It’s been a rough couple of years for Australia’s big four consultancy firms if negative news headlines are anything to go by, with a series of scandals rocking the lucrative sector.Today it went from bad to worse, as the Treasury revealed overnight that the big four — PwC, Deloitte, KPMG and EY – could be “broken up” entirely, or face massive fines in a major new crackdown.Another measure set out by the government could dramatically reduce the number of partners the firms could have, possibly down to 400. Based on recent firm headcounts, the big four collectively employ nearly 3000 partners across Australia. If forced to comply with a 400-partner limit, around 1400 partners would have to be let go or shuffled into different divisions of the firms if they are successfully broken up.On Tuesday, EY made headlines after two grads on secondment at CBA allegedly accessed the Prime Minister’s bank details — and are now facing jail time if found guilty.Anthony Albanese said it is “appropriate” charges have been laid. He refused to “go into the detail” because the case is before court but said it was “a serious issue”.“Accessing anyone’s privacy, any Australian’s privacy is alarming, let alone someone from a contractor who’s not an employee of Commonwealth Bank being able to access that information,” he told the ABC’s News Breakfast.He said his government would “continue to examine” the conduct of major consulting firms, such as EY.“The behaviour of some of these big accounting firms has been completely unacceptable,” Mr Albanese said.“In some cases, it has involved breaches of the law, and they need to be held to account, if you’ll excuse the pun, because they simply have engaged in behaviour that’s not consistent with Australian law or consistent with the way that people would expect big corporations to operate.”It comes as a major whistleblower scandal rocks KPMG, forcing major heads to roll at the firm – and as PwC is still reeling from a scandal three years ago, in which it used confidential government intelligence to help multinational clients avoid taxes.Now, the Assistant Treasurer Daniel Mulino has released a Treasury position paper saying there is “strong and compelling evidence” that the big four firms need tougher regulation.“In recent years, we have seen behaviour from some large accounting, auditing and consulting firms in Australia that is not fair and honest,” Mr Mulino said.“This has undermined trust in the firms themselves and raised broader questions about the resilience of the frameworks meant to uphold market integrity.“It is time to return trust and integrity so that the government, taxpayers and other businesses can rely on the services of large accounting, auditing and consulting firms.”What the government is looking atThe Treasury paper signals that the government could move away from a model of “self-regulation” and minor professional body oversight for the sector.Among the options proposed in the paper, the government said it might break up the big four accounting partnerships. It could do that by directly targeting their partner numbers or by splitting off or functionally separating audit arms.It proposed banning companies from using consultants from any firm that also provides their audit services — saying this could remove a potential for consulting clients to “compromise” any auditor’s independence.Currently, the big four are regulated by a mix of federal and state-based bodies. The Tax Practitioners Board is the only regulator with the power to investigate a firm. However, under proposed changes, the sector could be brought under the remit of the Australian Securities and Investments Commission (ASIC) which could be given the power to investigate and impose hefty fines on firms. This would bring Australia in line with the US and UK and make the entire firm legally responsible for firm-wide cultural, quality control and ethical failures.Treasury also suggested fines could be imposed on accounting firms that are considered a “significant global entity” with more than $1 billion in turnover — that includes PwC, EY, Deloitte and KPMG. The big four all make more than $2 billion in annual revenue, which means they could be subject to fines of more than $200 million under the plans.The report looks at the UK’s model of achieving “operational separation” in the professional services firms, which could allow firms to continue offering both audit and consulting services to the same companies. It would require separate CEOs and chairs for both the audit and consulting wings of a major firm as well as distinct governance boards. The paper says ASIC could license and fine audit firms, including the ability to strip a firm of registration if a single partner fails a “fit and proper” test.The Treasury paper proposes forcing the big firms to bring in independent board directors and implement “specific tailored duties” similar to those under the Corporations Act. If they cannot comply, they could face the wrath of ASIC.Another, blunter option outlined in the paper would be to force the audit and consulting divisions to separate entirely.EY has already looked at doing this under a plan dubbed Project Everest, but the deal collapsed amid a dispute between consulting and audit partners over who would own the tax division, which makes the most money.The Treasury paper also suggests giving ASIC the power to impose new controls on the firms, which could also see them effectively broken up or put out of business if breaches were severe enough. Currently, ASIC oversees only individual auditors, not the firms as a whole.The government is considering a dramatic downsizing strategy by slashing the maximum number of partners allowed in a big four firm from the current limit of 1000.The report points out that Australian law firms are already strictly capped at 400 partners by comparison. Downsizing the accounting firms may be tough though, because partnerships are regulated on a state level.Consultation on the options paper will close on August 12.Scandals mount The move comes as another headache emerged for one of the big four firms this week.One of two graduate workers at EY were sacked and copped criminal charges after allegedly accessing the Prime Minister’s banking details.The workers, aged 21 and 25, were grads employed by consultancy giant Ernst and Young and were on secondment at Commonwealth Bank when they allegedly used the bank’s systems to access the personal banking details of Anthony Albanese and at least one senior EY partner.The consultancy firm took on a new cohort of graduates in March and deployed dozens of junior staff members to consult on CBA’s technology systems.It was during this secondment that the two grads allegedly accessed the banking details.On May 6, the Australian Federal Police charged two young men with accessing restricted personal banking data belonging to a federal parliamentarian.A 21-year-old man faces a criminal charge of unauthorised access to, or modification of restricted data, and also “using a carriage service to make available, publish or otherwise distribute information that is personal data, of one or more individuals, and engaged in that conduct in a way that reasonable