Self-regulation is a beautiful business model if you can get it. The way it works is that an industry pays a professional body to police it, and then, whenever the government threatens to bring in a real regulator, the industry points to the professional body and says: look, we’re already policed. Australia’s big four accounting firms are in this position right now — fighting to stop Canberra from giving the securities regulator, ASIC, the power to regulate auditors — and so you would think their professional body, Chartered Accountants ANZ, would want its policing to look, at a minimum, like policing. Instead, as the Australian Financial Review reports, it has produced a review of KPMG’s handling of an internal scandal that found the firm’s whistleblower policy went “beyond the Corporations Act.” Beyond it. That is the same Corporations Act whose whistleblower protections KPMG declined to extend to the actual whistleblower, while allegedly bullying him instead. The guardrails were so good, apparently, that nobody was protected by them.
Some backstory: in May 2024, a KPMG employee raised concerns that confidential audit information was being used improperly; KPMG classified the complaint as an HR matter, its transparency reports made no mention of it, and the affair ended up before a parliamentary inquiry. In May this year KPMG conceded that its treatment of the whistleblower “fell short of the firm’s expectations,” and the whistleblower has since accused ASIC of having to be dragged to investigate. Enter Chartered Accountants with its review. Its investigative techniques were admirably economical: it did not independently verify any evidence KPMG supplied, did not interview chief executive John Sams or any board member, and interviewed exactly three KPMG executives. Two of the three — HR chief Dorothy Hisgrove and chief risk officer Paul Low — have since resigned, with Hisgrove, who was under scrutiny over the treatment of the whistleblower, leaving the partnership entirely. The review managed, while interviewing hardly anyone and checking nothing, to make sweeping statements about the firm’s leadership. You have to admire the efficiency.
The report’s strongest recommendations, per the AFR: get staff to bookmark online resources on confidentiality, rename the independence committee, and consider appointing a chief ethics officer. “Consider” is doing a lot of work in that sentence. The document runs 19 pages and refers to the role of leadership more than a dozen times — awkward, given that a Chartered Accountants spokeswoman defended the review by saying it was only ever meant to examine KPMG’s “systems and processes – not their people and leadership which are being separately investigated,” and that “any attempt to characterise the review otherwise would be deliberately misleading.” Sure. A report about systems, not leadership, that keeps mentioning leadership, and that nobody outside the system was ever meant to read: Chartered Accountants doesn’t publish these reviews at all. This one is public only because KPMG released it — which tells you roughly how damaging KPMG found it.
Now the incentives, because there are always incentives. Chartered Accountants’ annual report, released the same week, shows chief executive Ainslie van Onselen collected a $1.2 million pay package last financial year — up 9.7 per cent on the year before and 44.5 per cent since she took the job in mid-2020. It includes a $300,000 bonus for hitting performance hurdles tied to “upholding professional standards and trust” and “undertaking bold, visible advocacy in the public good.” The reason this is funny — if you are not a Chartered Accountants member, and maybe not even then — is that van Onselen is the person who told the parliamentary inquiry that KPMG’s misconduct was “extremely serious,” was “basic 101 stuff in terms of ethics principles,” and “struck at the very heart of trust in audit.” That was the bold, visible advocacy. The upholding of professional standards produced the bookmark recommendation. The AFR notes, almost tenderly, that a $3.4 million Vaucluse mansion — shared with her husband, media personality Peter van Onselen, whose unsuccessful fight against a lawsuit brought by his former employer Network Ten in 2023 cannot have been cheap — does not maintain itself.
The membership is reportedly furious, with complaints that the body is displaying worse governance than CPA Australia managed in its 2017 rebellion over chief executive Alex Malley’s $1.8 million pay — the accounting-profession benchmark for governance fiascos, now apparently being cleared. Members also notice the structural wrinkle: the big firms are a significant revenue source for the body that supposedly watches them. Even inside KPMG, some auditors are unhappy, and here the incentives make a neat closed loop — the big four’s whole argument against ASIC regulation rests on self-regulation working, and Chartered Accountants has just demonstrated, in writing, what self-regulation looks like. As the AFR observes, ASIC’s top brass are cheaper, too.