Management and assurance of integrity by consulting services

Submission 3

Inquiry into the

management and
assurance of integrity
by consulting services
KPMG submission

KPMG Australia, April 2023

KPMG.com.au
 Management and assurance of integrity by consulting services
Submission 3

Contents
Executive summary
About KPMG
Our recent commitments to strengthen integrity
KPMG response

Section 1: Acting in the public interest - our role as a trusted adviser to government

Section 2: Acting lawfully - our extensive regulatory environment

Section 3: Acting ethically - our commitment to integrity

Section 4: Our response to recent industry integrity challenges

 Management and assurance of integrity by consulting services
Submission 3

3 | Inquiry into the management and assurance of integrity by consulting services

Executive summary
We are pleased to provide KPMG Australia’s (KPMG) submission to the Senate Finance and
Public Administration References Committee to help inform the Inquiry into the management
and assurance of integrity by consulting services.

Integrity is at the core of KPMG’s approach. While our people make important economic, capability, and
social contributions through the services we provide to our clients, we recognise that we can only play
this role if our clients trust us. We take seriously and act on incidents that are inconsistent with our
Values or breach KPMG’s Code of Conduct. We learn from our experiences and take steps to strengthen
controls, policies and ethical culture.
KPMG understands it is a privilege for any private sector organisation to support the Commonwealth
Government in a commercial capacity or advisory role. For our people in a purpose-led firm, the
attraction is clear. To serve the Commonwealth Government and the Australian Public Service (APS) is
by extension serving the Australian public and committing to put the national interest before any other
commercial consideration.
When working with government, professional services firms and consultants have a duty to operate with
the highest level of integrity, confidentiality and trust. When government engages with us, we never take
this trust for granted and we must, and do, take our responsibilities seriously.
Although we are confident in our policies and procedures as they relate to our confidentiality obligations,
in a world where societal expectations are constantly evolving, we remain vigilant in regularly reviewing
our operations to ensure they remain aligned with community attitudes and expectations.
This is why following the public disclosure of the Tax Practitioner’s Board (TPB) integrity matter 1, KPMG
took steps to reinforce our robust frameworks. We commissioned an independent review of our
confidentiality processes, which found our policies and procedures were consistent with best practice.
We support Treasury's review of confidential consultations and the Commonwealth Government’s plan to
strengthen the TPB.
Our submission outlines our role as a trusted adviser to government in section one; our extensive
regulatory environment in section two; our existing commitments to integrity in section three; and our
response to recent industry integrity challenges in section four.
KPMG is proud to support the world-class work of the APS and we look forward to assisting the important
work of the Committee.

Yours sincerely,

Tanya Gilerman Paul Low

National Managing Partner Partner, National Industry Leader
Chief Risk Officer Infrastructure, Government and Healthcare
KPMG Australia KPMG Australia

1
Former PwC partner banned for integrity breach | Tax Practitioners Board (tpb.gov.au)
©2023 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the
KPMG global organisation.

Liability limited by a scheme approved under Professional Standards Legislation.

 Management and assurance of integrity by consulting services
Submission 3

4 | Inquiry into the management and assurance of integrity by consulting services

About KPMG
KPMG Australia is an Australian partnership and a member firm of the KPMG global organisation of
independent member firms affiliated with KPMG International Limited, with more than 265,000 partners
and employees spanning 143 countries and territories around the world. Our service areas are Audit,
Assurance & Risk Consulting; Deals, Tax & Legal; Management Consulting; our mid-market practice,
KPMG Enterprise; and Infrastructure, Assets & Places.
We provide services to clients across many diverse sectors including financial services, energy and
natural resources, consumer and retail, technology, industrial markets, infrastructure, healthcare as well
as government. We also draw on our global network, as required, to support our clients by bringing
international insights, experience and expertise to our work.
We believe that our multidisciplinary model is the best way to serve our clients, our people and
society. Today’s governments face complex problems that require the best, most integrated thinking. Our
multidisciplinary model ensures we can bring the breadth of expertise and skills from across our
organisation to tackle any issue or opportunity.

©2023 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the
KPMG global organisation.

Liability limited by a scheme approved under Professional Standards Legislation.

