KPMG Australia is cutting 27 partners and about 360 employees — roughly 5% of the firm — after a financial year in which its consulting arm shrank 17%.
Consulting revenue fell to A$632 million in the twelve months to 30 June 2026. Three years earlier the same business brought in more than A$1 billion. Total firm revenue landed at A$2.26 billion, down 1% from A$2.28 billion. Average equity partner pay fell 13% — about A$72,000 — to A$645,000. All figures are Australian dollars.
What makes this a specific failure rather than a market cycle is the rest of the income statement. Four of the firm’s five other divisions grew. Audit and assurance rose 11% to A$405 million. Tax and legal rose 10.9% to A$268 million. Australian demand for professional services did not collapse. Demand for KPMG’s consulting did.
The ban is the mechanism
The firm has been barred from applying for new federal government contracts until at least the end of September 2026, following a whistleblower complaint over leaked audit information. Government work was the ballast under the consulting practice, and procurement rules do not care how good the pitch is. When a firm is excluded from bidding, the pipeline does not soften — it stops, and the revenue rolls off as existing engagements complete.
That is why the decline shows up as a cliff rather than a slope. A 17% fall in one year, on top of earlier declines that took the business from A$1 billion-plus to A$632 million, is not the shape of a demand problem. It is the shape of an eligibility problem.
Our take: Reputational risk is usually discussed in soft language — trust, brand, standing. Here it has a number and a maturity date. A conduct failure inside the audit practice converted into an exclusion order, and the exclusion order converted into roughly A$400 million of vanished annual revenue and 387 people losing their jobs in a division that did nothing wrong. The partner pay line is the tell: down 13% at a firm where four of six divisions grew. That is what a single-source customer concentration looks like when the single source withdraws consent.
What to watch
- The end of September. The ban is stated as running until at least then. Whether it lifts, extends, or converts into a conditional reinstatement determines whether A$632 million is a floor or a waypoint.
- The other Big Four Australian arms. If Deloitte, EY and PwC report comparable consulting declines, this is sector-wide and the scandal is a coincidence. If they don’t, it isn’t.
- Partner count, not headcount. Twenty-seven partners is the number that signals the firm does not expect the work to return quickly. Staff can be rehired in a quarter; partners are a multi-year decision.
- Whether audit keeps growing. Audit and assurance up 11% while the consulting arm is being dismantled is an awkward split at a firm whose problem originated in audit.