Macquarie Group’s Audit Dilemma: PwC vs KPMG
Macquarie Group (MQG), one of the key players in the global financial domain, is currently facing a crucial decision concerning its audit contract. In November 2025, MQG announced a significant shift in its audit contract from PwC to KPMG, a deal estimated to be worth around $75 million per annum (source). The transition is scheduled to begin in the financial year FY28, corresponding with MQG’s balance date of 31st March.
The 18-Month Gap: Preparing for Independence
The 18-month period prior to the transition was intended to grant KPMG sufficient time to establish its independence. However, the approval of this changeover is contingent upon regulatory and shareholder approval. As things stand, the Australian Securities and Investments Commission (ASIC) is currently investigating KPMG, creating an uncertain environment for the planned transition.
Macquarie’s Audit Policy
Under MQG’s audit and assurance independence policy, it is stipulated that the company must ‘tender’ every ten years. However, the policy also clarifies that it is not mandatory to exclude the incumbent firm. In addition to the $75 million annual audit fee, PwC also receives around $10 million per year for non-audit services. PwC is expected to audit FY27 accounts before the anticipated transition to KPMG for FY28.
Uncertainty Looms Over the Transition
The future of the proposed transition from PwC to KPMG remains uncertain, given the ongoing ASIC investigation into KPMG. MQG has yet to comment publicly on the issue. The MQG board, chaired by ex-RBA governor Glenn Stevens and comprising prominent corporate figures, is responsible for addressing this corporate governance issue. It is anticipated that the board will seek specific assurances from KPMG to ensure a smooth transition and to safeguard the interests of all stakeholders.
Exploring Alternatives
An alternative solution could be to re-tender the audit contract, with potential contenders including EY or Deloitte. However, the implications of this decision are significant, as both EY and Deloitte may be conflicted due to their existing commitments. Moreover, the costs and risks associated with this change could be substantial. The possibility of employing a second-tier firm is also unlikely, due to the intricate relationship between the big four banks and the big four accounting firms.
Audit Committee’s Role
The Audit Committee, chaired by ex-KPMG partner Michelle Hinchcliffe, will play a pivotal role in guiding the MQG main board’s approach to this issue. The Audit Committee is charged with the annual review of the engagement of the external auditor, including the audit plan and any significant changes. The committee is also responsible for reviewing the value for money of the fees of the external auditor and providing an opinion on ‘the quality, effectiveness, objectivity, independence and other matters relating to the prior year’s audit’.
Impact on Banks Relying on KPMG
The current situation with KPMG may have far-reaching implications for banks that rely on KPMG’s services for the annual independent review of risk management frameworks under APRA’s prudential standard CPS 220 on Risk Management. These reviews must be conducted by ‘operationally independent’ staff to avoid conflicts of interest. The current turmoil surrounding KPMG might complicate this matter further.
As MQG navigates this challenging situation, stakeholders eagerly await the outcome of this crucial decision. The company’s choices will not only influence its own operations but also potentially reshape the wider landscape of financial auditing.
