Industry department officials have said they are reconsidering their position on millions of dollars in current work with KPMG, after the scandal-hit firm was accused of deceptive behaviour, misleading clients and misusing confidential information to win contracts.
In the economics committee at Senate estimates, Greens senator Barbara Pocock pressed department officials on their existing contracts with the big four firm.
Industry deputy secretary Neil Mason told the committee the department had about 14 current contracts with KPMG, in various stages of delivery, spanning financial, insurance, technology, audit and consultancy services.
Senator Pocock said she had a list of 15 projects worth about $8 million, most classified as management and advisory services, and Mr Mason agreed that was close to his list.
However, a Canberra Times analysis of AusTender data showed the department's exposure to KPMG is higher than officials estimated in the room.
The data revealed 16 distinct active contracts valued at $9.3 million rather than the cited $8 million.
It also showed that management advisory services - which are usually consultancy contracts - accounted for 83.8 per cent of the firm's total active contract value.
"It just really concerns me that we have got these massive allocations to a firm which is now under a very serious shadow," Senator Pocock said.
"I'm really looking for some leadership here from your department to make some clear indications with a firm that behaves like this."
Mr Mason said the department was deeply concerned and he had personally spoken with a Canberra-based KPMG partner to seek assurance about the firm's handling of the department's information.
Officials confirmed the firm had not disclosed any of the issues before they became public.
As a result, the department will hold off on making any decisions regarding existing contracts until it receives a formal response from KPMG and sees how the Department of Finance handles the scandal at a whole-of-government level.
KPMG is the department's internal auditor under a $1.7 million contract expiring in mid-2026.
However, Mr Mason said the department had already decided to part ways with the firm before the latest scandal broke.
A tender process began months ago, with the department successfully selecting Sententia and Cobalt to take over the work under new contracts worth a combined $2.5 million.
Department officials promised to provide more detail on individual contracts and clarify whether any of KPMG's work touched on funding allocations.
Addressing those concerns, Industry acting secretary Julia Pickworth said that the "allocation of funding within the department is a matter for the department and the department decision makers", adding they "would never rescind our delegation on that to a consultant".
During the first week of Senate estimates, Senator Pocock asked Finance Minister Katy Gallagher about the behaviour not only of KPMG but the broader big four consulting firms.
Finance deputy secretary Marisa Purvis-Smith said the department had 10 contracts with KPMG, including eight consultancy contracts worth $27 million on AusTender and two non-consultancy contracts worth $4.8 million.
She said Finance was considering a range of options in response to the scandal, including close monitoring of KPMG, a mutual agreement that the firm not bid for Commonwealth work for a set period and suspension from the management advisory services panel.
Ms Purvis-Smith said the department expected almost continuous disclosure of significant issues from major suppliers, rather than just being notified after problems were aired in parliament or the media. It was a failure Senator Pocock said once again was left to a whistleblower to sound the alarm.
Senator Pocock said the big four firms had repeatedly "fallen at the first hurdle" on ethics, adding she was "sick of another massive airing of a scandal ... without action".
She said the government was failing to act on agreed reforms from two inquiries, including stronger whistleblower protections and measures to curb the power of the big four.
Senator Gallagher said she did not accept that claim, arguing the government had "done more than any other government" by putting in place a supplier code of conduct and a crackdown on PwC.
"I'm as frustrated as you are", Senator Gallagher said. "We have to continue to respond in the most appropriate way and we will".
The scrutiny of KPMG also reached the education portfolio. Liberal senator Maria Kovacic said the education department had six active contracts with the firm worth $4.1 million and asked what was being done to protect confidential information.
Education secretary Tony Cook said education officials were working with lawyers on formal correspondence to seek further guarantees.
"We don't have any reason to believe [information has been compromised], but again we'll be seeking those assurances with KPMG," Mr Cook said.
In a statement, a KPMG spokesperson addressed the situation.
"We recognise it is a privilege for any private-sector organisation to support the Commonwealth government and we take our commitment to meeting its requirements seriously," the spokesperson said.
"We are continuing to engage with the Department of Finance and are working hard to address concerns raised. Our investigation into the matters raised by the whistleblower remains ongoing."
