The Australian Securities and Investments Commission has shifted its gaze toward KPMG following revelations that staff leveraged artificial intelligence to bypass mandatory compliance testing.
The informal inquiry, led by Chairman Joe Longo’s enforcement arm, follows reports of internal collusion where auditors reportedly used AI tools to "sail through" professional training.
While KPMG conducted an internal investigation and sanctioned the involved parties, the regulator was initially left in the dark due to a lack of mandatory reporting requirements for such ethical breaches.
The intervention marks a notable pivot for ASIC, which faced intense scrutiny for its historical passivity.
The firm was previously embroiled in a massive five-year cheating scandal ending in 2020, which resulted in US-led sanctions while ASIC claimed it lacked the "jurisdiction" to intervene under the Corporations Act.
However, under the watchful eye of the Financial Regulator Assessment Authority and a "scathing" recent review by the Australian National Audit Office, the watchdog appears to have finally found its backbone—or, in its own parlance, "enlivened its jurisdiction."
The ANAO’s report criticised ASIC's oversight as only "partly effective," noting a tendency to prioritise administrative errors over substantive professional misconduct.
As regulators globally grapple with the implications of generative AI in professional services, this move signals that ASIC may no longer tolerate the "sloppy" or deceptive use of technology.