KPMG Australia seeks $100m bailout from parent group after scandal
KPMG Australia is reportedly considering asking for $100m (£52.6m) in emergency loans from the Big Four firm’s global network after a scandal rocked the firm’s reputation and business down under.
The Australian firm’s newly appointed chief executive, John Sams, has considered asking KPMG International to loan the arm up to $100m or waive its fee to use the KPMG name and resources.
The Australian Financial Review, which first reported the news on Monday, quoted a KPMG spokesperson saying: “KPMG Australia continues to work collaboratively with KPMG International to assess financial projections.” The spokesperson added: “KPMG International will consider any funding request in accordance with its governance arrangements.”
Following the audit scandal that rocked the Big Four firm’s business down under, the Australian arm asked its parent company for financial support in August after laying off hundreds of staff.
The firm, like the rest of the Big Four, operates as an independent member in each country. Still, KPMG International, registered in England, is the parent group that oversees the policies and procedures all member firms must follow.
KPMG International has a global board of senior partners and chief executives worldwide that oversees and guides the parent company.
KPMG International’s new chief executive Gary Wingrove formally took the helm last Thursday. Wingrove previously led KPMG Australia from 2013 to 2021.
KPMG Australia in crisis mode
KPMG Australia was left in scandal after it was revealed that senior staff leaked internal documents to generate new business and then mishandled a whistleblower complaint. The outcry has led public sector bodies in Australia to freeze new contracts with the company, while some of its largest corporate clients have ditched it.
In its annual results in August, the Australian arm said it plans to cut its workforce by five per cent and partner pay by 13 per cent, as it battles a downturn in client spending and the fallout of a scandal involving the misuse of confidential data to win audit contracts.
“KPMG has 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,” the firm said in its results.
KPMG Australia executive John Sams said in a statement: “With demand for consulting remaining weaker, most of the roles affected will be in our consulting business. Changes to our business and the professional services landscape have also reduced the need for some roles in business services.”
KPMG International was contacted for comment.