iscover ASIC to explore ‘regulatory hooks’ it can use in KPMG investigation
RegulationThe chair of ASIC said the regulator has “deep concerns” about the misconduct matters that have surfaced at the big four firm after formally commencing an investigation into the big four firm.
Appearing before a Senate estimates hearing last week, ASIC chair Sarah Court stated that ASIC had commenced a formal investigation into KPMG in relation to the conduct of a few of its auditors after previously announcing that it had started a preliminary investigation.
Allegations about the conduct of several registered company auditors at KPMG first came to light after whistleblower claims were shared by Senator Deborah O’Neill before Parliament in March. The alleged misconduct relates to client documents being shared inappropriately in order to win external audit work.
Court said ASIC’s focus for the investigation would be to determine whether the conduct sanctioned by KPMG may be a breach of the duties of a registered company auditor and whether each of the registered company auditors have maintained their fitness and propriety in accordance with the Corporations Act.
ASIC said it commenced the formal investigation following the resignation of the CEO of KPMG, Andrew Yates, and head of audit, Julian McPherson, and has since issued multiple compulsory notices to KPMG.
“There are three registered company auditors that are currently within the scope of what we are looking at but this is an ever-moving feast as more information comes our way, so I don’t know that that will be the end of it,” Court said.
Court noted that there were limits to ASIC’s jurisdictional reach in relation to partnerships such as KPMG.
“We are thinking internally about what the various regulatory hooks may be in relation to the conduct that is being revealed,” she said.
“Our jurisdiction is available to only some of the individuals that sit within the partnership. People who are registered company auditors who are senior auditors that sign off on accounts and have various profession obligations are a clear regulatory hook.”
The corporate regulator said there may be some other regulatory hooks, as partnerships often have a range of proprietary companies, such as service companies, for example, which may be another option for ASIC.
“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,” she said.
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Miranda Brownlee
Miranda Brownlee is the editor of Accountants Daily and Accounting Times, the leading sources of news, insight, and educational content for professionals in the accounting sector.
Miranda has over a decade of experience reporting on the financial services and accounting sectors, working on a range of publications including SMSF Adviser, Investor Daily and ifa.