The chief executive of accounting firm KPMG, Andrew Yates, has resigned effective immediately after the mishandling of whistleblower allegations."I have been committed to a 'speak-up culture' in our firm; it is clear that in this case we have let ourselves down and I take accountability," Mr Yates said in a short statement.Auditing partner Julian McPherson has also stepped down."KPMG Australia confirms its treatment of a whistleblower and investigation into their allegations fell short of the firm's expectations, those of the whistleblower and the broader community," KPMG said in a statement.It reveals a whistleblower brought allegations regarding client documents being inappropriately shared internally to the senior leadership team.An internal investigation did not substantiate the claims, with a further external legal firm also supporting the outcome.However, after the whistleblower raised further complaints with the board, a different external law firm, Allens, was appointed to complete another investigation into the claims, which is ongoing.KPMG says the initial investigations were not conducted with the "necessary rigour required" and "fell short of the firm's expectations".KPMG chair says they 'apologise unreservedly'KPMG says the ongoing investigation by Allens has revealed a further, separate incident in which internal documents containing client information were inappropriately shared internally.KPMG has reported this new finding to impacted clients, regulators, professional bodies and the parliamentary committee."We apologise unreservedly to the whistleblower," KPMG chairman Martin Sheppard said in a statement."We commit to learning from this process to ensure we create an environment where it is safe and easy to surface concerns that will be acted upon."KPMG apologises to the clients whose information was not handled with the care and respect they expect from us. We also apologise to our people, as these matters do not reflect on the contribution they make to KPMG and our clients."Mr Sheppard said KPMG would also engage an ethics consultant to review its "speak-up culture"."We are reinforcing and strengthening the controls that protect client confidentiality, and we will set out for our clients the specific steps we are taking to keep their information protected," he said."For each of our audit clients, we will confirm that any conduct matters do not impact the quality of their audits."Stan Stavros has been appointed as interim chief executive while a process goes on to find a permanent replacement.ASIC tells parliamentary inquiry it is investigatingFinancial industry regulator ASIC has told a parliamentary committee into financial services that it is investigating a number of registered company auditors who handled a whistleblower complaint at KPMG."We commenced those inquiries after a meeting with KPMG on the 14th of April and then after receiving further anonymised case information in writing from KPMG," ASIC deputy Sarah Court said."We've identified three of the four people involved are registered company auditors … and therefore come under ASIC's regulatory oversight."We have been informed by KPMG that they intend to claim legal professional privilege over much of their investigation material."A public letter from Lendlease was tabled that described several incidents where KPMG audit partners accessed Lendlease board papers."There is clearly a breach of what would normally occur between an auditor and its client here," ASIC chair Joe Longo told the committee."The circumstances set out in the letter are clearly unacceptable."