'Compromised report'

The court documents include claims that ABS agency head and chief statistician David Kalisch "made it clear" to Mr Coromandel that he expected the outcome of the KPMG review would result in census funding invested in the bureau's program to overhaul ageing IT infrastructure.

Mr Eldridge, who previously worked for the Department of Prime Minister and Cabinet, became concerned over a conflict of interest in KPMG reviewing funding of the program for which it was already providing assurance services, including advising ABS on the program's direction and future.

He alleged the KPMG review team "was producing (at best) a compromised report that aligned the observations from the existing KPMG teams working within the ABS".

"Far worse", he said, it appeared ABS had allocated the review to KPMG "on the understanding KPMG would produce a report that supported the flow of the census funding into [the transformation program]" or that KPMG had pitched its service on this understanding.

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KPMG denied Mr Eldridge's allegations and said he was fired for "appropriate reasons".

"The claim brought by Mr Eldridge contains multiple allegations that are entirely false, do not accurately reflect KPMG's work and had no bearing on the decision to end the employment relationship," a spokeswoman said.


"James Eldridge's employment by KPMG was terminated for appropriate reasons during his probation period."

An ABS spokesman said in a statement "the ABS did not guide KPMG towards any conclusion, but wanted their expert opinion".

"The review provided a summary of possible options and costs. It did not make any recommendations."

He said the KPMG review was recently provided to the census 2021 executive board, which recommended that "these options be further considered, particularly as the infrastructure build progresses".

The ABS spokesman said the Department of Finance had done its own "independent assurance review" of the transformation program in December 2017 and was confident it would be delivered successfully "as long as risks were effectively managed".

'Conflict of interest'

KPMG has entered into 15 contracts at the ABS since 2015 with a value of $11.4 million, including $4.8 million for "independent assurer" services and $2.7 million to assure the bureau's 'Statistical Business Transformation Program', according to the AusTender contract-tracking system.


The court documents include claims about ABS agency head and chief statistician David Kalisch.

The firm's so-called "alignment review" was announced in June 2017 and worth $600,000. Its aim was to assess whether the bureau's IT transformation program would be ready and fit for the 2021 census and inform the ABS if it should funnel large amounts of funding allocated for the census to the program.

Mr Eldridge was responsible for interviewing all 67 internal ABS stakeholders and documents, but he said he had concerns about KPMG both reviewing funding of the program and providing assurance services for the program.

"This was particularly problematic because it would not have been in KPMG's interests for any report produced as a result of the Alignment Review to be either critical of [IT transformation program] or to conflict with observations previously made by KPMG's assurance team," Mr Eldridge said.

'Aligned views'

Despite these issues, KPMG allegedly placed members of its assurance team in the review team and the review head, director Andrew Peel, checked in with the assurance team to ensure the review "aligned" with their views.

An ABS spokesman said "the ABS did not guide KPMG towards any conclusion, but wanted their expert opinion".

One of the emails sent by Mr Peel to the assurance team said "we have been encouraged to be very direct and explicit on the current lay of the land".


"This should result in the key findings not being a surprise to any of the key stakeholders and expectations correctly set on what this engagement will produce."

Senior ABS executives also raised concerns over KPMG's independence, Mr Eldridge said.

In response to the review team's concerns over the IT transformation program, ABS program manager of technology applications, Tim Montgomery, allegedly questioned "how could the alignment review team be in a position to be critical at all of [IT transformation program], given KPMG are assuring the program?"

ABS Chief Information Officer Steve Hamilton also allegedly raised concerns about a member of the assurance team being part of the alignment review.

Preparing the draft report, Mr Eldridge noticed that the team's observations and criticisms of the program were being "watered down and removed".

KPMG allegedly removed criticisms throughout the report that would counter what the ABS head was seeking, including that "it would be risky for ABS to invest the budget allocated to census 2021's IT solution into [the transformation program], given it was widely stated by ABS employees that [the program] was slipping on time, scope and budget and given the failures of the previous census".

Criticisms of the lack of information about what the program was supposed to be building were also allegedly removed.

Detailed summaries of interviews with stakeholders, all but one of which had been "heavily critical" of the ABS' IT program, were "buried in the appendices", Mr Eldridge said.


Mr Peel also allegedly requested Mr Eldridge remove a table that showed there was only a 2 per cent alignment between the program and census 2021 requirements.

'Not your role'

After Mr Eldridge raised his concerns about the independence, he was told to attend a meeting with Mr Coromandel and KPMG Canberra office chair Cath Ingram.

He told them he was still getting used to "where KPMG sat on the risk continuum" and that his previous employers Deloitte and the Department of Prime Minister and Cabinet had a "much lower appetite" for risk and conflicts of interest.

Ms Ingram allegedly responded "Deloitte do f---all assurance work so they don't have this problem."

"It is not your role to identify or raise issues of independence," she allegedly said, including "you are not an auditor from the ANAO [Australian National Audit Office] James, we are not conducting a performance audit".

Three days later, to his "complete surprise", national partner Michael Smart allegedly advised him he was fired because he "failed to build a working relationship with colleagues", specifically telling him "you have not let go of this independence issue".

Mr Eldridge is seeking damages from KPMG as well as penalties against Mr Smart and ABS review director, Mr Peel, for their alleged involvement in his adverse action.

david.marin-guzman@fairfaxmedia.com.au | ed.tadros@fairfaxmedia.com.au