Shame and Scandal in the Profession
I have been resisting saying, “I told you so!” – but now I must.
In an article published in 2023, following the PwC Tax Scandal in Australia, I argued that it is time to seriously regulate the Big 4 (Ratnatunga, 2023b).
There were many similar scandals happening globally at that time. The article listed the biggest accounting scandals of the previous 25 years, including the Lehman Brothers Scandal in the USA in 2008 (EY) and the Satyam Scandal in India in 2009 (PwC). But the regulators appeared to be ‘toothless tigers’, especially in Australia (Ratnatunga, 2021b).
However, the scandals never stopped.
In fact, in the 2025-2026 period, several major regulatory enforcement actions, internal ethics failures, and data misuse scandals involving the Big 4 accounting firms – Deloitte, PwC, EY, and KPMG – have come to light or reached formal resolution.
The good news is that this time around, regulators appear to be taking serious action to rein in these accounting and auditing giants.
Recent Global Scandals
Let us first start with an overview of some of the big scandals globally in the 2025-2026 period.
KPMG Australia – Whistleblower Mishandling & Confidential Data Misuse
The Scandal: Accounting firm KPMG is engulfed in an ongoing scandal that has seen several senior leaders quit their roles and the corporate watchdog launch a formal investigation into the firm’s business dealings. It all centres on an internal whistleblower’s allegations that some of the firm’s senior partners misused confidential client documents.
The KPMG whistleblower raised concerns with the firm’s senior leadership team in 2024 that confidential board papers from construction giant Lendlease were used to pitch for and win audit contracts from other firms, including Westpac Bank and the Dexus property group. An internal investigation did not substantiate the claims, with KPMG further claiming an external investigation by legal firm Ashurst supported the initial outcome (Stewart and Ziffer, 2026).
However, Ashurst partner Jane Harvey told the parliamentary inquiry on the scandal that the firm was never engaged by KPMG to undertake an investigation and did not conduct one (Tadros and Wootton, 2026).
Then, after the whistleblower raised further complaints with the board, a different external law firm, Allens, was appointed to complete another investigation into the claims. Findings from the Allens investigation corroborated some of the whistleblower’s allegations and uncovered secondary instances of inappropriate document sharing. This resulted in an Australian Securities and Investment Commission (ASIC ) investigation and a Department of Finance review, which is ongoing at the time of writing.
In March 2026, with the protection of parliamentary privilege, Labor Senator Deborah O’Neill aired the claims (Stewart and Ziffer, 2026), which then brought the scandal into the public domain. Since then, this audit scandal has led to a “who’s who” of current and former senior leaders from KPMG being hauled before a parliamentary hearing that commenced on June 19, 2026.
KPMG has since released a statement apologising to the whistleblower, stating that the initial investigations “fell short of the firm’s expectations.”
The Fallout: In May 2026, KPMG CEO Andrew Yates and audit partner Julian McPherson both resigned over the handling of the whistleblower’s allegations. COO Eileen Hoggett was also demoted from her role. More than one independent board member has left or signalled their intention to resign.
Consequently, the Department of Finance and KPMG reached a mutual agreement that KPMG would not bid for new Commonwealth work until 30 September 2026, during an independent review of KPMG’s governance, culture, ethics and integrity frameworks. Furthermore, the Reserve Bank of Australia moved to remove KPMG as manager of its whistleblower hotline.
The scandal triggered a broader government pushback. Federal spending on Big 4 contracts, which had nearly halved from A$348 million in the 2024-2025 period following the earlier PwC scandal (see Ratnatunga, 2023), was now cut further.
In a far-reaching move, the Australian Treasury released draft proposals targeting the Big 4, including potential structural break-ups (i.e., separating audit from consulting), capping partner numbers at 400 per firm, and introducing penalties up to A$910 million for regulatory breaches. (Reuters, 2026b). [More on this later].
