Macquarie puts KPMG audit under formal review

Macquarie Group chair Glenn Stevens said the investment giant is formally inquiring into KPMG's capability to deliver its audit, as well as the conduct of the audit itself, at the latest parliamentary inquiry into the consulting firm.

"In a nutshell, what we need clarity on: was there any misuse, not only of our information, but anybody else's, in the pursuit of the Macquarie tender in particular?" Stevens said.

"We've asked for that work to be externally reviewed, and that will be done by Allens, and the scope of that work has been agreed in detail with Macquarie, so that we can have confidence that the scope was appropriate."

In response, parliamentary committee member Paul Scarr questioned why Macquarie did not engage an independent external reviewer rather than relying on Allens, given the law firm acts for KPMG, which stands to earn "millions and millions of dollars" from the Macquarie audit.

Macquarie Group chief financial officer Frank Kwok defended the decision, telling the committee both the timing and the scope of the review had been agreed directly with Macquarie.

"The scope of the review has been shared and, more importantly, agreed with us in discussions with Allens directly," he said.

He pointed to the breadth of the exercise, noting Allens had indicated it was reviewing more than 130,000 e-communications at KPMG, which he said demonstrated "the scope and breadth" of what has been requested.

The review, he said, was intended to establish "whether there has been any impropriety in relation to their pursuit of our audit tender," adding Macquarie was satisfied the scope was correct and was awaiting the review's findings.

The embattled global consulting firm has been under scrutiny for misusing confidential client information to pursue audit tenders, including those of Westpac and Dexus. The details were brought forward by a whistleblower, and KPMG has admitted its investigation into the claims fell short.

KPMG said the parliamentary inquiry has shone the light on its failings, including unethical behaviour by senior people, and the human impact of its handling of the whistleblower.