A major consultancy firm that has been under fire for practices in its audit business will cut its local workforce after being suspended from applying for government contracts.

KPMG, which is one of the top four firms behind Deloitte, PwC and EY, on Monday revealed its annual revenue fell one per cent to $2.5 billion in fiscal 2026.

It also warned the outlook for the new year remained difficult.

‘We expect difficult market conditions to continue in financial year 2027 and beyond,’ new chief executive John Sams said.

A continuation of soft market conditions in 2025/26, as well as a continued reduction in the use of consultants by governments, resulted in a 16.9 per cent decrease in revenue for the consulting business.

However, revenue for its audit and assurance and tax and legal arms rose 11 per cent and 10.9 per cent, respectively.

After reviewing its costs and workforce and the impact of the firm’s conduct and whistleblower matters, it will cut jobs by five per cent.

The reduction will mostly hit its consulting and business services arm and take out 27 partners and around 360 employees.

A major consultancy firm that has been under fire for practices in its audit business will cut its local workforce after being suspended from applying for government contracts

‘This result reflects the resilience of our business and, above all, the commitment of our people in a very challenging year,’ Mr Sams said on Monday.

‘We will continue to monitor performance closely, act when needed and consider carefully how the firm needs to be set up for the future.’

But while revenue was below its expectations, four out of its five businesses grew, Mr Sams noted.

However, its partners won’t escape the revenue dip, with average equity partner remuneration falling by 13 per cent on the prior year.

KPMG has been banned from applying for federal government contracts until at least the end of September, when the finance department expects to have completed its own review of its conduct.

A number of state governments have also put KPMG on ice.

The firm has been engulfed by an audit leak scandal since it was grilled by a federal government parliamentary committee hearing in June.

It was revealed some executives had misused confidential board papers to win new audit contracts and mistreated a whistleblower who raised concerns.

KPMG, which is one of the top four firms behind Deloitte, PwC and EY, on Monday revealed its annual revenue fell one per cent to $2.5 billion in fiscal 2026

The firm has also been referred to the National Anti-Corruption Commission by committee member and Greens senator Barbara Pocock.

The scandal has claimed numerous executives, including its former chief executive Andrew Yates and chair Martin Sheppard.

Mr Sams confirmed several internal and external reviews of the firm will be completed in the coming months.

‘Their findings will inform the next phase of our action plan and help ensure we take all necessary action,’ he said.

‘We know there is more to do.’

KPMG has 297 active federal contracts worth $653 million.