 Management and assurance of integrity by consulting services
Submission 3

5 | Inquiry into the management and assurance of integrity by consulting services

Our recent commitments to strengthen integrity

KPMG has extensive risk and compliance frameworks that uphold high standards of integrity which we
review regularly to ensure best practice. Despite confidence in our high standards, we outline below
additional actions we have recently taken to further strengthen our integrity:
1 Reinforced our confidentiality obligations to our people: Following the public disclosure of the
TPB integrity matter 2, we reminded our 12,000-strong workforce of their obligations to comply with
KPMG’s policies and procedures on confidentiality. We reinforced confidentiality obligations when
accepting government advisory roles outside of KPMG, conducted additional risk workshops and
committed to undertake a refresh of our confidentiality policies.
2 Conducted an independent review of our confidentiality obligations: In early March 2023,
KPMG commissioned an independent review of our policies and training materials relating to the
firm’s confidentiality obligations.
The review found that our risk and compliance frameworks were comprehensive and proactively
mitigated material risks of confidentiality breaches. The review confirmed that KPMG’s policies and
procedures were consistent with best practice and guidance published by relevant professional
bodies. The review also outlined several recommendations directed at further strengthening our
compliance with confidentiality obligations, and we have implemented or are in the process of
implementing all recommendations.
3 Support for Treasury’s review of confidential consultations: KPMG has been working
constructively with Treasury, the Australian Taxation Office (ATO) and the TPB as a part of their
review into how they manage confidential consultations.
Pending the finalisation of recommendations, we would expect to support measures under
consideration that would strengthen integrity in these processes.
4 Support for a Strengthened Tax Practitioners Board: KPMG supports the recommendations
outlined in the independent review into the effectiveness of the Tax Practitioners Board and the Tax
Agent Services Act 2009 3 and looks forward to further public consultation planned in the coming
months.

2
Former PwC partner banned for integrity breach | Tax Practitioners Board (tpb.gov.au)
3
Review of the Tax Practitioners Board | Treasury.gov.au
©2023 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the
KPMG global organisation.

Liability limited by a scheme approved under Professional Standards Legislation.

 Management and assurance of integrity by consulting services
Submission 3

KPMG response
 Management and assurance of integrity by consulting services
Submission 3

7 I Inquiry into the management end assurance of integrity by consulting servioes

on value for money. We support the requirement

Section 1: Acting in the public for government to report on our contracts and
interest - our role as a trusted support the related reporting that is required
under parliamentary processes and through
adviser to government reviews undertaken by the Australian National
Audit Office. KPMG would support further
KPMG is proud to assist the work of the APS,
measures to ensure AusTender provides the
supporting engagements with w ide-ranging
most appropriate level of transparency as
impacts on the Australian community. With the outlined in our submission to the 2018
pace and scale of change facing the Australian parliamentary inquiry into "Commonwealth
community, the public sector calls on specialist contracting".4
skills and capabilities from the private sector to
complement the resources w ithin the public Procurement Connected Policies are
service in delivering complex, time-challenged Commonwealth policies for which procurement
projects. Our industry and private sector insights has been identified as a means of delivering
are often sought out by government to help government policy objectives.5 KPMG rigorously
inform policy development. adheres to these policies, further supporting the
Commonwealth Government's policy directives
This approach provides value for taxpayers and around small business, combatting the black
brings best practice experti se to the frontline of economy, Indigenous businesses, enhancing
public policy. KPMG fully supports the ongoing gender equality, and increasing Australian
development of the APS. It is standard practice
industry participation .
for KPMG to work closely with our government
clients to better understand how we have The Shadow Economy Procurement Connected
performed and where we can do better. Policy requires that tenders provide a statement
from the ATO show ing they have a satisfactory
KPMG holds a privileged position as a trusted
tax record (STR). As KPMG is a partnership, we
adviser to Australian governments, but we provide a satisfactory STR on behalf of the
understand with that privilege comes
partnership and in respect to each partner that
responsibility. Our commitment to ethics and is directly involved in the delivery of the relevant
integrity is the foundation of all our
contract.
engagements and we are proud of the role we
play in helping the Commonwealth Government The Indigenous Procurement Policy applies
meet its policy objectives through its Indigenous employment and business
Procurement Connected Policies. participation targets to contracts wholly
delivered in Australia valued at $7.5 million or
Commitment to the Commonwealth
more in 19 industries. The case study below
Government's procurement rules
outlines how the Commonwealth Government's
When working with the Commonwealth Procurement Connected Policies have
Government, our services are sourced in contributed to KPMG's strong historical
accordance with the Commonwealth commitment to Indigenous businesses.
Procurement Rules (CPRs) set out by the
Department of Finance. We value and respect
the CPRs and appreciate that an independent
competitive process ensures probity while Case study - KPMG's commitment to
Indigenous procurement
upholding value for money when allocating
public funds. Since becoming the first major professional
services firm in Australia to launch a
KPMG is bound by all relevant contractual
Reconciliation Action Plan (RAP) in 20096 ,
requirements for conflict-of-interest and
we have exceeded both our procurement and
confidentiality management, including adhering
Indigenous employment targets. Our
to relevant confi dentiality agreements set out in
partnership with Jawun Indigenous Corporate
individual contracts and panel arrangements.
Partnerships has seen 297 of our people on
This can include outlining steps to prevent,
secondment, contributing over 67,000 pro
mitigate, resolve or otherwise manage conflict of
bono hours to help build the capabilities of
interest.
Indigenous organisations nationally. Since
AusTender provides a level of transparency our last RAP, we have welcomed our firm's
which is important to maintain a robust and second Indigenous Partner and first
competitive process, again reinforcing the focus Indigenous Board member. We have

