KPMG’s Australian arm has been ditched by the country’s government for audit work until September following the fallout of allegations that the firm mishandled client information.

Accounting firm KPMG is engulfed in a scandal that has seen several senior leaders quit and ASIC launch an investigation into the firm's business dealings.

The firm has agreed to stop bidding for Commonwealth work while the Finance Department investigates its handling of a whistleblower complaint.