KPMG’s Australian chief, Andrew Yates, will step down immediately, after taking responsibility for the consultancy firm’s failure to properly respond to whistleblower allegations around the misuse of client information.

The firm’s chief executive made the shock announcement on Friday morning, saying: “It is clear that in this case we have let ourselves down and I take accountability.”

Yates was appointed to the top role at KPMG Australia in 2021 and will be replaced on an interim basis by partner Stan Stavros.

The head of KPMG’s audit and assurance division, Julian McPherson, will also step down from his role and will leave the company “after an orderly transition of his client responsibilities”.

Senator Deborah O’Neill, who chairs the powerful joint committee on corporations and financial services, first revealed the whistleblower’s allegations under parliamentary privilege in a speech to the Senate on 24 March.

It was alleged that KPMG improperly used confidential information from its client Lendlease to win audit work with Westpac and Dexus, and that the accounting firm had repeatedly failed to act on the whistleblower’s complaint.

On Friday morning, KPMG’s chair, Martin Sheppard, said “we apologise unreservedly to the whistleblower”.

The top-tier accounting firm said it was continuing to investigate “a matter relating to client documents being inappropriately shared internally”. KPMG said it recognised its internal reviews had fallen short.

“KPMG Australia confirms its treatment of a whistleblower and investigation into their allegations fell short of the firm’s expectations, those of the whistleblower and the broader community,” it said in a statement.

“The initial internal investigation, that did not substantiate the allegations raised by the whistleblower, was in hindsight not conducted with the necessary rigour required.”

An external investigation into the whistleblower’s complaints by law firm Allens would continue “with new evidence and an expanded scope”, KPMG said. It was “continuing to challenge the conclusions reached in prior investigations”.

The Australian Securities and Investments Commission (Asic) on Friday morning revealed it was conducting “a preliminary investigation into the allegations about the conduct of a number of the registered company auditors at the firm KPMG”.

The Asic commissioner Kate O’Rourke told the joint parliamentary committee, which has oversight of the corporate watchdog, that the investigation related to three individuals “rather than the firm itself”. She did not identify the trio involved.

O’Neill, during Friday’s hearing, tabled a letter from Lendlease to the committee in late April that detailed how the property developer was first made aware of the whistleblower’s allegations in May 2025.

Following O’Neill’s speech in the Senate, KPMG told Lendlease that an audit partner had accessed the company’s board papers and “that these documents were put on a screen in the presence of the KPMG audit team then”.

But “KPMG deemed the documents to be of ‘low sensitivity’ and gave KPMG ‘zero competitive advantage’”.

The Asic chair, Joe Longo, said “the circumstances that are set out in the letter are clearly unacceptable”.

“There’s clearly a breach of what would normally occur between an auditor and its client here, and as the letter itself points out, this is something that Lendlease and KPMG are going to have to sort out between themselves.”

It was not the first high-profile scandal involving the alleged misuse by a top accounting firm of private data.

PwC was banned from government contracts after it was alleged that partners at the firm used privileged access to confidential government briefings to help clients avoid new tax rules for multinational companies.