Senate Finance and Public Administration Legislation Committee [Part 2], , 12:55 to 18:01
Senator Charnowski inquires about the termination of a KPMG contract for internal audit services, exploring the grounds for termination including performance issues and the broader external environment.
Topics: Procurement, Integrity, Government spending
Speakers: Senator Barbara Pocock, Cha Jordanoski, Speaker 3, Speaker 5, Unknown Speaker
>> Thank you, chair. Um, I've got some questions around uh internal uh contract with KPMG for internal audit. The questions relate to the internal audit contract that KPMG had with um uh Department of Prime Minister and Cabinet. Um when was the contract awarded?
Sorry, when was the contract
>> awarded?
>> Um, thank you, Senator Charnowski, first assistant secretary and chief operating officer. Um, so in relation to that contract, um, the information that I have for me um, in front of me uh, says that the contract was entered into on the 18th of February 2025.
>> And what was it specifically for? Uh so
that specific contract was for internal audit services
>> and over what period of time?
>> Um in terms of the exact period of time senator I can see from my notes that it crossed over two um financial years. So the 24 25 and 25 26 financial year. So >> um so probably over two years
>> two two full financial years. No,
Senator, I would believe it was probably because it started on the 18th of February, 2025, it probably went for the two years. Um, but I'd have to take that exact detail on notice.
>> Yes. When did it conclude in the contract as opposed to later? >> Yeah.
>> Um, Senator, I'd have to take that on notice, but I think it was over two financial years, but I can come back to
>> Yes, I'd like those details, please. Is it correct the contract was terminated in July of 2014? >> That's correct, Senator. >> Okay. And on what grounds was it
>> Um, so the department um considered um in the context um of our arrangement with KPG that um given the position that was taken by the department of finance um that we made a decision internally that we would terminate the contract.
Did other departments to your knowledge similarly terminate any contracts they had with KPMG because that's not my understanding?
>> I wouldn't know that Senator um I can only confirm what I know about um our position as um Department of Prime Minister and Cabinet.
>> So I don't want to put words in your mouth but the grounds were arising from concerns the Department of Finance had about KPMG.
>> I I guess that was one of the elements that we considered. in ter in terms of the other elements it was probably driven mostly in relation to what was happening in the external
>> Um and that's a polite way of saying serious uh issues around uh KPMG's handling of confidential information had arisen. It was evident there were clear misdemeanors um a foot that that is the reason is it not that you terminated the contract.
>> Thank you. Sorry, Senator. It's certainly relevant to our considerations. For context, we had two internal um order providers. So, it was a consideration not just about those external factors that were going on in terms of the uh incidents in relation to KPMG's conduct, but also that the services that we were receiving under that contract.
>> Can you explain what you mean? And would you mind speaking up a bit? I can't hear
>> Certainly. Sorry, Senator. Um just to say that we had two different audit providers um both of whom have been operating under that contract for that period of time. um there were differences in terms of the the quality and the substance that was being received and as a department we made the the decision that on balance that we needed only to um to continue with one of those providers.
>> So KPMG services do I conclude from what you just said were inferior to the other contractor.
>> We were quite comfortable with the the ongoing service being provided by the
>> Sorry my question was was the service inferior and is that why it's pretty
simple question. No, but he's allowed to answer how he sees fit. Senator, and he's answered it the way he thinks is appropriate.
>> I'm asking him to be direct, Minister.
sorry. >> You're not entitled to tell him how to answer a question. You're entitled to put the question and and the official is responding to your proposition,
>> but it is a fair proposition, is it not? That the KPMG was not terminated because their services were superior to the
entirely accurate, the uh services were terminated for convenience.
>> For convenience. >> What does that mean?
>> That's the contractual term that and allows us to contract to uh terminate the contract upon our assessment uh where the circumstances warrant such.
>> Did you have any other contracts in the department with KPMG at the time?