Macquarie could reconsider KPMG audit appointment after confidentiality scandal

Macquarie is seeking assurances that confidential information from other audit clients was not used to help KPMG win the A$75 million-a-year mandate

Macquarie Group could revisit its decision to appoint KPMG as its next auditor as the fallout from the firm’s Australian confidentiality scandal begins to threaten one of its biggest audit wins.

Macquarie chair Glenn Stevens told a parliamentary inquiry on Friday that the group had asked KPMG to establish whether confidential information belonging to other audit clients was used in pursuit of the Macquarie tender. He said there was still time for Macquarie to “revisit” its decision to appoint the firm, although a final decision would need to be made relatively soon.

The stakes are substantial. KPMG’s external audit mandate with Macquarie is worth about A$75 million a year, according to the Australian Financial Review.

KPMG was selected in November 2025 to replace PwC following a competitive tender. Macquarie’s board said at the time that, after an 18-month transition period to allow KPMG to meet auditor independence requirements, it intended to recommend KPMG’s appointment to shareholders at the 2027 annual general meeting. The firm is due to become auditor for the financial year beginning on 1 April 2027 — Macquarie’s FY28 — subject to regulatory consents and shareholder approval.

Macquarie wants proof its tender was clean

The critical issue for Macquarie is no longer simply whether KPMG can recover from the scandal. It is whether the conduct uncovered elsewhere in the firm touched the process through which KPMG won Macquarie itself.

“In a nutshell, what we need clarity on: was there any misuse, not only of our information, but anybody else’s, in the pursuit of the Macquarie tender in particular?”

Macquarie chair Glenn Stevens

Macquarie has asked for the matter to be examined by law firm Allens under a scope agreed with Macquarie. Chief financial officer Frank Kwok told the committee that Allens was reviewing more than 130,000 electronic communications as part of the exercise, which is intended to determine whether there was any impropriety in KPMG’s pursuit of the mandate.

The committee questioned the arrangement because Allens also acts for KPMG. Macquarie defended the process, saying that it had agreed the scope directly with the law firm and was satisfied that the review was sufficiently broad.

Macquarie is separately assessing whether KPMG continues to have the capability and capacity to conduct its audit following the upheaval at the firm. KPMG Australia’s chief executive, national audit leader and chairman have all left their positions since the scandal escalated.

The Hinchliffe connection

The audit selection process was already attracting scrutiny because Macquarie’s Board Audit Committee chair, Michelle Hinchliffe, spent 37 years at KPMG before retiring from the firm in February 2022 and joining the Macquarie board. Her KPMG career included serving as head of financial services in Australia, head of audit in the UK and chair of KPMG UK’s audit practice.

Hinchliffe was involved in parts of Macquarie’s audit tender process. At Macquarie’s July AGM, Stevens said she had attended an equal number of presentations by each firm competing for the mandate, but had recused herself from scoring the firms and from the decision to appoint KPMG.

By then Macquarie had already begun formally examining both KPMG’s capacity to perform the audit and the integrity of its participation in the tender.

From audit wins to audit risk

The questions arise against the backdrop of evidence that confidential information belonging to other KPMG audit clients was improperly accessed or shared while the firm was pursuing additional audit work.

The parliamentary inquiry has examined the use of Lendlease information in connection with KPMG’s pursuit of work at Westpac and Dexus, and Optus information in connection with its bid for Telstra’s audit. KPMG has acknowledged failings in its handling of the confidential material and in its response to the whistleblower who originally raised concerns.

At Friday’s hearing, KPMG’s new chief executive John Sams went further, telling the committee that the firm could not dismiss what had happened as the work of a “few bad apples” and that it needed to examine its culture.

There is, however, an important distinction in the Macquarie case. No finding has been made public that confidential information was improperly used to help KPMG win the Macquarie audit. Macquarie is now seeking evidence to satisfy itself on precisely that question.

But the commercial consequence is becoming clear. Conduct involving the handling of confidential client information during the pursuit of audit work is now putting another major audit mandate at risk.

For KPMG, that creates a striking reversal: a scandal centred on how confidential information was handled in the competition for audit work could now cost the firm an A$75 million-a-year audit mandate it only recently won.

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This is part of Big4News’ continuing coverage of the KPMG Australia Audit Leak Scandal.

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