The full KPMG Australia scandal timeline...

The KPMG Australia scandal began with a whistleblower’s 2024 allegations that senior partners misused confidential Lendlease board documents to gain an unfair edge in winning major audit mandates, including Westpac.

The story exploded into the open in 2026 after parliamentary revelations, a firm admission that internal investigations “fell short,” multiple leadership exits, fresh admissions of further breaches (including Optus-related material), regulator action, and mounting client and government fallout.

It also fits a broader Australian pattern, in which the Big Four have been forced to confront the consequences of treating confidentiality, independence, and oversight as problems to manage after the fact rather than standards to protect from the start.

The scandal has put reform back on the table, reviving proposals that were floated after the PwC tax leaks scandal but went nowhere at the time — including tougher independence rules, stronger whistleblower protections, tighter oversight, and a harder line on separating audit from consulting.

Timeline of a Scandal

June and August 2023 — KPMG partners twice access a Lendlease folder containing confidential material relating to audit bids submitted by rival firms EY and PwC. The material later becomes part of KPMG’s preparations for its attempt to win the Westpac audit.

10 October 2023 — Seven people from KPMG’s audit business meet to help prepare partner Kim Lawry for the Westpac audit tender. During the meeting, confidential material taken from Lendlease board papers is displayed, including an assessment of rival bids submitted by EY and PwC.

6 November 2023 — The “Lunchgate” incident occurs at KPMG’s Barangaroo office, during KPMG’s pursuit of the Dexus external audit. According to the whistleblower, partner Jeff O’Sullivan said he would go to lunch and leave his laptop open on confidential Dexus internal-audit material so members of the bid team could view it. KPMG later said the remark was intended as a joke and that it found no evidence the information was actually shared, but sanctioned O’Sullivan for making an inappropriate remark.

Late 2023–March 2024 — Westpac audit tender raises conflict-of-interest questions.
During Westpac’s audit tender, Peter Nash, Westpac’s audit committee chair and a former KPMG Australia national chairman, attended audit pitch meetings. KPMG chair Martin Sheppard later told a parliamentary hearing that Nash had stayed at his house during the pitching process, describing him as a long-standing friend. Westpac said Nash declared his KPMG links and was not on the selection committee, but later acknowledged the perception of bias created by those relationships.

More -
https://www.big4news.com/p/the-full-kpmg-australia-scandal-timeline

Sanctions against PricewaterhouseCoopers LLP and Mr John Waters...

This Press notice concerns the outcome of an investigation into the relevant Statutory Audit Firm and Statutory Auditor (as defined in the FRC’s Audit Enforcement Procedure). It would not be fair to treat any part of this announcement as constituting or evidencing an investigation into, or findings in respect of the conduct of, any other persons or entities.

Executive Counsel of the Financial Reporting Council (FRC) has issued a Final Settlement Decision Notice (FSDN) under the Audit Enforcement Procedure and imposed sanctions against PricewaterhouseCoopers LLP (PwC) and John Waters, audit engagement partner, in relation to the statutory audit of the consolidated financial statements of Babcock International Group Plc (Babcock) for the financial years ended 31 March 2019 (FY2019) and 31 March 2020 (FY2020).

The sanctions are:

PwC:

• A financial sanction of £3,248,437 (this figure reflects a starting point of £5,500,000, discounted for the mitigating factor of exceptional cooperation by 12.5%, and further discounted for admissions and early disposal by 32.5%);
• A published statement in the form of a Severe Reprimand;
• An order requiring PwC to take specified action with the aim of preventing the recurrence of the contravention; and
• A declaration that the FY2019 and FY2020 Audit reports signed on behalf of PwC did not satisfy the Relevant Requirements in relation to the matters set out in the FSDN.

Mr Waters:

• A financial sanction of £59,062 (this figure reflects a starting point of

£100,000, discounted for the mitigating factor of exceptional cooperation by 12.5%, and further discounted for admissions and disposal by 32.5%).

• A published statement in the form of a Severe Reprimand; and
• A declaration that the FY2019 and FY2020 Audit reports signed on behalf of PwC did not satisfy the Relevant Requirements in relation to the matters set out in the FSDN.

PwC will also pay Executive Counsel’s costs of the investigation.

Babcock is a Public Interest Entity (PIE). It is a multinational corporation headquartered in the UK, and its shares are listed on the Main Market of the London Stock Exchange. It provides engineering services and other services (in the UK and internationally) in relation to maintaining, upgrading, operating and managing significant infrastructure and essential equipment. A number of its contracts are UK government contracts, including contracts with the Ministry of Defence.

PwC and Mr Waters have admitted serious and numerous breaches[^[1] ] of Relevant Requirements in relation to the auditing of cash pooling; financing arrangements in relation to a specific overseas contract; capitalisation of certain costs on aircraft; an intangible asset; assessment of goodwill impairment; certain credit notes on aircraft; and two long-term contracts, across both audit years. Material restatements were made in the FY2021 financial statements to correct prior period errors associated with some of the breach areas.

PwC and Mr Waters failed to exercise adequate professional scepticism and to obtain sufficient appropriate audit evidence in all those areas of the audits, and to achieve fair presentation and compliance with accounting standards in five areas. In these areas, they failed adequately to challenge management as to whether management’s accounting approach was compliant with the financial reporting framework, and demonstrated an insufficient audit response to the risk of material misstatement.

With regard to Mr Waters’ position, he faced severe challenges in discharging his responsibilities as audit engagement partner, including as a consequence of being appointed to the FY2019 Audit at short notice, after the audit had commenced, and not having had the opportunity for any handover from his predecessor. The COVID-19 pandemic made the FY2020 Audit significantly more difficult.

As part of the sanctions accepted by PwC, PwC has agreed to examine and report to the FRC on aspects of its processes in respect of the change of audit engagement partners during an ongoing audit and the response to indicators of increasing audit risk during an engagement.

The Respondents’ exceptional level of cooperation during the investigation by Executive Counsel of the breaches is demonstrated by the following facts and matters:

• PwC undertook two separate critical self-reviews of different areas of the FY2019 and FY2020 audits at the request of Executive Counsel, and disclosed their findings to Executive Counsel;
• PwC undertook a Root Cause Analysis to identify the underlying causes of the audit failings, and disclosed their findings to Executive Counsel; and
• Mr Waters participated fully in the self-reviews and Root Cause Analysis and fully co-operated with Executive Counsel’s investigation.

“In March 2023, the FRC announced sanctions against PwC and two audit engagement partners in relation to the FY2017 and FY2018 audits of Babcock and one of its subsidiaries.

Following a separate investigation in relation to the FY2019 and FY2020 audits, PwC and the new audit engagement partner appointed in relation to those financial years have admitted serious and numerous breaches. These included significant contraventions of the fundamental requirements to perform an audit with adequate professional scepticism and to evaluate effectively whether the financial statements complied with accounting standards and achieved fair presentation of the underlying transactions. The quality of these audits fell short of the standards expected of statutory auditors.

The FRC acknowledges that the audit engagement partner assumed his role in FY2019 in challenging circumstances. In such circumstances, however, the firm and the audit engagement partner should together have ensured that those challenges were appropriately addressed, and the audit work performed in accordance with applicable standards.”

Penrose Foss, Executive Counsel:

Read the Final Settlement Decision Notice.

 https://www.frc.org.uk/news-and-events/news/2026/07/sanctions-against-pricewaterhousecoopers-llp-and-mr-john-waters/