Dr Eric Perez is Chief Executive Officer (CEO) of the Australasian Institute of Marine Surveyors (AIMS). Eric believes foresight and strategic thinking are key leader capabilities that are fundamental to developing informed, timely and futures-oriented strategy. Future-fit leadership requires strategy-level leaders with a deep understanding of the links between foresight and strategic thinking, moving industries away from a reliance on the past and toward genuine engagement with possible futures.
In late 2024, the Parliamentary Joint Committee on Corporations and Financial Services examined structural, governance and cultural challenges in Australia’s audit, assurance and consultancy industry1. The Joint Committee’s examination followed the PwC tax confidentiality breach. More recently, allegations involving confidential information at KPMG have attracted further scrutiny. Together, these events have generated significant government and media interest in questions of trust, ethics and organisational culture.
What is clear to me is that individuals with limited or no power within PwC and KPMG should not be lumped in with those directly responsible for the conduct in question. Yet when misconduct occurs at senior levels, its consequences can extend across an organisation and undermine public trust in the broader sector2.
So why does any of this matter? There are important leadership lessons here. More significantly, when organisations build substantial parts of their businesses on public funds, the leaders in those organisations should expect a high level of scrutiny. KPMG, for example, reportedly has approximately $650 million3 in active contracts with the Federal Government. These are public funds, managed by government for the collective benefit of the community.
The conduct that has emerged from PwC and the allegations involving KPMG should therefore be examined not only as matters of governance and compliance, but as an opportunity to consider some broader leadership lessons that apply whether you work in the audit, assurance and consultancy industry or any other sector.
Trust
What does breaking trust do to leadership? From a business perspective you will see lower levels of morale, team/individual disengagement, poor communication within and outside the organisation and higher levels of turnover as team members look for other business settings4.
When we feel we cannot trust the judgement and intentions of our leaders, the consequences can include quiet, loud and impulsive quitting, with multiple internal and external impacts on the organisation:
- Internal – loss of corporate knowledge, costs associated with recruitment, workload increases and ongoing low morale.
- External – loss of customer trust, brand/image damage and loss of contracts.
One of the biggest internal issues I see arising from a loss of trust is the loss of corporate knowledge. I am not convinced we should view the departure of a long-term, previously engaged employee as simply another vacancy to fill. It should raise questions. Once leaders behave in a way that appears to break trust, they can create instability that affects the business long after an individual has left their role.
Externally, one of the most significant impacts is reputational damage. Recent reporting on KPMG provides an example of the commercial consequences that can accompany a period of significant public scrutiny. Reported impacts include5:
- Job losses will affect 27 partners, 360 employees.
- Consulting revenue in past 12 months has dropped approximately 17%.
- Macquarie Group has chosen not to work with KPMG with an annual loss of an estimated $70 million per year contract.
Ethics
The debate regarding ethics will continue to intrigue those of us with an interest in leadership and governance. The Harvard Division of Continuing Education define ethical leadership as, ‘the practice of making decisions guided by values such as honesty, respect, accountability, justice, and service’6. The behaviour of the partners at PwC and KPMG breached their ethical responsibility. In the PwC example, sensitive government information was used to assist multi-national organisations avoid their tax obligations7. In the KPMG example, the misuse of confidential board papers by audit partners for commercial gain8.
Does our ethical practice as leaders reflect the cultures in which we operate? I would argue yes. Individual leaders remain responsible for their decisions, but organisational environments also influence which behaviours are rewarded, challenged or allowed to continue. That makes ethics not simply an individual question, but a leadership and culture question. When commercial pressure is high, the real test of an organisation’s values may be whether its leaders are prepared to uphold them when doing so comes at a cost.
Culture
I am as certain as I can be that academics and leadership practitioners will be writing about and contemplating the lessons from PwC, KPMG and the broader professional services sector for years to come. It would be easy to attribute misconduct simply to individual greed or a lack of ethics. I think leaders should ask a more difficult question: what organisational conditions allow poor behaviour to occur, continue or go unchallenged?
No leader or organisation operates in a vacuum. Governance structures, commercial incentives, competitive pressures and client expectations can all influence behaviour.
None of those factors excuse unethical conduct. Leaders remain accountable for their actions. But they should prompt organisations across every sector to examine the relationship between the behaviours they say they value and the behaviours their systems actually reward.
This is where culture becomes important. Culture is not simply what appears in a values statement. It is reflected in the behaviours leaders model, what organisations reward, what employees feel able to challenge and, perhaps most importantly, what is tolerated when commercial pressure is high. The events involving PwC and KPMG therefore raise a question relevant to every leadership team: Could the incentives, structures or behaviours within our own organisation create conditions in which people feel pressure to compromise what we say we stand for? That is a much more uncomfortable question than asking whether we have a code of conduct. It is also a much more useful one.
Closing thoughts
When the pressure is on, how do ethical leaders respond? The answer should be simple: ethically. The events involving PwC and KPMG are complex and their effects extend beyond the individuals directly involved. They also provide an opportunity for leaders across industries to consider the relationship between trust, ethics, governance and culture.
Leaders need to understand not only their legal obligations, but also the expectations placed upon them by colleagues, clients, government and the wider community. I never fully appreciated the need for codes of conduct, but I can see why they are valuable as a reminder of what we expect from people in leadership roles. A code alone, however, cannot create an ethical organisation. Leadership behaviour has to reinforce it.
Trust, once damaged, is difficult to rebuild. Organisational culture is not abstract; we live and breathe the cultures in which we work. I am convinced that one of the roles we inherit as leaders, whether we are aware of it or not, is to be a champion of that culture and, when needed, to review it, test our assumptions and change it.
For leaders across all sectors, the lesson is clear: ethical leadership requires open and transparent business practice. It requires leaders to protect trust, challenge poor behaviour early and create cultures where doing the right thing is not treated as optional.
References
1 Australian Government. (2024). Parliamentary Joint Committee on Corporations and Financial Services. Ethics and Professional Accountability: Structural Challenges in the Audit, Assurance and Consultancy Industry. Link
2 Kruger, C. (2026). Macquarie dumps KPMG from the nation’s biggest audit contract. Link
3 Ittimani, L. (2026). KPMG loses contracts and leaders amid scandal over alleged confidential leaks. Here’s what you need to know. Link
4 Murphy, M. (2025). The Leadership Mistake That’s Quietly Killing Trust Inside Your Company. Forbes. Link; Trivella, C. (2023). Companies Are ‘Quiet Quitting,’ Too, And It’s A Bad Business Practice. Forbes Human Resources Council. Link
5 Jose, R. (2026). Scandal-hit KPMG Australia to cut nearly 400 jobs, warns of difficult market. Reuters. Link; Consultancy.com.au. (2026). KPMG cops massive blow as Macquarie quits audit contract and retains PwC. Link
6 Kirk, V. (2026). What is Ethical Leadership and Why Is It Important? Harvard Division of Continuing Education. Link
7 Ainsworth, K. (2023). What is the PwC tax scandal? Who is Peter-John Collins? Who knew about it? ABC News. Link
8 Santhebennur, M. (2026). KPMG hinted at internal investigation to Westpac in 2025. Accounting Times.