The “big four” audit and consulting firms face a likely crackdown that could even lead to the firms being broken up, following a string of ethical failures.

The federal government has released a new consultation paper proposing stricter regulation of the firms, including increased oversight and heavier penalties. Many of its proposed reforms are welcome – and long overdue.

It follows a series of scandals about inappropriate use of confidential information that have hit three of the big four professional services companies: KPMG, PwC, EY and Deloitte.

But one big question remains: even if tougher rules and penalties are introduced, will Australia’s corporate watchdog have the resources to properly audit the auditors?

Why the government is acting now

Just this week, it emerged that two junior EY employees had been sacked over allegedly accessing Prime Minister Anthony Albanese’s private bank information while working as contractors at Commonwealth Bank.

That followed more serious recent admissions from KPMG that its senior partners had accessed confidential client information to help them bid for other companies’ work.

These scandals come just three years after another rival firm, PwC, admitted to using confidential government information about new corporate tax avoidance rules to help other corporate clients dodge the new rules.

That led to a federal inquiry, which made 40 recommendations for action back in 2024. This new Treasury consultation paper is a follow-up – and it’s unusually blunt, declaring:

In recent years, we have seen behaviour from large........

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