The consultancy firm KPMG has launched an internal review to address concerns about potential conflicts of interest after sustained criticism from senators, unions and transparency advocates.
The federal government has paid KPMG to conduct safety and quality audits of aged care facilities, while a separate division within the firm simultaneously charges providers for advice on audits and accreditation.
KPMG says all potential conflicts of interest are carefully managed but Greens senator Barbara Pocock has raised concerns during a parliamentary hearing into the government’s use of consultants.
“In aged care, you are both an auditor of aged care residential services and you are a consultant to those services,” Pocock said.
“The conflict of interest is very clear. It’s repetitive. Chinese walls will not protect against it. It is a real concern that this very important separation is not under way.”
KPMG chief executive Andrew Yates told the inquiry he was aware of public commentary and concern about the arrangements.
“I need to listen to what we are hearing and make sure that we are doing the right thing,” Yates said.
“We feel we are doing the right thing. Our clients are telling us that we are doing the right thing. We are hearing the comments you have been making. I have asked our risk team to review this to make sure that we are actually doing the right thing.”
The scope of the review and its duration are not known. KPMG was contacted for comment but did not respond before deadline.
Government consultancy firms have faced intense scrutiny after the misuse of confidential tax policy information at PwC, which has damaged the firm’s revenue and reputation. It now plans to divest its government work – worth about 20% of revenue – for just $1 to save more than 1,000 jobs.
The Community and Public Sector Union has warned KPMG’s work as an auditor and an adviser could expose taxpayers and residents to potential conflicts of interest, as consultants could be asked to audit clients that are not disclosed to or detected by government.
“What we have here is a consultancy assisting the aged care regulator to audit aged care facilities, while at the same time, it seems that same consultancy is also advising aged care providers,” CPSU assistant national secretary, Michael Tull, told the inquiry. “At face value, that looks like a potential conflict of interest.”
“We’re talking about aged care regulation, an area of serious public concern, where many people think profit motives stand in the way of quality care. There cannot be even the slightest room for people to doubt the independence of the aged care regulator.”
The aged care safety and quality commission has previously told a parliamentary inquiry that it prompts KPMG to declare any conflicts of interest every month and that when conflicts are identified, work is not awarded.
KPMG executive Paul Low told the inquiry the firm would welcome additional transparency over the movement of staff from government to consultancy firms.
“If there is ambiguity around the separation from government and there are opportunities to make that clearer for other employers, that is something that KPMG would support,” Low said.
“If we have a senior executive who is moving into our business formerly from government or from a political role in the last two years, we engage with our national managing risk partner and the client lead partner for that client in our business.”
Another parliamentary inquiry has been launched into ethics and professional accountability in the government consulting industry. Labor senator Deborah O’Neill said continued scrutiny was required to ensure accountability.
“I think we have opened the lid on a set of practices that this sector has tried to keep quiet and just considered business as usual for a very, very long period of time,” O’Neill said.