EY Australia – Commonwealth Bank Data Breach
The Scandal: Two former Ernst & Young (EY) graduate employees allegedly accessed the private banking account details of Australian Prime Minister Anthony Albanese and a senior EY partner while on secondment at the Commonwealth Bank of Australia (CBA). The Australian Federal Police (AFP) charged the two men with criminal privacy and data access offences (Bharadwaj and Tadros, 2026).
The Fallout: In addition to the criminal charges laid against both employees, the incident sparked national outrage over third-party contractor access to sensitive data and accelerated calls in Parliament for aggressive regulatory restrictions on multinational consultancies.
Deloitte, PwC, and EY Netherlands – Widespread Exam Cheating & Ethics Violations
The Scandal: The Public Company Accounting Oversight Board (PCAOB), headquartered in the USA but having a global reach, said that it had fined the Netherlands arms of Deloitte, Ernst & Young, and PwC a total of $8.5 million because hundreds of staff and partners cheated on internal exams—including ethics and professional independence tests—over a five-year period from 2018 to 2022 (Kapoor, 2025). Previously, the PCAOB has imposed a series of heavy fines on Big 4 accounting firms globally to clamp down on rampant exam cheating, most notably a $25 million penalty for KPMG in 2024 for similar exam cheating (Ratnatunga, 2021a).
The Fallout: The scandal resulted in significant financial penalties for the firms involved. The PCAOB fined Deloitte Netherlands $3 million, PwC Netherlands $3 million, and EY Netherlands $2.5 million (totalling $8.5 million). KPMG Netherlands had previously been fined $25 million. There were also leadership departures, with Deloitte Netherlands’ Chief Quality Officer resigning after receiving answers to a mandatory test and a senior PwC partner stepping down. There was also increased regulatory oversight, with the Dutch AFM (Authority for the Financial Markets) placing all three firms under “intensive supervision” and requiring independent root-cause investigations, firm-wide cultural remediation, and mandatory compliance reporting.
PwC China / Hong Kong – Evergrande Audit Enforcement Resolution
The Scandal: Following the collapse of property developer China Evergrande Group—which overstated revenues by $78 billion—regulators found PwC failed to perform basic audit procedures, ignored massive misstatements, and issued misleading audit reports. While mainland Chinese regulators issued penalties in late 2024, the enforcement resolution concluded with Hong Kong regulators issuing final sanctions (Ye, 2026).
The Fallout: Hong Kong authorities ordered PwC to pay HK$1.3 billion ($166 million) in fines and compensation, imposed a 6-month ban on onboarding new clients, and fined former audit partners. This action followed the 441 million yuan (US$62M) fine and 6-month business suspension previously handed down by mainland Chinese authorities. PwC experienced an unprecedented wave of client cancellations across state-owned and listed enterprises in Greater China, alongside widespread layoffs and partner pay cuts as a direct result of the financial penalties and client loss. PwC China and Hong Kong have appointed new leadership, closed the specific audit branch tied to the deficiencies, and implemented governance overhauls. In addition, the Liquidators for Evergrande have pursued massive separate legal claims—seeking up to US$8.4 billion (57 billion yuan) from PwC entities in the High Court of Hong Kong (Reuters, 2026a)
Global Market Trends and Structural Industry Shifts
High-Risk Client Offboarding by Big 4 Globally
These scandals have heightened audit quality demands by regulators in the USA and Europe, although, as yet, Australian regulators appear to be lagging behind (Ratnatunga, 2021b). As a result, many Big 4 firms are collectively shedding clients they see as too high a risk for the audit fee return. The UK’s Financial Reporting Council (FRC) has taken aggressive enforcement actions, prompting the Big 4 to actively purge higher-risk clients in order to avoid severe fines and reputational fallout.
Consequently, the Big 4 has collectively shed dozens of mandates on London’s junior Alternative Investment Market (AIM). This has resulted in mid-tier accounting firms – such as BDO, Grant Thornton, and PKF Littlejohn – expanding their market share on AIM, while Big 4 firms have cut headcount in mid-market audit practice divisions (Ward-Brennan, 2026).
