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KPMG and its "independent" review of FWA's investigation into Craig Thomson

This is the Australian Professional and Ethical Standards Board's Code for Professional Accountants.

Apesb code
It's big.   Comprehensive.  Verging on the formidable.   And crystal clear.

Section 290

290.3 In this section, the term(s):  “audit,” “Audit Team,” “Audit Engagement,” “Audit Client” and “audit report” includes review, Review Team, Review Engagement, Review Client and review report; and  “Firm” includes Network Firm, except where otherwise stated.

A Conceptual Framework Approach to Independence

290.4 In the case of Audit Engagements, it is in the public interest and, therefore, required by this Code of Ethics, that members of Audit Teams, Firms and, Network Firms shall be independent of Audit Clients.

290.5 The objective of this section is to assist Firms and members of Audit Teams in applying the conceptual framework approach described below to achieving and maintaining Independence.

290.6 Independence comprises:

Independence of Mind
The state of mind that permits the expression of a conclusion without being affected by influences that compromise professional judgment, thereby allowing an individual to act with integrity and exercise objectivity and professional scepticism.

Independence in Appearance
The avoidance of facts and circumstances that are so significant that a reasonable and informed third party would be likely to conclude, weighing all the specific facts and circumstances, that a Firm’s, or a member of the Audit Team’s, integrity, objectivity or professional scepticism has been compromised.


A well credentialled expert practitioner points out:

KPMG accepted an assignment which involved in part examining whether there had been evidence of any political interference. An approach to this which was independent in appearance would involve KPMG designing its own tests to enable it to form an opinion.


It would not involve asking interviewees to determine for themselves what amounted to interference.


It would not involve accepting a letter (with minor modifications) written by one of the persons who was to be the subject of enquiries ie O’Neill.


It would not involve sending that letter to a list of persons basically suggested by the same person.


The question is whether this is so significant that a reasonable person would form the view referred to.


KPMG really had no way of determining whether such interference occurred unless someone had been stupid enough to leave a written record or admitted it.


The purpose of the exercise was clearly either to provide a basis for asserting no interference had occurred or, as you have hinted as a cover to extract information from Lawler that might prove useful in the action against Jackson, or both. KPMG should have been aware of the first purpose and the difficulties that would be faced by it on this issue.


The problem has been caused by accepting this aspect as a specific area on which to report and then confining its conclusions to the information gained from the key word search, letters and interviews.


Given the other findings of the report the question of whether there were deliberate delays remains open.

Here are two different ways that two people within Fair Work Australia dealt with Vice President Lawler and the allegations Craig Thomson made against him.   Thomson spoke on 21 May.

Bernadette O'Neill wrote this email on Saturday 26 May.



At the same time, Justice Ian Ross was preparing to deliver an address to the same Senate Estimates hearing.

Given Justice Ross's statement, it is beyond belief that KPMG persisted with Bernadette O'Neill's instruction to gain, without warrant, access to VP Lawler's iPhone, computer, email and sundry other records.   Given that from September 2011 O'Neill had been personally responsible for the investigation into Thomson, it is impossible for this review of her investigation to be classed as independent of her - she was the person directing the reviewers.

12_05_28 - Ross J - Statement to Senate Estimates 28 May 2012_001

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12_05_28 - Ross J - Statement to Senate Estimates 28 May 2012_003

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