persons would regard, in all the circumstances, as menacing or harassing towards those individuals,” an AFP spokeswoman said.Court documents show he was working from his home in Marrickville at the time of the alleged offence. The second charge carries up to five years’ imprisonment, while the first carries a maximum of two, meaning he faces up to seven years in prison if found guilty.A 25-year-old man was also charged with one count of unauthorised access to restricted data. Both men appeared in Newtown Local Court on Tuesday, where their bail was extended. The AFP said that as the matter was before the court, it would make no further comment.EY is not the first consultancy giant to make headlines this year as a major scandal has rocked one of its biggest competitors, fellow big four firm KPMG.At the end of May, KPMG was rocked by two senior resignations over how the firm handled a whistleblower’s complaints. The firm’s chief executive Andrew Yates and former head of audit Julian McPherson have resigned, while Eileen Hoggett has stepped down from her leadership role as chief operating officer. Last week, KPMG Australia chairman Martin Sheppard became the latest executive to quit as the misconduct scandal is put under the spotlight.What is the KPMG scandal all about?KPMG is under the pump after a whistleblower’s allegations that partners used confidential client data to win corporate audit contracts.Companies like KPMG act as independent, outside accounting checkers that big corporations use to dig through their financial books and verify that they are telling the truth to the public and investors.An audit contract is simply the official business agreement between the corporation and the accounting firm.The corporation agrees to pay the accounting firm (which is often in the millions of dollars), and the accounting firm agrees to do the financial check-up. Because these contracts are incredibly lucrative, accounting firms compete fiercely to win them. The whistleblower – a former audit director – claims that some top bosses (partners) at KPMG bent the rules to win one of these lucrative contracts. None of the individuals identified in this story is personally accused of involvement in any wrongdoing.They made a formal disclosure in May 2024 alleging that some partners misused confidential Lendlease (a real estate company) board papers to pitch for and win the external corporate audits for Westpac and Dexus (a major Australian real asset group).It is also alleged that inside information was used to secure lucrative work from Macquarie Group and Westpac.Instead of protecting the whistleblower or properly investigating the claims, the firm allegedly spent over two years covering up the scandal.The whistleblower claims the company tried to bury the truth by downplaying the serious allegations as a minor internal workplace dispute, using legal confidentiality loopholes and gag orders to keep it secret, and launching retaliatory actions against them for speaking up.It came to a head in March this year when Labor senator Deborah O’Neill used parliamentary privilege to disclose the allegations.The following day, she announced the Parliamentary Joint Committee on Corporations and Financial Services, which she chairs, would hold a public hearing on June 19.KPMG has apologised to the whistleblower and ordered a fourth investigation into the matter. However, the review will be conducted by Allens, the exact same law firm that previously dismissed most of the whistleblower’s allegations.The big concern is that sharing private client data was just a normal part of KPMG’s workplace culture, even if the information itself wasn’t secret or worth a lot of money.The KPMG board said the firm had “fallen short” in how the whistleblower and their concerns were handled, how the investigations were carried out and how leadership reacted to the allegations.Chairman steps downKPMG announced Mr Sheppard’s exit among sweeping changes to “address identified failings, improve oversight and controls, and begin the work of rebuilding confidence in the firm”.He will be replaced by an independent chair – the first in the company’s history.“The decisions announced today are necessary and immediate,” interim chief executive Stan Stavros said in a statement.“We did not meet the standards expected of us, and we recognise the impact this has had on the whistleblower, our people, our clients and the community.“We are acting where it matters: changing leadership, strengthening independent governance, commissioning external reviews, improving whistleblower oversight, tightening controls and reinforcing accountability across the firm.“Trust will only be rebuilt through sustained action and demonstrable change.”He added that KPMG was “determined to confront what went wrong, act transparently and ensure these failings are not repeated”.The changes announced on Tuesday last week included an “immediate external lessons-learned review into the whistleblower matter and related failings”, and an “action plan focused on governance, culture and ethics, and controls”.Not the first scandal to rock the ‘Big Four’This is not the consultancy world’s first rodeo when it comes to seriously bad press.Another Big Four firm, PwC, made headlines in a scandal that went to the heart of government in 2023.The scandal started when, in 2015, the Federal Government moved to crack down on multinational corporations avoiding tax by developing the Multinational Anti-Avoidance Law.The former head of international tax for PwC Australia, Peter Collins, was brought in to help the government design the laws. He signed three separate confidentiality agreements as part of that process.It’s alleged that Mr Collins received confidential information and documentation, and proceeded to share information within PwC with colleagues who were not authorised to receive it, a Tax Practitioners Board inquiry found.His registration as a tax practitioner was terminated for breaching the Professional Conduct in the Tax Agent Services Act 2009, which required that he must act honestly and with integrity, and avoid conflicts of interest.It’s alleged that PwC used that information to effectively market tax avoidance schemes around the world.The Australian Federal Police (AFP) launched a full criminal investigation (dubbed Operation Alesia). In late 2024, the situation escalated dramatically when federal agents officially raided PwC’s Sydney headquarters.To salvage what they could of their reputation and protect their government consulting arm, PwC was forced to completely split its business. They sold their entire multimillion-dollar government consulting division to a private equity firm for exactly $1. That division was rebranded as a completely separate company called Scyne Advisory.The Federal Government essentially banned PwC from doing any further business with the Commonwealth — a huge loss for the firm. However, it didn’t last forever.In August 2025, after a 16-month hiatus and a series of internal governance overhauls, the Federal Government gave PwC the green light to resume bidding for federal contracts again, though the firm agreed to stay out of major, high-tier government tenders until late 2028.