact of AI to explain this phenomenon.
However, anyone who has been following recent events at KPMG Australia will be well aware that this is by no means the whole story. In fact, the firm itself said it reviewed its costs and future workforce needs in response to
“continued economic weakness, difficult market conditions and the impact of the firm’s conduct and whistleblower matters”.
It is clear that KPMG’s consulting downturn predates the scandal — but in my view, the scandal has made that downturn much harder for KPMG to absorb.
Consulting was already struggling before the scandal became public
KPMG’s consulting problem did not begin in March 2026, when Senator O’Neill first divulged news about the whistleblower scandal in parliament.
In FY25, before the whistleblower allegations became public, Consulting revenue had already fallen 18%, because of reduced government spending and the broader economic slowdown. Yet overall KPMG revenue declined only 3%, because Audit grew 7%, Tax & Legal 8%, Enterprise 13% and Deal Advisory & Infrastructure 2%. Careful cost management improved profitability, and average equity-partner remuneration actually increased 10.3%.
A year later, Consulting has fallen another 16.9% and average equity-partner remuneration is down 13%. So the reduction in partners and employees has not happened in a scandal vacuum. Two consecutive years of severe Consulting contraction cannot simply be carried indefinitely.
However, that does not mean that the scandal had no bearing on the dramatic job cuts that are resulting from Project Vector. KPMG is no longer just dealing with a weak Consulting market. It is dealing with a weak Consulting market while simultaneously trying to contain a crisis of trust.
A downturn is one thing. A trust crisis is another.
Economic downturns eventually turn. A consulting project postponed because budgets are tight can reappear when investment resumes. A government that has reduced expenditure on consultants can increase it again. A client delaying a transformation programme can restart it.
A shattered reputation is a different story. Over the last few months:
KPMG has voluntarily agreed not to bid for new Commonwealth work until the Department of Finance completes an independent review of its governance, ethics and integrity.
Lendlease ended its extraordinarily long audit relationship with the firm after the misuse of its confidential information came to light.
Macquarie, meanwhile, is reconsidering whether KPMG should take over its A$75 million-plus annual audit mandate. KPMG was selected in 2025 but is not due to start the audit until 2028.
Optus chairman John Arthur told Parliament that KPMG’s sharing of Optus information amounted to an “egregious breach of professional responsibilities” and said Optus would be watching the firm “like a hawk”. Westpac described growing frustration over KPMG’s drip-feed of information.
That is not ordinary cyclical weakness. It is reputational impairment in a business whose product ultimately depends on trust.
In an ordinary downturn, management can cut discretionary expenditure, reduce recruitment, accept temporarily lower partner profits and give a struggling practice time to recover.
The scandal reduces KPMG’s financial room to use those levers.
And KPMG already entered this crisis with relatively little room to spare.
Then there is the A$557 million debt load
As Big4News reported in June, KPMG Australia was carrying A$557 million in bank debt, borrowed from NAB and DBS, equivalent at the time to roughly A$815,000 per partner.
The lending arrangements included revenue covenants. The Australian reported that KPMG was at risk of breaching those covenants as clients reconsidered their relationships with the firm, although so far there has been no public evidence that a covenant has actually been breached.
So KPMG’s FY2026 results constitute a concerning data point. The firm’s revenue has moved from:
A$2.553 billion in FY23, to
A$2.386 billion in FY24, to
A$2.315 billion in FY25, and now to
A$2.257 billion in FY26.
Banking Day subsequently examined the same balance-sheet problem and reported that KPMG International had reportedly intervened to restrict partner exits not only because of the risk of disruption to audit work, but also to avoid capital repayments to departing partners. It also reported that some of KPMG Australia’s previous borrowing had supported earlier partner exits.
That is a very important point — partnership exits can themselves consume cash precisely when liquidity is under pressure.
And now the Australian firm appears to need outside help.
ABC reported that KPMG Australia had sought financial support from KPMG International, describing the support as necessary for the local firm to remain solvent.
The Australian has separately reported that KPMG International is negotiating a substantial loan to stabilise the Australian business, putting the potential facility at A$200 million.
Project Vector therefore looks different when viewed through the balance sheet.
It is not simply an exercise in matching Consulting headcount to Consulting revenue.
It is also about restoring financial headroom to survive the storm, which so far shows no sign of abating.
So who has paid for the failures so far?
KPMG’s crisis has removed most of the leadership that presided over it. But departure has not produced the same financial outcome for everyone.
The figures below need to be read carefully. Some are actual remuneration, some are maximum performance opportunities, some retirement entitlements have been confirmed without their value being disclosed, and some final exit payments remain private.
Andrew Yates — former chief executive
KPMG said Yates resigned as the executive with “ultimate responsibility” for management of the whistleblower process and the management-led investigations.