' Australian Government Contract Reporting - Inquiry s Procurement Connected Policies I Department of
based on Auditor-General's report No. 19 !2017-18) Finance
- Parliament of Australia {aph.gov.aul • Reconciliation Action Plan {kpmg.coml
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L1ab111ty limited by a scheme approved under Professional Standards Legislation

 Management and assurance of integrity by consulting services
Submission 3

8 I Inquiry into the management end assurance of integrity by consulting servioes

introduced cultural and ceremonial leave and The Australian Securities and Investments
have voiced our support for the Uluru Commission (ASIC) is responsible for assessing
Statement from the Heart. We have also compliance with and enforcing accounting and
partnered with small and medium Indigenous audit standards. Auditors are legally obliged to
businesses to deliver work for the comply with the Code of Ethics for audits of
Commonwealth Government. entities subject to the Corporations Act. ASIC
inspects KPMG's Australian firm annually.
KPMG continues to support the growth of
Indigenous businesses through procurement, AS IC is also the regulator of the financial
including allocating more than three per cent services industry and assesses the applications
of our procurement budget to Indigenous made to procure an Australian Financial
suppliers. We have also committed to expand Services Licence (AFSL). KPMG, via two of its
our successful Indigenous business corporate entities, holds AFSLs enabling the
accelerator program to support the growth of operation and activities of its financial services
small to medium Indigenous businesses businesses.
across Australia.
Tax and Business Activity Statement (BAS)
agents are subject to the regulatory oversight of
the ATO and TPB. All legal practitioners are
also subject to the oversight of regulatory bodies
Section 2: Acting lawful ly - our such as the legal services commissioners, which
operate in states and territories. The Uniform
extensive regulatory environment Law Rules set out the framework within which
Professional service firms are subject to an many of our legal practitioners must operate.
extensive and complex framework of Our people are also subject to international
overlapping obligations that require us to standards and regulatory regimes where our
manage conflicts of interest, perceived or work extends beyond Australia.
otherwise. Contractual frameworks set by our
clients define their expectations and
requirements, supported by regulatory and legal
obligations, professional codes and Section 3: Acting ethica lly - our
commitments to professional bodies. Further,
our people are required to comply with KPMG's comm itment to integrity
Code of Conduct, and the expectations of
communities in which we operate. At KPMG, we understand that trust is earned by
doing the right thing - not just some of the time,
As members of Chartered Accountants Australia but all of the time. We are committed to the
and New Zealand (CA ANZ), all KPMG partners highest standards of personal and professional
are subject to Accounting Professional & Ethical behaviour in everything that we do.
Standards (APES) 110 Code of Ethics for
Managing conflicts
Professional Accountants, which is issued by
the APES Board (APESB). The requirements of KPMG is committed to being a purpose-led
APES 110 are reflected in numerous KPMG organisation and has embedded this in the
policies and procedures. In addition to being CA firm 's sustainable growth strategy. In 2021 we
ANZ professionals, KPMG personnel play an also established the role of Chief Purpose
active role as members of a diverse number of Officer (CPO) w ith a threefold focus - a
other professional associations, many of which navigator, constructive challenger and enabler.
have clear expectations of the conduct of their The CPO was appointed to KPMG's
members. Commercial Conflicts Resolution Committee
Regulatory oversight (CCRC) and has played a critical role in
decisions made by the Committee.
KPMG offers a range of services subject to
The CCRC reviews, maintains oversight of, and
specific regulatory requirements, including
makes decisions relating to, but not limited to,
engineering, property, insolvency and
restructuring, sustainability reporting, data commercial conflicts, including proposed
security, forensic services and our client facing engagements, communications, or expressions
of thought leadership likely to detrimentally
legal practice KPMG Law to name a few. As
such, we are subject to extensive regulations, impact our relationship with one or more of our
requirements and codes of conduct that require clients. If a potential conflict of interest cannot
be resolved or appropriately managed, we
us to maintain high levels of integrity. Non-
compliance can result in significant firm-wide or decline the engagement or prospective client.
personal financial and operational impacts. Our policies and procedures include assessing
conflict of interest and risk through our client

