KPMG Australia on Thursday said it has not taken any decision on possible job cuts. The statement came after the Australian Financial Review (AFR) reported that the accounting firm plans to remove about 1,000 positions, or more than 10% of the workforce, as it grapples with the fallout from an audit misconduct scandal.
Commenting on the report, KPMG stated it is reviewing its operating model, cost base and workforce requirements but stressed that “no decisions have been made regarding any specific measures or potential impact on roles”, according to Reuters.
KPMG says workforce review is ongoing
A KPMG spokesperson stated to Reuters the firm is evaluating “a range of options to ensure the firm remains well positioned for the challenges ahead.” The KPMG International Chairman and CEO, Bill Thomas, and Chief Operating Officer, Gary Wingrove, are in Australia this week to meet partners and clients.
As per a report by the AFR, details of the proposed workforce reduction were shared with selected partners earlier this week.
The publication also mentioned that partners were appealed to support the new leadership team headed by recently appointed CEO John Sams and Chairman Michael Ebied, or consider leaving the firm.
Audit scandal impacts business
KPMG Australia has faced intense scrutiny since whistleblower allegations emerged in March that confidential client details were used to help secure lucrative audit contracts.
Reuters reported that the allegations were related to the sharing of confidential data related to Lendlease and Optus among staff bidding for audit work with Westpac, Telstra and Dexus.
The controversy has already led to the departures of the firm’s chairman, chief executive and audit chief. Last week, John Sams, a partner from its commercial advisory and transactions practice, was appointed as its new CEO.
According to the ARF, the proposed job cuts are likely to affect the advisory business the most as the scandal has affected the firm’s revenue pipeline. The report stated that KPMG remains barred from bidding for new government work, as well as projects in Victoria and New South Wales, until late September. It also reported that Lendlease is ending its 68-year ties with KPMG, while Macquarie is reviewing its audit contract.
Multiple investigations underway
KPMG is facing a separate probe by the Australian government, the Australian Securities and Investments Commission (ASIC), Chartered Accountants ANZ and the Tax Practitioners Board.
Reacting to the reported restructuring, Labor Senator Deborah O’Neil stated to KPMG employees “were being hurt by the governance failures of their senior leaders.” According to AFR, she further added that the reported job cuts were “another reason these firms need to reform.”