In Australia, The Treasury released a landmark Options Paper, outlining structural and legislative overhauls targeting the Big 4 partnerships. The Key Proposals in the paper are as follows (Australian Treasury, 2026).
Forced Separation: Treasury has proposed either structural separation (splitting audit and consulting into completely independent corporate entities) or strict operational separation (blocking firms from offering non-audit services to their audit clients).
Capping Partnership Size: This proposal seeks to drastically reduce the statutory cap on the maximum number of partners in an accounting partnership from 1,000 down to 400 (aligning with legal partnerships) to dismantle “too-big-to-govern” corporate models.
Mandatory Firm Tenure Limits: This proposal seeks to mandate firm-level rotation (e.g., compulsory retendering or switching audit firms every 10 years), replacing the current rule that only requires rotating individual engagement partners every 5 years.
ASIC Jurisdiction Expansion: This proposal is to bring multi-billion-dollar partnership structures directly under the jurisdiction of the corporate regulator, the Australian Securities and Investments Commission (ASIC), subjecting them to the same corporate reporting, governance, and whistleblower standards as listed companies under the Corporations Act.
Similar actions have resulted in the following global market trends & structural industry shifts, as shown in Table 1:
Table 1: Global Market Trends & Structural Industry Shifts
| Region / market | Current position | Possible structural outcome |
| Australia | Treasury options paper released 1 July 2026; consultation closed 12 August 2026. Big 4 currently regulated as state-based partnerships, outside ASIC supervision. ASIC directed to strengthen audit oversight, 16 July 2026. | Firm-level licensing by ASIC; partner cap reduced from 1,000 to 400; structural or operational separation of audit and consulting; continued reduction in Commonwealth reliance on Big 4 advisory work. |
| United Kingdom / AIM | Big 4 withdrawal from higher-risk junior market audits under FRC enforcement pressure. Big 4 FTSE AIM 100 clients down from 49 to 30 over three years. | Continued consolidation of AIM audit work among specialist and mid-tier firms; further Big 4 headcount reduction in mid-market audit. |
| Greater China | State-owned and listed entities moving away from PwC following Evergrande enforcement; substantial client attrition already recorded. | Domestic firms gaining market share; sustained reduction in Big 4 local audit capacity. |
| Public sector procurement | Tighter probity and ethical soundness conditions applied to firms supplying both audit and advisory services. | Sustained reduction in government contract spending with Big 4 consultancies across major jurisdictions. |
Enforcement Powers of Statutory Regulators vs. Professional institutes
Many professional accountants, let alone business entities and the general public, are not aware that when a Big 4 scandal occurs, the regulatory enforcement typically splits into two parallel tracks:
(1) The Statutory Regulator Track
(2) The Professional Institute Track
The Statutory Regulator Track (Systemic & Market Focus)
The target is the Big 4 firm entity involved in the scandal (e.g., PwC China or KPMG Australia). Regulators like the FRC or PCAOB step in to protect public markets. They inspect audit engagement files, evaluate structural governance, and assess audit quality failures. If guilty, the outcome is large entity-level fines, multi-year monitorship requirements, or firm-level bans from auditing public companies or government contracts (Ratnatunga, 2021b).
The Professional Institute Track (Individual Conduct & Ethics Focus)
The targets here are individual partners, audit signing partners, and staff members. Institutes like ICAEW or CA ANZ evaluate whether individual members breached the profession’s Code of Ethics (e.g., honesty, integrity, confidentiality, and professional competence). The outcomes are formal reprimands, mandatory ethics retraining, fines on individual partners, or permanent expulsion—taking away their right to use the “CA” designation and effectively ending their executive accounting career.
Consequently, the Statutory Regulators (e.g., PCAOB, FRC, ASIC) and Professional Institutes (e.g., CA ANZ, ICAEW, ICAS) operate on fundamentally different legal foundations, target different entities, and wield vastly different enforcement powers. These differences are summarised in Table 2.