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pnvate Eng ish company mrted y guarantee Al nghts eserved The l(PMG rame ar<l logo are trademar1<s used under ce•se by the IIX!ependent O'ember firns of tre
l(PMG globa organisation.

L1ab111ty limited by a scheme approved under Professional Standards Legislation

 Management and assurance of integrity by consulting services
Submission 3

9 | Inquiry into the management and assurance of integrity by consulting services

and engagement processes and systems. This • Compliance: KPMG requires its employees
helps identify existing or potential conflict of to comply with all applicable laws and
interest for prospective engagements. regulations, as well as the company's
Engagements with conflicts that cannot be policies and procedures.
eliminated or safeguarded to an acceptable
level (i.e. through the implementation of system Everyone at KPMG is required to undertake the
information barriers and ethical divider firm’s We do what is right: Integrity at KPMG
memorandums) are rejected under our policies. training covering the Code, as well as a
When working with government clients we are separate Privacy training module upon joining
also mindful of competing issues that may arise the firm, and on an annual basis. Adherence is
when working with different departments or monitored and managed, and our training is
even different areas within a department. continually refreshed to ensure it aligns to best
practice.
Managing independence
Ethical Decision-Making Framework
In Australia, independence requirements have
been enshrined in the Corporations Act. As an We have continued to invest in strengthening
audit firm, we are required to be mindful not only our ethical culture. Our Board and National
of actual conflicts of interest, but also of the Executive Committee (NEC) are deeply involved
perception of conflicts of interest. Compliance in the delivery of the firm’s culture plan. This
with these obligations requires us continually to year we have introduced our Ethical Decision-
reinforce the importance of independence. Making Framework and incorporated it in our
mandatory independence training. We have
At KPMG, we have prescribed policies, appointed an Ethics Ambassador who sponsors
procedures and guidance, combining Australian Ethics Champions in all functional areas of our
and international regulatory, independence and firm.
ethical requirements. All KPMG Australia
partners and client service professionals must We have seen significant improvement in our
complete independence training upon joining Ethical Culture Index (ECI) survey, an
the firm, and annually thereafter, and complete independent measure of how well we are living
an annual confirmation stating that they have our Values and behaviours, including an overall
remained in compliance during the previous score increase to 89 points out of 100, up from
year. 84 points in the previous survey.

Code of conduct Speak up culture

The KPMG Code of Conduct (the Code) 7 There has been a positive shift in the extent to
outlines the responsibilities all KPMG people which people feel they can challenge superiors.
have to each other, our clients and the public. It There has also been an increase to 85 percent
shows how our Purpose and Values guide our of our staff agreeing that misconduct can be
behaviours and actions. The Code covers a reported without fear in our organisation, which
wide range of topics, including: has been reflected in an increase in actual
reporting of misconduct.
• Integrity and ethical behaviour: KPMG
We encourage a ‘speak up’ culture across the
requires its employees to act with integrity
firm. This means ensuring all our people feel
and honesty, and to comply with all
included and have confidence to speak up, raise
applicable laws and regulations.
concerns early and prevent them from becoming
• Professionalism: KPMG requires its serious issues.
employees to maintain high standards of We will continue to empower our people to
professionalism, including treating clients, speak up about any unethical or inappropriate
colleagues, and third parties with respect. behaviour in the workplace, especially to their
• Confidentiality: KPMG requires its leaders. For that reason, we view any increase
employees to protect the confidentiality of in reporting in the immediate term as a sign of
client information and to use it only for progress.
legitimate business purposes.

