Conflict of interest revelation highlights close ties in aged care auditing

As first noted by The Guardian, over 520 real, potential or perceived conflicts of interest were acknowledged by four consultancy firms involved in auditing the safety and quality of residential aged care homes reported.

The revelation comes after months of investigations into the Government’s reliance on external consultancy firms and concerns regarding potential conflicts of interest for consultants involved with both the Government and aged care providers. 

Key points

• The Liberals and The Greens voiced their concerns over potential conflicts of interest with the likes of KPMG working with aged care providers and auditing providers for the Government at the same time
• Similar concerns with three other firms, RSM, HDAA and SAI Global, placed more scrutiny on the Government for their reliance on external consultants, with the quartet signing contracts that totalled a combined $40 million over two years
• They completed an estimated 1,500 audits in 2023 after the Government brought them on board to help overcome a daunting backlog caused by the COVID-19 pandemic
• Meanwhile, In August 2023 it was revealed that PwC had not disclosed potential conflicts of interest when it signed a multi-million dollar Government contract while servicing aged care providers

Red flags were hoisted last May as an inquiry into the Government’s use of external consultancy firms began. During this time the Community and Public Sector Union (CPSU) criticised the Government’s use of a third-party quality assessment workforce as many of the leading firms were working on both sides of the fence. 

“What we have here is a consultancy assisting the aged care regulator to audit aged care facilities, while at the same time, it seems [as though the same] consultancy is also advising aged care providers,” CPSU Assistant National Secretary, Michael Tull told The Guardian. “At face value, that looks like a potential conflict of interest.”

Less than one year later it’s been revealed that four consultancy firms – KPMG, RSM, HDAA and SAI Global – reported more than 520 real, potential or perceived conflicts of interest over two years of work with the Government. 

CPSU Deputy National Secretary, Beth Vincent-Pietsch, told The Guardian it was a staggering number of disclosures and it reinforced the risk potential when large consultancy firms are hired by the Government.

“When a profit driven company offers audit, assurance, advisory and consultancy work all under one roof, conflicts of interest are inevitable. It’s time governments weened themselves off their costly and cosy addiction to consultants and started rebuilding the Australian public service’s in-house capability,” said Vincent-Pietsch.

While the figure appears to be negative, Aged Care Quality and Safety Commissioner (ACQSC) Janet Anderson said the high number of declarations positively reflects the Commission’s robust conflict management process.

“Where there is a declared conflict, the commission will not assign an activity to that individual and/or organisation,” said Ms Anderson.

“Consideration of declared conflicts is part of the commission’s standard planning processes for scheduling assessment and monitoring activities.”

The ACQSC provided some insight into the declarations made by the four firms, such as also being paid by the provider they were asked to audit, personal connections to the facility or voluntary actions like training or mentoring.

KPMG has been upfront about conflicts related to its work, telling a Senate inquiry into the consulting industry last year that it consistently reviews and updates its list of conflicts for the ACQSC. As a result, it has declined several engagements because it deemed it would be inappropriate to act.

The Guardian reported it has contacted the four firms for additional comment, but received no response, while senator Janet Rice will seek further details when Senate estimates hearings begin in February. 

“The Australian public would rightly assume that auditing aged care facilities would be done by impartial government employees who have no stake in the outcome,” added Ms Rice.

“People in aged care deserve to have these processes done by an impartial government team.”

Meanwhile, Ms Anderson and the ACQSC have confirmed they will reduce their reliance on external consultancy firms, but she has remained steadfast in the success of their partnerships. This comes after they rejected reports presented by consultancy firms because they did not meet the appropriate standards.

Ms Anderson said the Commission was holding them to account, and that it was a normal process for both internal and external audits.

“There have been instances where we have declined to accept one of their reports and have required that they undertake further work on it in order to meet our quality benchmarks,” added Ms Anderson.

“I think that the public purse needs to be efficiently spent, and we were determined, and continue to be determined, to get the best possible quality from them.”

Hello leaders contacted the Community and Public Sector Union for additional comments but did not receive a response in time for publication.