ASIC commences formal investigation into KPMG
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The news: The Australian Securities and Investments Commission (ASIC) has commenced a formal investigation into KPMG and three registered company auditors that sit within it.
Answering questions from Greens Senator Babara Pocock during a Senate committing hearing, ASIC chair Sarah Court said last week’s preliminary investigation into KPMG had moved to a formal investigation.
“In terms of the correspondence that we have had with Mr [Martin] Shepherd or with KPMG, there has been a significant amount of interaction between ASIC and KPMG at the most senior levels… I can assure you that we are engaging proactively with KPMG, and that level of engagement has intensified,” Court said.
Court noted the formal investigation commenced earlier this week and it had issued multiple compulsory notices throughout that period to KPMG.
While there were currently three auditors who are being investigated, Court said the issue is an “ever-moving feast” and there could be more auditors involved.
During the hearing, ASIC CEO Scott Gregson confirmed it had eight contracts with KPMG worth $3 million. Six of the contracts are for services and two for consultancy.
“We’ve also approached KPMG indeed this week, seeking assurances of the absence of involvement of those persons involved in the matters that are public, and also seeking assurances that their obligations as to confidentiality and treatment of secure information, remain intact,” Gregson said.
“We’ve had an interim response giving us that confirmation. We’re continuing to work with KPMG.”
When Pocock questioned whether ASIC would review its contracts with KPMG, Gregson said it would consider reviewing once it had more information from KPMG.
The context: Last week, KPMG Australia chief executive Andrew Yates resigned following the firm’s repeated failure to adequately address whistleblower allegations on the misuse of client information.
What they said: “We talked in this committee previously about some of the limits on ASIC jurisdictional reach in relation to partnerships, of course,” Court said.
“KPMG is a partnership, so we are thinking internally at ASIC about what our various regulatory hooks may be in relation to the conduct that is being revealed.
“Needless to say, we have deep concerns about what has been revealed in the press, and we are trying to get to the bottom of the evidence as to those various incidents.”
The source: Senate Estimates
