The PwC tax leaks saga was expected to jolt the entire professional services sector, yet two years later the KPMG audit controversy is exposing similar cultural faults. PwC partners misused confidential Australian Taxation Office briefings to pitch to multinationals, while KPMG partners allegedly used clients’ confidential financial data to chase audit work at competitors.
Those episodes have badly damaged the brands of two of the big four firms that dominate audit, accounting and consulting. Mounting concern over these ethical failures is driving pressure for tougher regulation that could reshape how large partnerships run.
Treasury’s position paper on consulting firm regulation, released on Wednesday, sets out multiple options to lift governance standards across major partnerships. Proposals include mandatory independent directors and new legal obligations for senior partners that resemble company directors’ duties.
Treasury is also exploring a cap on firm size, cutting the maximum from 1000 partners to 400 to make firm-wide governance more practical. Central to the paper is the idea that big multidisciplinary partnerships should adopt company-style boards and executive structures to strengthen internal oversight and accountability.
Regulators appear focused on the mechanics of control inside these sprawling firms, not just punishing past misconduct. A company-like board with independent members could challenge profit-driven decisions that place client confidentiality and public trust at risk.
Clearer legal duties for key partners would make it easier to hold individuals responsible when governance fails. A hard cap on partner numbers would force some firms to rethink growth models built on ever-expanding practices and complex internal politics.
Major firms edge toward reform stance
One of the big four firms has indicated broad support for many of Treasury’s proposed reforms. This suggests some changes may be less radical than they first appear.
EY has said it backs a range of options in the Treasury paper released by the Albanese government on Wednesday. PwC Australia and Deloitte Australia have taken a more guarded line, welcoming consultation but avoiding firm commitments to specific measures.
KPMG has not yet responded publicly, while the Greens have criticised the government for delaying action on what they argue are long-standing and obvious fixes. Several options in the paper resemble EY’s own attempt under Project Everest in 2023 to separate its audit and consulting arms, suggesting parts of the sector already see structural change as inevitable.