Table 2: Direct Comparison of Statutory vs. Professional Regulation
| Dimension | Statutory regulators (PCAOB, FRC; ASIC subject to the qualification above) | Professional institutes (CA ANZ, ICAEW, ICAS) |
| Legal authority and mandate | Government-backed bodies established by legislation, with investor protection and market integrity as their mandate. | Membership bodies operating under royal charter or association rules, with professional standards and ethics as their mandate. |
| Who and what they regulate | The firm as an entity and registration to audit public companies. In Australia, ASIC currently regulates registered company auditors as individuals, not the partnerships employing them. | Individual members and practice certificates. They generally lack statutory power over corporate or partnership structures. |
| Investigation powers | Power to compel production of documents, require testimony and conduct inspections of audit working papers. | Authority derived from the member’s contractual acceptance of the by-laws. No power to compel third parties or non-members. |
| Maximum financial penalties | Entity-level penalties reaching tens of millions of dollars, such as the PCAOB’s US$25 million penalty against KPMG Netherlands. | Penalties directed at individuals, typically capped at substantially lower thresholds. |
| Operational sanctions | Power to restrict or prohibit a firm from auditing listed entities, or to suspend its audit registration. | Power to withdraw the professional designation, cancel practising certificates or expel a member. |
Disciplinary Actions Taken by Professional Bodies
All this raises an interesting question: “What were the disciplinary actions taken by the Institutes of Chartered Accountants to discipline their members involved in the Big 4 firm scandals?”
Institutes of Chartered Accountants—such as Chartered Accountants Australia and New Zealand (CA ANZ), the Institute of Chartered Accountants in England and Wales (ICAEW), and the Institute of Chartered Accountants of Scotland (ICAS)—serve as professional membership bodies.
All these bodies are members of the International Federation of Accountants (IFAC), which is merely an advocacy group for the financial accounting profession and not an accreditation or standards body. Despite IFAC’s posture that it has some sort of disciplinary enforcement over its member bodies, it has none.
As discussed in Table 2, the regulatory authority and disciplinary mechanics of professional bodies differ significantly from state regulators like the US’s PCAOB or the UK’s FRC. While state bodies regulate firm-level licenses and corporate audit oversight, professional institutes hold authority only over individual chartered accountants and firm membership credentials.
Professional institutes issue a range of penalties for ethics violations, academic misconduct (such as exam cheating), and failure of professional due care by individual members, as follows:
Professional Misconduct
Cautions and Reminders: It was reported that the Chartered Accountants Australia and New Zealand (CA ANZ) confirmed that over 200 members at major firms received formal cautions and nearly 100 received professional reminders. This approach has triggered intense public and parliamentary scrutiny regarding transparency and whether lower-level administrative actions adequately deter corporate misconduct (Tadros, 2026).
Financial Penalties & Cost Orders: Professional conduct committees impose monetary fines directly on individual members or registered member entities, although data on these are not easily available.
Severe Breaches
For severe breaches of the Code of Ethics (e.g., tax leak scandals, deliberate confidentiality breaches, or major fraud concealment), the following penalties may apply:
Forfeiture of Membership: Individual partners and staff can be permanently expelled from the institute. Stripping an accountant of their CA designation effectively terminates their ability to act as an official audit sign-off partner or hold executive accounting titles.
Suspension: Members can be barred from practising or using post-nominal letters for specified periods during ongoing investigations.
However, professional bodies face limitations and challenges due to scope restrictions, and Table 3 presents recent industry responses.
Table 3: Enforcement Limitations of Professional Bodies & Resulting Industry Responses
| Area | Scope and limitation | Industry response |
| Individual versus firm jurisdiction | Institutes regulate individuals, which makes it difficult to sanction a partnership as an entity unless firm-level membership rules permit it. | Reform proposals would allow entity-level sanctions on firms, principally through statutory licensing rather than through institute rules. |
| Confidentiality versus transparency | Institutes withhold the identity of firms involved in complaints in order to protect ongoing proceedings and are criticised in parliament for doing so. | Legislators are pressing for public naming of firms involved in substantiated misconduct to strengthen deterrence. |
| Whistleblower protection | Traditional partnership structures attract weaker statutory whistleblower protections than corporations. | Institutes have advocated extending corporate whistleblower provisions to partnerships and permitting protected disclosures within audit teams. |
The Big 4 Scandals: Why the Public Should Care
The “Big 4” firms come at a significant cost to taxpayers when they advise business and government.