According to leaked KPMG remuneration documents reported by The Saturday Paper, Yates received A$3.2 million in total remuneration in FY25.
Martin Sheppard — former national chairman
Sheppard chaired KPMG Australia’s board during the failed response to the whistleblower allegations. He subsequently acknowledged his overall governance responsibility as chairman for processes that failed to produce the required result.
Leaked remuneration documents showed an FY25 base distribution of A$1.9 million, with a maximum performance distribution of another A$778,000. His final retirement payment has not been publicly disclosed.
Julian McPherson — former head of Audit & Assurance
McPherson was National Managing Partner of Audit & Assurance and resigned alongside Yates after KPMG acknowledged shortcomings in the handling of the whistleblower and its investigations.
The leaked remuneration documents showed an FY25 base distribution of A$1.5 million, with a maximum performance distribution of A$755,000 — he lost a separate A$389,000 bonus following an unsatisfactory performance rating over the Optus matter. McPherson confirmed that he will receive entitlements under KPMG’s retirement agreement. The value of those entitlements has not been publicly disclosed.
Kim Lawry — senior audit partner
Lawry led KPMG’s successful Westpac audit pitch and attended the October 2023 meeting at which confidential Lendlease information was discussed.
She received more than A$1.4 million in FY24, including a A$100,000 exceptional distribution. Leaked documents showed an FY25 base distribution of just over A$1 million, with a maximum performance distribution of A$508,000.
KPMG later fined Lawry over the Lendlease matter, and she left after Westpac requested her removal from its audit. Lawry told Parliament that she will receive entitlements under KPMG’s retirement agreement. Their value has not been disclosed.
Paul Rogers — audit partner
Rogers was the audit partner who accessed and displayed confidential Lendlease information. KPMG subsequently sanctioned him and announced his departure.
Leaked remuneration documents showed an FY25 base distribution of A$526,000, with a maximum performance distribution of A$210,000. No reliable public figure has been disclosed for Rogers’ final retirement or exit payment.
Eileen Hoggett — former chief operating officer
Hoggett is an important exception to the line of senior figures leaving KPMG with generous retirement packages. She was expelled from the firm after new evidence emerged that contradicted her earlier denials concerning confidential Lendlease documents retained in her locker.
Leaked remuneration documents showed an FY25 base distribution of A$1.5 million, with a maximum performance distribution of A$755,000.
Hoggett told Parliament that her expulsion meant she received no retirement payment, no accrued annual leave, no long-service leave and no pay for her final month.
Dorothy Hisgrove — former National Managing Partner, People & Inclusion
Hisgrove was involved in KPMG’s handling of the whistleblower matter. That said, reports indicate that Hisgrove and general counsel Louise Capon had advocated stronger action against Hoggett and were overruled.
Leaked remuneration documents showed Hisgrove had an FY25 base distribution of A$1.2 million, with a maximum performance distribution of A$622,000.
The Australian reported that Hisgrove was expected to receive around A$2 million on departure. That figure was reported as an expected payout, not as a subsequently confirmed payment.
The contrast is harsh: some senior figures connected with the misconduct or the governance failures retain retirement entitlements, while another group of partners—reportedly uninvolved in the scandal—is now being pushed out under Project Vector, alongside around 360 employees.
Two very different kinds of departure
Before KPMG confirmed that 27 partners would leave, The Australian reported that partners then being selected for redundancy had not been involved in the audit scandal.
It also reported that their exit terms were being reduced: senior partners who might previously have received nine months’ notice were being offered six months, while partners with shorter tenure could receive three months. For a hypothetical partner earning A$2 million a year, the newspaper calculated that moving from nine months to six would reduce the notice payment by A$500,000.
Those reports preceded the final announcement, so they should not be read as establishing the individual terms of every one of the 27 partners now leaving.
But they expose an awkward contrast. McPherson and Lawry have confirmed that their departures come with entitlements under KPMG’s existing retirement agreement. But partners selected for Project Vector—who were reported not to have been involved in the scandal—were meanwhile being offered less generous exit terms than previously applied.
That is where the accountability question becomes difficult to avoid.
And then there is Michael Ebeid
Ebeid is different again. There is no suggestion that he participated in the underlying misuse of confidential client information. But he is implicated in the failure of governance.
He was already an independent KPMG director and one of the independent board members involved in oversight of the firm’s investigation of the whistleblower allegations. After Senator Deborah O’Neill raised those allegations publicly, emails subsequently released by Parliament showed Ebeid describing many of her statements as “completely false” and her intervention as inappropriate and unfair.
He later apologised, saying that he had not known the full range of facts and would not have written the email had he known what subsequently emerged.
KPMG nevertheless chose Ebeid to become its first independent chairman—the person charged with strengthening oversight and accountability—and he subsequently disclosed that the role carries a A$1 million annual base salary.
