A senior member of staff at KPMG raised serious concerns about confidential documents being used to win lucrative audit contracts and raised concerns about an unethical, profit-driven culture.
When the allegations against the firm fell on deaf ears internally, they were shared with Labor senator Deborah O'Neill who read them out in parliament in March.
KPMG executive director and deputy counsel James McClelland said the first internal investigation into the claims was "fundamentally undermined by the answers which were given, which were misleading, if not directly deceptive to the questions that I asked, and undermined by limitations on scope for the work that I undertook."
Mr McClelland used his appearance at the inquiry to apologise for the way the firm treated the whistleblower.
"I've never had an opportunity to meet the whistleblower," he said.
"I want to take the opportunity to say I am sorry. I am sorry I have been part of this."
Another investigation by KPMG's lawyers found the firm accessed the real estate company's restricted folders containing confidential audit pitch documents by rival firms EY and PwC.
This investigation found confidential documentation from the Lendlease audit was accessed while KPMG was working to win a $32 billion-a-year contract with Westpac.
Former partner Kim Lawry had a photo of Lendlease's so-called scorecard of audit options on her phone, which she told the inquiry did not contain commercially sensitive information.
She said the focus on one document overshadowed more than 9000 hours of work.
Reports in the Saturday Paper found Ms Lawry was paid more than $1.4 million in total for the 2023/24 financial year as a reward for her work in securing the Westpac deal, and received promotions year on year.
Committee chair Deborah O'Neill told the inquiry significant change was needed in the sector.
The quality of audit affected all investment decisions in Australia, Senator O'Neill said.
"What I fear is, in the language of apologies, is a failure to actually understand the gravity of what has happened," Senator O'Neill told reporters.
Major clients are reconsidering their audit contracts with KPMG as a result of the scandal.
Former Reserve Bank governor and Macquarie chairman Glenn Stevens told the inquiry he was awaiting answers to determine whether Macquarie would maintain a $700 million contract with KPMG.
Four of the five former KPMG executives before the inquiry have accepted voluntary retirement packages, except for former chief operating officer Eileen Hoggett who was expelled in late July.
"I am still currently trying to ascertain and understand the basis of my expulsion from the firm," she said.
The expulsion voids Ms Hoggett's accrued annual leave and a retirement pension, despite having worked at the firm for 33 years.
KPMG expelled Ms Hoggett after evidence emerged that she had stored printed copies of confidential documents in her personal locker and shared them with colleagues to win audit contracts.
"I am not aware that the documents were distributed widely or used to win new work," Ms Hoggett said, noting that only she and her personal assistant had access to the locker.
Former chairman Martin Sheppard and former chief executive Andrew Yates both said they had not seen an email in which Ms Hoggett told her personal assistant to show a colleague the printed copy "sensitively, without letting too many people know".
The former KPMG executives are expected to front the inquiry again when the committee holds its next public hearing in September.
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