Australian Ethical drops KPMG as auditor

Australian Ethical will drop its decade-long auditor KPMG and will soon begin the competitive tender process for a new external auditor from FY28.

In June, the scandal-hit consulting firm admitted its treatment of a whistleblower and investigation into their allegations fell short.

Allegations against KPMG by the whistleblower include misappropriation of confidential Lendlease board papers which were used by KPMG to pursue major audit tenders including Westpac and Dexus. There have also been serious concerns raised regarding independence and integrity during the pursuit of the Macquarie audit contract.

"Whilst we have been well served by KPMG as our external auditor since 2013, we have decided that now is the right time to run a competitive tender for our external audit in FY28 and beyond," Australian Ethical chair Steve Gibbs said.

The super fund said the decision follows continued scrutiny of KPMG Australia's audit practice, including information exposed by the Parliamentary Joint Committee on Corporations and Financial Services.

KPMG has since detailed a governance overhaul and action plan to address integrity issues across the firm.

"While KPMG's Action Plan and continued focus on strengthening governance, culture and ethics, and controls across the firm is acknowledged, Australian Ethical will not invite KPMG to participate in the tender process," Australian Ethical said.

The tender process will be completed during FY27, and shareholders will be asked to approve the appointment of the successful audit firm at the annual general meeting (AGM) in November 2027.

Macquarie's board recently rejected KPMG as its auditor starting 2027 and will instead proceed with incumbent auditor PricewaterhouseCoopers (PwC).

This came after Macquarie chair Glenn Stevens was grilled at the August 14 parliamentary hearing over the bank's reliance on Allens, KPMG's own lawyers, to review the embattled auditor's conduct. The investment giant was formally inquiring into KPMG's capability to deliver its audit, as well as the conduct of the audit itself.