KPMG is entitled to believe that someone who witnessed the governance failures from inside the boardroom is particularly well placed to fix them.
In my view, however, Ebeid is an awkward symbol of KPMG’s governance reset. The firm has promoted someone who was already inside an oversight structure that failed to get to the bottom of the whistleblower’s allegations, and is paying him A$1 million a year to repair it. It must be a tough pill to swallow for the partners and employees who are now being shown the door.
PwC shows why FY26 may not tell us very much
KPMG’s current revenue decline is, of course, not the end of the impact of the scandal. After all, Australia has a recent Big Four case study we can refer to in order to benchmark the potential extent of the damage that lies ahead for the firm.
PwC Australia’s tax-leaks scandal erupted in 2023.
In FY23, PwC reported total revenue of A$3.35 billion. By FY24 that had fallen 26.1 per cent to A$2.475 billion. PwC said the reduction was driven primarily by the sale of its government consulting business, together with difficult external conditions that reduced demand for Consulting and Financial Advisory. Average partner income fell 12.7 per cent. The contraction continued. PwC’s FY25 Audit Transparency Report shows total revenue falling again to A$2.085 billion.
Only now—three years after the scandal became public—are there signs of a return to growth. A leaked internal PwC memo said revenue grew about 6% in the six months to June 2026, described as the firm’s first return to growth since 2023.
KPMG’s trajectory will not necessarily resemble PwC’s. The businesses, scandals and market circumstances are different. But PwC demonstrates something important: the revenue consequences of a professional-services scandal can take years to work through the accounts.
Which brings us back to KPMG’s most surprising FY26 number.
Audit grew 11%. How does that make sense?
KPMG’s Audit & Assurance business—the division at the centre of the confidentiality scandal—grew 11% in FY26. At first glance, that seems almost perverse. But audit revenue moves differently from consulting revenue.
The appointment and replacement of auditors of public companies is governed by formal processes. ASIC’s guidance shows that auditor resignations can require regulatory consent and replacement frequently runs through shareholder and AGM procedures. ASIC explicitly seeks to avoid changes interfering with completion of an audit already under way.
KPMG’s FY26 Audit revenue is therefore likely to reflect mandates largely in place before the full consequences of the scandal were known.
Lendlease has already ended its longstanding relationship with KPMG. Macquarie’s prospective A$75 million-plus mandate is under review, but KPMG is not even due to begin that audit until 2028.
PwC provides an illuminating comparison here too.
Despite PwC’s total revenue falling from A$3.35 billion in FY23 to A$2.085 billion in FY25, its revenue from audits of financial statements moved from A$540 million in FY23 to A$575 million in FY24 and A$571 million in FY25.
KPMG’s 11% Audit growth should therefore not be interpreted as proof that Audit has escaped the economic consequences of the current crisis.
It is simply too early to see them.
Project Vector may be the beginning, not the final bill
KPMG’s latest restructuring can therefore be read in two ways.
The narrow reading is that Consulting revenue has fallen sharply for a second consecutive year, and KPMG is cutting Consulting capacity accordingly.
That is true. But it misses the wider financial picture.
KPMG is carrying a large debt burden. Revenue has now declined for three consecutive years. Its government pipeline has been materially constrained. Longstanding clients have left or are reconsidering mandates. Partner departures can create capital-repayment and retirement obligations. Partner remuneration is falling. The firm is paying for legal investigations, remediation and a governance overhaul. And the Australian partnership has reportedly turned to KPMG International for significant financial support.
Against that background, I think Project Vector is better understood not simply as a response to weak Consulting demand, but as an attempt to rebuild financial resilience after the scandal sharply reduced KPMG’s margin for absorbing that weakness.
And that brings us back to the question of who pays.
KPMG said in June that its failures “do not define the vast majority of our Partners and people”, describing them as professionals who continue to work with integrity.
Two months later, hundreds of those professionals who continued to work with integrity are being sent packing.
And if the experience of PwC is any guide, Project Vector may not represent the final bill for KPMG Australia’s scandal.
It may be the first attempt to create enough financial headroom for costs that have yet to arrive.
This is part of Big4News’ continuing coverage of the KPMG Australia Audit Leak Scandal.
KPMG Australia Audit Leaks Scandal
The KPMG Australia scandal that erupted publicly in March 2026 represents one of the most significant integrity crises to hit the Big Four in Australia since the PwC tax leaks affair. At its core are allegations—first raised internally by a whistleblower in 2024 and later amplified through parliamentary privilege—that senior partners misused highly conf…
About Claudine Cassar
I’m a corporate anthropologist and former Deloitte equity partner. I sold my technology business to Deloitte in 2016 and led the Malta Consulting team for five years. I am the founder and editor of Big4News, which provides independent, clear analysis of PwC, Deloitte, EY, and KPMG — free from corporate spin.
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