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 its 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 said 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.
A spokesperson from the federal Department of Finance said that the department “was taking these allegations extremely seriously and was in active conversation with KPMG on this matter”.
“Finance is reserving its rights in relation to this, including the potential to suspend KPMG from the MAS Panel, or to seek a mutual agreement for KPMG not to bid for any Commonwealth work for a pre-determined period of time,” the spokesperson said.
The department has notified other Commonwealth entities that this is a “significant event that is being assessed by Finance”, saying that entities may seek assurance from KPMG whether currently engaged individuals are associated with these matters, and if so, entities should consider additional risk mitigation steps.
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