A leading shareholder advisory firm is urging Australia’s biggest listed companies to put their audit contracts to tender every 10 years, mirroring rules in the United Kingdom and Europe. Ownership Matters argues that regular tendering would sharpen competition and scrutiny around long-running audit relationships.
It wants companies to embed the 10-year cycle in governance practice rather than wait for regulators to force change.
Ownership Matters also warns that the allegations against KPMG should prompt boards to reassess the quality and integrity of the firm’s audit work. Boards using KPMG are being told to seek direct assurances about how the firm protects and handles confidential client data.
Questions are now being raised about how much reliance investors can place on audits where the same firm has held the mandate for many years. Concerns about data security add another layer of risk on top of the usual audit quality debate.
KPMG Australia has been thrown into crisis after a former employee claimed auditors misused confidential information from some of the country’s largest companies. The whistleblower alleged staff used client data and insider knowledge to help win new audit mandates, crossing lines that are meant to separate advisory work from independent assurance.
Fallout has been swift, with the firm losing its chief executive, chairman and three senior audit partners since the allegations were aired in federal parliament in March. Those departures show how seriously governance experts and policymakers are treating potential conflicts and data abuses inside major audit firms.
