The Australian government continues to wave through contracts for the big four audit firms, despite scandals and revelations that some have shared confidential client material from both private and public sector clients.
The latest Big Four audit firm to be caught out grabbing government contracts it was notionally unqualified to bid for is KPMG—which was embroiled in scandal after staff used confidential documents from its client Lendlease in order to help prepare new work pitches for other major corporates, including Westpac and Dexus.
That scandal got worse with revelations that the firm ignored the warnings of an internal whistleblower.
Lendlease ended its 68-year relationship with KPMG, but the Albanese government is far more reticent when it comes to cutting ties.
With a question mark hanging over both its ethics and internal dealing of the scandal, KPMG agreed with a Department of Finance edict that it be suspended from bidding for new government contracts from June until the end of September. That date has now been pushed out to 31 October 2026 pending the outcome of further reviews into the audit firm.
It’s now been revealed that KPMG—and the government—viewed that as a non-binding commitment.
Not dying in a ditch
One department prepared to stick its head out of the trenches and offer KMPG more work is Defence. According to a report in the Canberra Times, in total the department handed KPMG more than $22 million in variations or extensions to existing contracts which the masthead called “fine print” loopholes.
In addition, on 26 August 2026, KPMG was awarded a $5,248,941.01 contract to provide management support services to Defence. Department of Finance records reveal that contract was won as part of an open tender process.
As it usually costs more money to engage new consultants, as opposed to retaining existing providers working on government projects, contract variations are commonplace. However, one contract KPMG has with Defence has ballooned from $5 million to $35.6 million over numerous variations, including one during the period of the current ban.
It raises the question if the final contract value is 600 per cent higher than the original amount, shouldn’t this have been anticipated when the original contract went out to tender?
The optics of such contract extensions are not good for the government nor KPMG when the prevailing attitude seems to be that sitting it out for three months is optional rather than mandatory.
One must question why the Department of Finance would make an official announcement calling for a pause to new KPMG contracts with Defence largely ignoring it. Is someone at Finance going to pick up the phone and ask Defence what’s going on?
Independent ACT senator David Pocock was reported saying, “It’s hard to see how so many contract variations above and beyond what was originally specified could be warranted. A ban that can be worked around this easily isn’t a ban. The government should enforce a genuine ban that captures any non-essential variations and extensions.”
PwC emerges from its scandal
Fellow big four audit firm PwC has—thanks to a favourable government review—apparently emerged from its federal government scandal.
A policy note from the Department of Finance, states, “Finance has concluded that PwC Australia has implemented and/or revised its policies and process to meet the ethical standards of governance, culture, and accountability to support PwC Australia’s re-engagement with the Australian Government.”
PwC was banned, and forced to divest its government consulting division to Synce Advisory, after it was revealed it shared confidential documents from the Australian Tax Office—a PwC client—with multinational clients in order to assist them in reducing their tax obligations in Australia.
Following the review, conducted by former Telstra boss Ziggy Switowski, Finance has now announced the freeze on PwC bidding for government work has ended.
Finance tightens the leash on government departments
The Department of Finance also announced this week that government entities awarding contracts of greater than $2 million in value are now required to deliver a report to the department on such contracts.
Reports must include details of how contracts align with the Australian Public Service procurement framework, consideration of existing departmental resources and incumbency risks for, among other things, contract extensions.