• Independence: KPMG employees are

required to maintain independence in their
work, and to avoid any conflict of interest
that could compromise their objectivity.

7
Global Code of Conduct (kpmg.com)
©2023 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the
KPMG global organisation.

Liability limited by a scheme approved under Professional Standards Legislation.

 Management and assurance of integrity by consulting services
Submission 3

10 | Inquiry into the management and assurance of integrity by consulting services

Section 4: Our response to requirements that apply to them in advisory

related roles that are outside KPMG.
recent industry integrity Reinforcing how seriously we treated this
challenges matter, we communicated these measures on 9
March 2023 to our 12,000 employees, ensuring
KPMG has an existing and well-established that our people were aware of the policies and
single point of contact for all government procedures we have in place to ensure integrity
consultations, with clear guidelines for in our interactions with government.
interacting with government on policy
consultations. Relevant outside government Conducted an independent review of our
advisory roles must be disclosed in a firmwide confidentiality obligations
internal database of personal appointments that
In addition to the above actions, in early March
includes partner and risk approval.
2023 KPMG commissioned an independent
The above processes ensure potential conflicts review of our policies and training materials
of interest are identified and appropriately relating to the firm’s confidentiality obligations to
managed when working with government on ensure that they were fit for purpose.
confidential consultations and were in place
Overall, the independent review found that
before the public disclosure of the TPB integrity
KPMG's risk and compliance framework was
breach matter.
comprehensive, that it positions the firm to
Reinforced our confidentiality obligation to our ensure partners and staff are aware of the
people importance of confidentiality obligations, and
proactively mitigates material risks of
Like many large organisations, we learn from confidentiality breaches. The review also found
our experiences and from those of others in the that KPMG’s policies and procedures were
business community. Our approach when consistent with best practice and guidance
making decisions on these matters is to strive published by relevant professional bodies.
for transparency to share our learnings,
strengthen accountability and identify The review outlined several recommendations
improvements in the way we work. directed at further strengthening our compliance
with confidentiality obligations in the areas of
Following the public disclosure of the TPB training and guidance for our people and we
integrity breach, we reviewed the TPB’s have implemented or are in the process of
sanction explanation 8 and considered what we implementing all recommendations.
could learn from the matter. We immediately
took steps to reinforce our processes relating to Commitment to a strengthened TPB and
compliance with our confidentiality obligations, Treasury’s review of confidential consultations
including:
KPMG supports the Commonwealth
• Reinforcing confidentiality requirements Government’s review into how Treasury
when accepting government advisory roles agencies manage conflicts of interest and
outside of KPMG on the internal database of confidentiality issues when seeking private
personal appointments; sector advice. Ensuring confidentiality is of
utmost importance in maintaining the
• Reviewing the roles which need to be trustworthiness of the profession. KPMG
included in our internal database of personal commits to implementing the recommendations
appointments, with the aim of better of this review.
informing our people about the government
In addition, KPMG supports the
advisory roles that need to be disclosed;
recommendations outlined in the independent
• Running targeted compulsory confidentiality review into the effectiveness of the Tax
and conflicts of interest workshops for tax Practitioners Board and the Tax Agent Services
partners and directors, with further proposed Act 2009 9 that relate to sanctions, individual
targeted confidentiality and conflicts training accountability of partnerships and agency
to be run for other divisions; and independence. KPMG looks forward to further
public consultation on these reforms in the
• Undertaking a refresh of KPMG’s coming months.
confidentiality policy to expressly require
staff to comply with all confidentiality

8
PriceWaterhouseCoopers | Tax Practitioners Board 9
Review of the Tax Practitioners Board |
(tpb.gov.au) Treasury.gov.au
©2023 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the
KPMG global organisation.

Liability limited by a scheme approved under Professional Standards Legislation.