The dismantling of KPMG is about to begin

August 3, 2026 — 5:00am

Any day now the dismemberment of the global accounting/consulting giant KPMG starts in earnest with massive job cuts expected from its Australian business. But this will only be the beginning of changes that could leave the firm a shadow of its current form.

While all the focus has been on the jobs carnage about to be inflicted on its 10,000-strong workforce in the wake of the whistleblower scandal – around 1000 are expected to lose their jobs as its work orders evaporate – it is not the only major surgery on the slate.

The potential spin-off of its government business for a nominal sum could jettison an even larger number of staff and partners into a separate entity to try and save this business from extinction.

French group Capgemini has not denied reports it made a $1 offer for KPMG’s defence business, which has been rejected. That was in early June.

There were also whispers of KPMG looking to sell the business before the whistleblower scandal broke. KPMG has been thrown into turmoil after a whistleblower alleged the firm had shared data from blue-chip clients, including construction giant Lendlease, to win new business.

KPMG declined to comment on the potential sale, and it has said no decisions have been made on job cuts, but it has made clear that everything is on the table in the current environment.

“KPMG is continuing to evaluate a range of options to ensure the firm remains well positioned for the challenges ahead,” has been the firm’s official line via its spokesman.

No one is pretending there is any alternative.

Just three years ago, PwC was forced down this same path following the tax scandal that came after the firm used confidential government tax plans to combat tax avoidance to help recruit new clients.

Retribution against PwC was swift. The firm’s lucrative government services division was banned from any new business with federal and state government departments.

PwC’s government business was sold to Allegro Funds for $1 plus $100 million the private equity group tipped into the business to fund the ongoing employment of 1400 PwC staff, including 117 partners.

KPMG is already feeling the heat with bans on any new business with the federal and state governments, while an independent review of the firm’s governance, culture, ethics and integrity frameworks is underway.

Canberra has made it clear these findings will be shared with its state counterparts.

And this is not the only threat from Canberra.

Assistant treasurer Daniel Mulino has re-floated previous proposals to help reform the wayward consulting giants, including the radical proposal to effectively split them all up by forcing these firms to offer either business advice or auditing, but not both.

If all the proposals being discussed were enacted, including spinning off KPMG’s government business and separating its audit and consulting arm, KPMG would shrink considerably.

KPMG, which recently touted 1000 partners in its offices, could even fit under the 400-partner cap, which is among the other proposals being considered by the Treasury.

The proposals to shake up the laws governing auditors, which were first floated in 2024 following the PwC tax scandal, are unlikely to be swept under the carpet with such ease this time.

There is also the matter of further attrition from its core audit business as major clients recover from the brutal shock of just what has been revealed and what other nasties lurk in the background waiting to be discovered.

It is a diabolical situation when clients are forced to defend their use of auditors who are meant to have a squeaky clean reputation.

And the flow of damning allegations, which are now being confirmed as fact, has not stopped.

Late last month, former chief operating officer Eileen Hoggett was expelled after the firm said new evidence had been identified to support the whistleblower’s allegation that sensitive Lendlease board documents were kept in a locker in KPMG’s Sydney office. Hoggett had already resigned over the scandal and was preparing her departure.

In the days after the expulsion, KPMG told a federal parliamentary committee Hoggett had previously denied the allegation, but it now accepted the allegation was substantiated.

Hoggett was touted as KPMG Australia’s next CEO before Senator Deborah O’Neill blew the whistle loudly on the scandal by reading out the allegations in parliament - almost two years after the anonymous whistleblower first made the allegations to KPMG.

Lendlease is preparing to dump KPMG as its auditor. PwC lost the Westpac account to KPMG as a result of its scandal. The firm can’t take it for granted that the bank won’t move its $25 million a year contract again.

Macquarie is also reviewing if KPMG has retained the talent to ensure it can conduct the group’s $70 million a year contract, and set up an external review of how KPMG won the contract in the first place last year.

The loss of these two contracts alone would trigger another brutal round of job cuts.

If PwC’s history is a useful indicator – it plunged from 10,000 employees pre-scandal to around 6000 today – KPMG has a long way to fall.

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