KPMG to cut almost 400 jobs from Australian arm as it loses contracts after audit leaks scandal
KPMG Australia has slashed jobs as the fallout of a major audit scandal continues. (ABC News: John Gunn)
In short:
Accounting firm KPMG is cutting hundreds of jobs after revenue fell as a result of a recent audit inquiry.
One number to know:
Accounting firm KPMG says it will cut 27 partners and about 360 staff from its local arm, and revamp its structure as it grapples with lower revenue from lost contracts following the audit leaks scandal.
The company's revenue fell from $2.28 billion the previous year, to $2.26 billion in the 2026 financial year, and KPMG Australia chief executive John Sams expected more revenue falls.
KPMG has been unable to retain most of its ongoing government contracts after allegations KPMG audit partners misused client data and then mishandled a whistleblower's complaint about it.
In March, Labor senator Deborah O'Neill shared with parliament a whistleblower's allegations that confidential board papers from Lendlease were used to support bids for major audit tenders for Westpac and Dexus.
And earlier this month, the firm's current and former partners were hauled before a federal inquiry probing why the firm allegedly shared client information and ignored the whistleblower's allegations when they first surfaced.
Five former KPMG partners were grilled in camera: Julian McPherson (left), Kim Lawry, Martin Sheppard, Andrew Yates and Eileen Hoggett. (ABC News: Matt Roberts)
The job cuts at KPMG's Australian arm were widely expected as the firm reportedly sought financial support from KPMG International to remain solvent.
KPMG is one of the "big four" accounting firms, which have taken a hit to their bottom line from getting fewer ongoing government consulting contracts, following the earlier tax leaks controversy at PricewaterhouseCoopers.
Mr Sams said in a statement the firm was cutting 5 per cent of its workforce, primarily in its consulting arm, "in response to continued economic weakness, difficult market conditions and the impact of the firm's conduct and whistleblower matters".
This includes 27 partners and about 360 employees.
"This is not a decision that has been taken lightly, and we know it will have a very real impact on people,"Mr Sams said.
With demand for consulting remaining weaker, "most of the roles affected will be in our consulting business".
"Changes to our business and the professional services landscape have also reduced the need for some roles in business services," he said.
"Our immediate focus is on treating everyone impacted with care, dignity and respect. We are providing practical support and making wellbeing support central to the process."
More job cuts could follow
The company will also restructure so that the firm's mid-market and private deals team joins deal advisory and infrastructure, while its advisory team joins consulting.
These changes would align KPMG Australia more closely with its global advisory services.
The firm will also begin consultation on "a small number of award-based roles".
Mr Sams said more cuts could follow.
"The changes announced today are an important step in the longer work of renewing and rebuilding our firm,"he said.
The firm was undertaking "internal and external reviews" in the wake of the whistleblower's allegations, which he said "will be completed in the coming months".
"Their findings will inform the next phase of our action plan and help ensure we take all necessary action," he said.
KPMG has faced months of scrutiny over its handling of a whistleblower complaint. (ABC)
Mr Sams thanked the firm's staff after a "very challenging year".
"They [KPMG employees] continued to deliver outstanding work for more than 13,000 clients, while supporting one another through a difficult period for the firm," he said.
"Our total revenue was slightly lower than last year, and below our expectations."
Consulting takes a hit, audit and tax divisions grow
While consulting took a hit, revenue grew in four out of five divisions, led by audit and assurance, up 11 per cent, and tax and legal, up 10.9 per cent.
"We also continued to invest significantly in technology and build our AI capability, helping our people work more effectively and deliver better outcomes for clients."
But the firm needed to "be clear about the outlook".
"We expect difficult market conditions to continue in FY27 and beyond,"Mr Sams said.
"Economic growth is expected to remain subdued until at least 2028, affecting client investment and extending decision-making timeframes," he said.
"The professional services sector is also changing rapidly as client expectations evolve, AI reshapes the way services are delivered, and government spending on consultants remains lower.
"We also recognise the challenges created by our own failings, and the work we must continue to do to rebuild trust.
"While these conditions are likely to persist, we remain focused on what we can control. We will continue to monitor performance closely, act when needed and consider carefully how the firm needs to be set up for the future."
Watch The Business, Mondays to Thursdays 8:44pm on ABC News Channel, after the Late News on ABC TV, and anytime on ABC iview