Australian government moves to tighten regulation of consultants after KPMG scandal

The Australian federal government has taken steps to clean up the consulting industry after the latest KPMG scandal. An options paper was released by Assistant Treasurer Daniel Mulino on Wednesday, outlining potential moves to regulate accounting, auditing and consulting firms more strictly.

The scandal involved KPMG partners leaking confidential information about Lendlease and Optus to colleagues who were applying for lucrative audit contracts at Westpac, Dexus and Telstra. At least three partners were involved.

The options paper flags possible measures such as imposing quality management and ethical obligations on big firms, and considering operational or structural separation of different business functions. It also suggests reducing partnership limits, introducing new governance rules, and mandatory periodic testing for audit services or regular rotation of contracts.

Mulino stated that recent behavior from some large firms has not been fair or honest, undermining trust and raising questions about market integrity. He emphasized that it is time to restore trust and integrity so that the government, taxpayers and other businesses can rely on these firms' services.