153 Misconduct Reports Against the Big Four. Your Auditor Probably Isn't One of Them. Ask These Five Questions Anyway.
153 Misconduct Reports Against the Big Four. Your Auditor Probably Isn't One of Them. Ask These Five Questions Anyway.
ASIC's latest figures on the big four accounting firms are a reminder that audit quality isn't something a board can assume. For a mid-sized NFP or SME, the useful response isn't alarm. It's a better conversation with your own auditor.
ASIC's count of reports of misconduct relating to the big four accounting firms has risen to 153, according to figures reported by Accounting Times last week. That's up from the 139 ASIC chair Sarah Court told a parliamentary committee about on 4 September. The figures cover 1 July 2023 to 7 October 2026.
By firm, KPMG accounted for 53, Deloitte 47, PwC 42 and EY 18. Some cases involve more than one firm, so those don't add to the total. Separately, ASIC is reviewing more than 550 internal complaints the four firms received about alleged misconduct over the same period, and has said it plans to share high-level findings from its surveillance before the end of the year.
Two cautions before going further. First, these are reports and complaints, not findings. At the September hearing, Court said the internal complaints figure shouldn't be read as 550 serious whistleblower issues, and that ASIC doesn't yet know how many warrant action. Second, not all of them relate to audit work.
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153
Reports of misconduct relating to the big four received by ASIC, 1 July 2023 to 7 October 2026 (up from 139 cited in September)
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550+
Internal complaints about alleged misconduct received by the four firms, now under review by ASIC. Not findings.
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Why this matters if your auditor is a local firm
Most mid-sized charities, NDIS providers and SMEs aren't audited by a big four firm. A $20 million NFP is far more likely to use a mid-tier or local practice. So it's tempting to read the headlines and move on.
That would miss the point. The story isn't really about four firms. It's that audit quality depends on things a board rarely sees: who actually does the work, how independent they are, what tools they use, and what happens when something goes wrong inside the firm. Those questions apply to every auditor, whatever the size of the firm.
For a charity, the audit carries real weight. The ACNC classes charities with annual revenue of $3 million or more as large, and large charities need their annual financial report audited. Funders, banks and the regulator all lean on that audit opinion. And under the ACNC Governance Standards, the board's duty to manage the charity's financial affairs responsibly doesn't stop at appointing an auditor and signing the engagement letter.
Yet in many organisations the only conversation the board has with the auditor is the audit committee meeting where the management letter is tabled. By then, the audit is done.
Five questions to put to your auditor before the next audit
None of these is an accusation. A good auditor will welcome them, and the answers will tell you a lot.
1. Who will actually do our audit, and how much of the partner's time will we get? The engagement letter names a partner. The work is often done by a team you never meet. Ask who's on it, how experienced they are, whether they've worked on your file before, and roughly how many hours the partner expects to spend. High staff turnover on an audit file is one of the quieter risks to quality.
2. What else does your firm do for us, or for people connected to us? Tax work, bookkeeping help, advisory projects, work for a board member's business. None of it is automatically a problem, but each one is an independence question, and the board should hear how the auditor has assessed it rather than assume it's been handled.
3. How are you using AI on our audit, and where does our data go? Many firms are now using AI to analyse ledgers, test journals or draft working papers. That can improve coverage. It also means your financial data, and possibly personal information about staff, donors or participants, is going into tools you haven't assessed. Ask which tools, whether your data is used to train them, and how a person reviews what the tool produces.
4. What did your firm's last external quality review find? Depending on its size and client base, an audit firm may be inspected by ASIC, quality-reviewed by its professional body, or both. You won't get the details of other clients, and you shouldn't. But a confident firm can tell you whether its last review raised issues, and what it changed as a result.
5. If someone inside your firm raised a concern about our audit, how would we find out? This is the question the big four figures make hard to ignore. Ask how the firm handles internal complaints and whistleblower reports about audit quality, and whether it would tell the client if a complaint touched their engagement.
The other half: what your auditor needs from you
Audit quality isn't only the auditor's job. The cleaner your file, the more of the auditor's time goes on real risks rather than chasing paperwork.
The basics haven't changed: reconciliations completed and reviewed before fieldwork, a list of the auditor's requests prepared in advance, grant agreements and their conditions summarised, and someone senior available to answer judgement questions quickly. Where AI helps on your side is the assembly: matching supporting documents to the request list, drafting first responses to audit queries, or summarising long funding agreements. A person still checks every answer before it goes to the auditor, because a confident wrong answer to an audit query costs far more time than a slow right one.
If your auditor is using AI on your file, it's also worth asking what evidence of your own AI use they'll want to see. I wrote about that in what the working paper needs to show.
A better conversation, not a change of auditor
My view: the right response to the big four figures, for most organisations, isn't to switch auditors. It's to stop treating the audit as something that happens to you once a year.
Put the five questions on the agenda of your next audit committee or finance committee meeting, ideally before the audit plan is finalised. Ask them politely, write down the answers, and ask them again next year. The answers you get, and how readily you get them, are a fair signal of the quality you're paying for.
Is your file ready before the auditor arrives?
Our free Finance Function Health Check looks at your year-end readiness: reconciliations, grant acquittals, audit request lists and the controls an auditor will test. PFL provides senior-level outsourced finance, management reporting, and AI automation for Australian NFP, NDIS, and SME organisations.
Book your free health check →Accounting Times — Big 4 misconduct reports to ASIC pile up to 153 (26 October 2026)
ABC News — ASIC reveals hundreds of complaints about alleged audit misconduct by big four accounting firms (4 September 2026)
ACNC — Audits (topic guide)
ACNC — Governance Standard 5: Duties of Responsible People
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