When governments and the larger public sector become unduly dependent on a few big consulting firms, it can cause more harm than good, especially when the consultants are appointed in an opaque process without any perceived expertise in the area. They also carry an expensive price tag and are not accountable when the advice they give is a failure in its implementation (Ratnatunga, 2023a)
In Australia, Ernst & Young, Deloitte, KPMG and PwC have earned about $21 billion in taxpayer-funded contracts over the past 10 years. The federal government alone currently has 297 active contracts with KPMG, worth $653 million (Stewart and Ziffer, 2026).
And a similar scandal has happened before. Fellow accounting giant PwC was found to be misusing confidential government information to help multinationals avoid tax . PwC’s arm dealing with public contracts was sold off for a dollar in 2023. PwC mutually agreed that it will not bid for any federal government contracts due to a non-compete clause until 15 July 2025 (Ratnatunga, 2023b).
The taxpayer costs resulting from Big 4 scandals span direct lost tax revenues, wasteful public procurement, investigation expenses, and remediation costs.
Direct Lost Tax Revenue & Corporate Tax Avoidance
Undermining Tax Legislation: During the PwC tax scandal, over 50 partners received confidential Treasury policy intelligence regarding the Multinational Anti-Avoidance Law (MAAL). PwC used this information to market tax-structure workarounds to 14 multinational corporations, directly undermining federal tax collection efforts (Ratnatunga, 2023b).
Avoided Tax Revenue: While the Australian Taxation Office (ATO) intercepted scheme implementations—saving an estimated A$180 million annually in diverted revenue in that specific instance—broader corporate tax avoidance structures designed by global accounting firms cost governments hundreds of billions worldwide (with global corporate tax abuse estimated at over A$300 billion annually) (Lowrey, 2023).
Wasteful Public Procurement & Substandard Deliverables
Bloated Public Sector Spending: Over a decade, federal and state government contract spending on Big 4 firms surged by over 1,200%, with total public spending on external consultants reaching A$20.8 billion per year (A$5 billion federally) (Convery, 2023).
Conflicts of Interest: Government reviews uncovered hundreds of millions in taxpayer-funded contracts (including A$374 million across specific reviewed deals) that suffered from severe conflicts of interest, inadequate record-keeping, and questionable value (Convery, 2023).
Regulatory, Legal, and Parliamentary Enforcement Costs
Cost of Public Enquiries: Millions of taxpayer dollars have been absorbed by public enforcement, including Senate committee enquiries, Australian Federal Police (AFP) criminal investigations, and regulatory enforcement by the ATO, ASIC, and the Tax Practitioners Board.
Re-Tendering and Departmental Transition: When government bodies were forced to suspend or terminate contracts with compromised firms (such as getting KPMG not to tender for new federal work or replacing PwC’s whistleblower hotline management at the Reserve Bank of Australia), departments incurred substantial administrative, legal, and re-bidding expenses.
Summary
This article discusses a series of scandals involving the Big 4 accounting firms—Deloitte, PwC, EY, and KPMG—between 2025 and 2026, highlighting their significant impact on the accounting profession and regulatory landscape. The article begins by referencing an earlier call for stricter regulation of these firms following a PwC tax scandal in Australia in 2023. It then outlines several recent major scandals globally.
In Australia, KPMG faced a whistleblower scandal involving the misuse of confidential client documents, leading to resignations and a ban on bidding for federal contracts. EY was embroiled in a data breach scandal involving unauthorised access to sensitive banking details of high-profile individuals. in the Netherlands, Deloitte, PwC, and EY were fined for widespread exam cheating and ethics violations, resulting in financial penalties and increased regulatory supervision. In China and Hong Kong, PwC faced enforcement actions after failing to perform adequate audits for Evergrande, leading to significant fines, client cancellations, and internal restructuring.
