KPMG Australia has begun cutting around 500 positions, including dozens partners and 450 staff, as the firm grapples with the financial and reputational fallout from a major audit and governance scandal.
KPMG has initiated discussions with impacted partners, with further employee redundancies expected to be finalized soon. Most reductions will hit the consulting and advisory divisions, while audit and tax teams are being largely spared due to ongoing business requirements and critical client ties, as per The Sydney Morning Herald.
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The restructuring follows a scandal involving allegations that KPMG partners misused confidential client information to pursue business from competitors of existing clients. The firm has acknowledged shortcomings in its handling of a whistleblower complaint and confirmed misconduct involving internal documents.
The controversy has also damaged client confidence and put significant contracts at risk. According to reports, around $442 million in contracts could be affected as clients reconsider their relationships with KPMG.
KPMG Australia has also experienced significant leadership changes as it attempts to rebuild confidence. Former chief executive Andrew Yates, chairman Martin Sheppard and other senior audit executives have departed amid the crisis.
The firm has since begun a major governance restructuring, while new leadership faces pressure to restore trust among employees, clients and regulators.
The controversy has attracted attention from an Australian parliamentary inquiry, where additional whistleblower allegations have emerged. Regulators are also examining potential breaches of whistleblower-protection laws and other alleged misconduct, as per media reports.
KPMG's difficulties have been compounded by falling revenue and high debt, with its Australian operation reportedly seeking financial assistance from the global KPMG organisation.
The job cuts represent one of the most significant consequences of the scandal, as KPMG seeks to reduce costs and stabilise its Australian business while rebuilding its reputation, reported The Sydney Morning Herald.
In another blow to the firm, Lendlease confirmed plans to replace KPMG as its auditor. Concurrently, Macquarie Group launched a review into how KPMG was awarded its $70 million audit contract last year.
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