The Australian Securities and Investments Commission (ASIC) is set to appear before a parliamentary inquiry on Friday, where it will be questioned regarding its handling of whistleblower reports related to alleged misconduct at KPMG, an accounting firm. The inquiry aims to investigate claims that KPMG audit partners mishandled client data and improperly addressed whistleblower complaints.
A whistleblower from KPMG has criticized ASIC for its lack of action, suggesting that the regulator has to be “dragged kicking and screaming” to investigate these serious allegations. This inquiry follows testimonies from other whistleblowers from KPMG and other major accounting firms, indicating a broader concern about regulatory oversight in the industry.
In December 2021, a different whistleblower contacted ASIC with claims that KPMG might have violated corporate laws. They expressed frustration in a June email detailing how ASIC had dismissed their previous disclosure attempt, which involved allegations of KPMG’s failure to maintain audit transparency. The whistleblower accused ASIC of adopting a “condescending tone” and demonstrating a poor attitude towards whistleblowers.
The email further stated that there appears to be an improper relationship between ASIC and KPMG, leading to a lack of regulatory action against the firm. The whistleblower warned that without adequate oversight, misconduct could proliferate within the firm and the industry at large.
Concerns were raised that another regulatory body might have to step in, which the whistleblower deemed inappropriate. They asserted that ASIC has had multiple opportunities to investigate KPMG’s alleged breaches of corporate law yet has failed to act decisively, effectively endorsing misconduct instead.
Response from ASIC indicated that the regulator takes all whistleblower reports seriously and is committed to evaluating and addressing allegations of misconduct diligently. They encouraged individuals with information about potential violations to come forward, assuring that all reports would be treated confidentially.
ASIC has previously communicated to the inquiry its intent to review compliance by auditors with systemic requirements, in addition to maintaining a focus on enforcing laws against auditor misconduct. They noted that several investigations and enforcement actions are currently in progress.
Senator Barbara Pocock, a member of the parliamentary inquiry and spokesperson for the Greens on finance and public service, emphasized the significant role of whistleblowers in exposing unethical practices within the big four accounting firms. She asserted that whistleblower complaints should receive serious consideration and that there should be a dedicated authority to ensure appropriate responses to such disclosures from regulators like ASIC.
Pocock criticized the current self-regulation of the big four firms and called for reforms to improve the protection of whistleblowers. She highlighted concerns over potential conflicts of interest, noting that ASIC was entering new contracts with KPMG around the time the firm’s scandals were becoming public knowledge. Her comments reflect a growing demand for independent oversight of regulatory bodies and their responsiveness to whistleblower concerns.
In light of these events, the federal government is exploring options to separate the auditing and consulting divisions of accounting firms, a move that could enhance accountability and address the systemic issues within the industry.