The article further discusses global market trends and shifts due to these scandals, such as the Big 4 firms offloading high-risk clients and mid-tier firms gaining market share. It also explores proposed regulatory changes in Australia, including forced separation of audit and consulting services, capping partner numbers, and imposing stricter compliance measures.
The article contrasts the enforcement powers of statutory regulators, like PCAOB and ASIC, with professional institutes, which focus on individual conduct and ethics. It emphasises the broader implications of these scandals, including taxpayer costs from lost tax revenue, wasteful public procurement, and regulatory enforcement costs. The article underscores the need for stronger regulation and transparency to prevent such misconduct in the future.
References
Australian Treasury (2026), Regulation of accounting, auditing and consulting firms in Australia: Options paper, Australian Government, July, p. 53. https://storage.googleapis.com/files-au-treasury/treasury/p/prj3d74d170cf192c4651fa4/page/c2026_781711.pdf
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Convery, Stephanie (2023), “Morrison government spent $20.8bn on consultants and outsourcing public service in final year, audit finds” The Guardian, May 6 . https://www.theguardian.com/australia-news/2023/may/05/morrison-government-spent-208bn-on-consultants-and-outsourcing-public-service-in-final-year-audit-finds
Kapoor, Michael (2025), “Deloitte, EY, and PwC Fined $8.5 Million for Dutch Exam Cheating”, Bloomberg Law, June 26. https://news.bloomberglaw.com/esg/deloitte-ey-and-PwC-fined-8-5-million-for-dutch-exam-cheating
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Ratnatunga, Janek (2021a) “Why Australia’s Regulators are Powerless in KPMG Exam Cheating Scandal”, ICMA Media Release, September 21, https://cmaaustralia.edu.au/why-australias-regulators-are-powerless-in-kpmg-exam-cheating-scandal/
Ratnatunga, Janek. (2021b), “The Impotence of Australia’s Accounting Regulators”, Journal of Applied Management Accounting Research, 19(2), pp. 19-26.
Ratnatunga, Janek (2023a), Consulting Firms: Big Bucks But Little Value for Governments, Journal of Applied Management Accounting Research, 21(1), pp. 10-16.
Ratnatunga, Janek. (2023b), “PwC Tax Scandal’s Aftermath: It’s Time to Seriously Regulate the Big 4”, Journal of Applied Management Accounting Research, 21(1): 17-28.
Reuters (2026a), “PwC Hong Kong to pay Evergrande shareholders HK$1 billion in compensation, SFC says”, April 23. https://www.reuters.com/world/pwc-hong-kong-pay-evergrande-shareholders-hk1-billion-compensation-sfc-says-2026-04-23/
Reuters (2026b), “Australia weighs breakup of Big Four accounting firms after scandals”, Business World Online, July 1. https://bworldonline.com/world/2026/07/01/760445/australia-weighs-breakup-of-big-four-accounting-firms-after-scandals/
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Tadros, Edmund (2026), “Hundreds of misconduct and other complaints at big firms upheld”, Australian Financial Review, Apr 19. https://www.afr.com/companies/professional-services/hundreds-of-misconduct-and-other-complaints-at-big-firms-upheld-20260419-p5zp49
Tadros, Edmund and Wootton, Hannah (2026), “Ashurst denies investigating KPMG allegations, contradicting firm, Australian Financial Review. Jun 19. https://www.afr.com/companies/professional-services/ashurst-denies-investigating-kpmg-allegations-contradicting-firm-20260619-p608ef
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Ye, Peggy (2026), “Evergrande liquidators seek US$8.4 billion from PwC entities in Hong Kong lawsuit”, South China Morning Post, May 18. https://www.scmp.com/business/article/3353983/evergrande-liquidators-seek-us84-billion-PwC-entities-hong-kong-lawsuit