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Breaking: Macquarie Group dumps KPMG from audit contract

Macquarie released a statement on Wednesday citing the ongoing scrutiny of KPMG. (Four Corners)

Macquarie Group has announced it will drop KPMG as an auditor, amid an ongoing scandal relating to its handling of confidential information.

Macquarie announced on Wednesday afternoon that its board held concerns over the firm's auditing practices, amid ongoing scrutiny of KPMG.

"The decision follows continued scrutiny of KPMG Australia's audit practice, including information exposed by the Parliamentary Joint Committee on Corporations and Financial Services," the statement said.

"It also follows Macquarie's formal enquiries of KPMG to consider its capacity to deliver the audit, as well as the nature and impact of ongoing issues at KPMG Australia."

ASX 200 LIVE: ASX ends lower as hot CPI drives up bets of further RBA rate rises; Deutsche Bank, ANZ tip further interest rate increases

The Australian sharemarket snapped a two-day winning streak on Wednesday after inflation came in stronger than expected, keeping the risk of further interest rate increases by the Reserve Bank of Australia in play.

The S&P/ASX 200 Index fell 0.4 per cent, or by 36.80 points, to 9127.80, after hitting a high of 9220.60 before the Australian Bureau of Statistics released the July price data.

While inflation slowed from 3.8 per cent in June to 3.5 per cent last month, it was above the 3.3 per cent forecast by economists. Trimmed mean – the RBA’s preferred gauge – held at 3.6 per cent, putting it on track to come in well above the central bank’s prediction for the September quarter.

Macquarie dumps KPMG from the nation’s biggest audit contract

KPMG has been dumped as the incoming auditor of Macquarie Group, costing the firm a contract that was expected to be worth $700 million over the next decade and marking the biggest single financial blow yet from its whistleblower scandal.

Macquarie told the ASX on Wednesday afternoon that it had determined to “no longer recommend the appointment of KPMG as auditor” at next year’s shareholder meeting, meaning it will instead retain rival firm PwC.

The announcement comes the same week that KPMG cut 380 employees and partners in what is expected to be just the first wave of job losses following the whistleblower scandal. Those cuts were concentrated in its consulting division, but with major contract losses the audit section will require fewer staff.

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