SYDNEY, June 16 - KPMG's audit-leak scandal is set to further erode the prospects for the Big Four accounting firms in Australia, with government contracting data indicating that new federal work awarded to KPMG, PwC, Deloitte and EY plunged following a previous PwC controversy.
A Reuters analysis of federal government tenders found that new contracts the Big Four signed with the Australian federal government fell to A$348 million ($245.51 million) in 2025 from A$637 million in the prior year. The shift highlights how quickly and decisively government agencies have moved to distance themselves from major professional services suppliers in an industry estimated at A$1.8 billion.
KPMG is at the centre of the current storm after allegations it shared confidential company information with potential private-sector clients in the course of bidding for audit engagements. The firm has acknowledged mishandling a whistleblower complaint related to the alleged conduct, and its chief executive and top auditor have resigned. KPMG has engaged an independent third-party governance consultant to review its practices as it seeks to stem an outflow of clients.
In a further blow, the Australian government said on Tuesday that KPMG will not be allowed to bid for new federal work until September 30. The Reserve Bank of Australia has also indicated it would likely not reappoint KPMG to operate its whistleblower hotline.
A Reuters review of published information, verified by lawmakers, shows KPMG holds about A$650 million of active federal contracts, covering services ranging from anti-slavery supply chain audits to cybersecurity work.
The current KPMG episode comes after PwC was rocked in 2023 by revelations it had shared confidential tax policy details to win clients. That scandal forced PwC to forgo new government contracts for more than a year and to sell its government advisory business - a unit that had accounted for a fifth of its revenue - for A$1. PwC's overall revenue subsequently fell 26% in the 2024 financial year following that divestment.
Former KPMG partner Brendan Lyon said government business is a substantial component of the Big Four's revenues and that the loss of hundreds of millions of dollars each year could imperil the firms' financial positions. "It’s undoubtedly going to have impacts and that’s been discussed by government politicians and various government departments," Lyon said.
Stephen Bartos, a former deputy secretary at the Department of Finance, warned that if allegations against KPMG are upheld the firm could face consequences similar to PwC's. "It gives rise to apprehensions by government agencies that there might be misuse of confidential materials from government. And therefore, government agencies will be more reluctant to use KPMG," Bartos said. "They could be facing state governments cutting back as well. Collectively, it amounts to more than federal government work."
Other strains on the Big Four have emerged in recent years. Last year, Deloitte apologised after academics found a report it had prepared for the Department of Employment and Workplace Relations contained AI-generated fabrications. Each of the Big Four has also faced sanctions in the UK over audit misconduct, and in the United States EY agreed in 2022 to pay $100 million to settle allegations its staff cheated on accountant exams.
Parliamentary inquiries in Australia sparked by the PwC revelations produced dozens of recommendations designed to close regulatory gaps, including proposals to cap partner numbers to boost accountability and to bar firms from offering both audit and consultancy services to avoid conflicts of interest. To date, those recommendations have not been implemented.
Political pressure has mounted for tougher oversight. Greens senator Barbara Pocock, a long-time advocate for stricter regulation of large consultancies, argued that the firms had squandered their social licence. "It’s time to force these ungoverned multi-million-dollar partnerships to adopt the same disciplines as large corporations," she said. "They have lost their social licence to special treatment on tax, transparency, and treatment of whistleblowers. It’s time to break them up and properly regulate them as parliamentary inquiries have repetitively recommended."
Conservative senator Richard Colbeck, who chaired a separate inquiry on the use of external consultants, said repeated scandals at PwC and KPMG signalled a likely market shake-up. "There’s probably a bit of a shake-up coming in that section of the market," he said. Colbeck added that departments are actively reassessing their engagements with KPMG: "Every government department is being asked by one or other of my colleagues how many contracts they have with KPMG. And every single department that I’ve heard asked has said, ’we’re reviewing our contracts’."
The combined effect of lost new contract awards, active contract suspensions and mounting parliamentary scrutiny paints a challenging picture for the Big Four's presence in Australia’s government contracting market. For KPMG specifically, the immediate restrictions on bidding for federal work and potential loss of assignments such as the Reserve Bank whistleblower hotline could hasten client departures and reduce revenue from government business.
Where the situation leads next will depend on outcomes of internal reviews, any formal findings about the alleged misuse of information, and whether the federal government and state agencies choose to permanently reallocate work away from the Big Four. For now, the contracting trend and political reaction underline how reputational damage and regulatory scrutiny can translate rapidly into tangible commercial consequences for major professional services firms.
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