Jozef Imrich, name worthy of Kafka, has his finger on the pulse of any irony of interest and shares his findings to keep you in-the-know with the savviest trend setters and infomaniacs.
''I want to stay as close to the edge as I can without going over. Out on the edge you see all kinds of things you can't see from the center.''
-Kurt Vonnegut
A whistleblower scandal cost KPMG Australia’s former chief executive Andrew Yates and ex-chairman Martin Sheppard more than $1.2 million in docked pay and bonuses following their mid-year resignations over the firm’s handling of the matter.
Yet both men still secured multimillion-dollar departure packages, with Yates collecting $6.7 million in earnings and retirement payouts despite forfeiting almost $700,000 in pay, and Sheppard taking home $1.8 million after a $526,000 bonus cut.
Former KPMG chairman Martin Sheppard (left) and former CEO Andrew Yates during a parliamentary hearing in August. Alex Ellinghausen
The figures were revealed in the firm’s Impact Plan and Data Book, two of five annual reports published on Friday detailing aspects of the big four accounting firm’s operations. Other reports covered the firm’s climate disclosures, data about its audit division and its modern slavery statement.
KPMG disclosed that it continued to have issues with staff cheating on internal tests, with 34 cases of employees using artificial intelligence to cheat on internal exams.
The disciplinary panel also substantiated 36 cases of serious misconduct, including four of sexual harassment and 32 policy breaches. The findings led to 11 individuals being fired or asked to resign and 25 written warnings, KPMG reported.
“Serious misconduct within our firm, first raised by a whistleblower and later in the Australian Parliament, together with failures of judgment, governance and leadership, damaged the trust of our stakeholders,” KPMG Australia chief executive John Sams and chairman Michael Ebeid said in a joint statement in the Impact Plan.
KPMG Australia has been in crisis since March, when allegations were raised that audit partners misused confidential client data and leveraged conflicted relationships to win work.
The scandal worsened as the firm’s mismanagement of the wrongdoing and the whistleblower who highlighted the conduct became apparent, prompting an exodus of executives involved in the issue, along with clients, partners and staff.
The reports detail that employees had lost trust in the firm and were less engaged following the scandal. The firm’s engagement index was down eight points to 65 per cent, while the trust index fell 16 points to 62 per cent.
“The misconduct included breaches of client confidentiality and exposed serious shortcomings in our response when one of our people spoke up,” Sams and Ebeid wrote.
“We acknowledge that some partners and people failed to uphold our values and that we took too long to respond appropriately. We got important things wrong and let down the whistleblower and others – and we apologise.”
‘Serious ethical failing’
The firm has launched a second iteration of an action plan to reform its operations after a number of scathing reports into aspects of the scandal and the firm’s mishandling of the whistleblower and his complaints.
This exposed “serious ethical failings” in the firm’s senior ranks and broader culture issues.
After the review, the federal government extended its ban on KPMG bidding for new government work until at least the end of February, telling the firm it must demonstrate it is trustworthy rather than just promise cultural change.
Another report by consultancy Principia Advisory, published on October 11, found that the firm systematically mistreated, marginalised and retaliated against anyone who spoke up about unethical behaviour.
Principia concluded that a relentless commercial pressure to win work and increase revenue fuelled a culture of systemic cheating, driving partners to steal sales credits, under-cost proposals and pressure staff into under-reporting actual hours worked.
