KPMG is feeling the heat over an audit breach furore and the alleged mistreatment of the staff member, which is being probed by a senate committee.
The company has denied the inquiry access to investigation documents, citing confidentiality, professional privilege and the risk of prejudicing the administration of justice.
Committee head Deborah O'Neill told KPMG chair Martin Sheppard, who made the decision, it was "outrageous".
"Mr Shepherd, do you understand how we find it hard to tolerate when ... you say you've got a commitment to transparency and then you're hiding, you are reserving legal professional privilege," she told him during a hearing in Canberra on Friday.
The committee dealt with sensitive and privileged documents all the time and could keep the information confidential, the Labor senator said.
"You have insulted us by not providing them," she said.
"We just don't trust you any more. You don't get to direct the will of the Senate."
Senator O'Neill has already taken advice from senate clerk Richard Pye, who advised the parliament could investigate KPMG for potential contempt.
Mr Martin said that while the committee and he might "not agree on this matter", he had done his best to address the needs of all stakeholders.
"Over the last couple of weeks, I have agonised - this has probably been amongst the most difficult decisions I've made in my executive career," he said.
"I've got a deep respect for the parliament and for the Senate."
Earlier, the committee heard from ex-KPMG Australia chief executive Andrew Yates, who on May 29 fell on his sword and resigned over the treatment of the whistleblower.
"I don't see myself as a bad apple," he told the committee.
"I see someone who took accountability for things that went wrong and nor do I see the firm to be full of bad apples.
"We're a large, complex organisation and we're fallible."
The issues surrounding KPMG began in 2023, when a staff member alleged audit team members had shared information from construction company Lendlease's board papers.
The data was allegedly used by others to secure the audit work of corporations, such as Westpac.
Senator O'Neill made former KMPG audit head Julian McPherson, who also resigned in May, read onto the parliamentary record a 2024 statement from the whistleblower.
"I have seen a number of actions taken by individuals that are quite clearly not up to the ethical standards of KPMG, or the expectations of regulators, governments, or the public at large," the statement said.
"It is KPMG's toxic culture and its thirst for improved partner remuneration at all costs that have resulted in them (their concerns) not being listened to or acted upon."
Lendlease chief executive Tony Lombardo and chair John Gillam both expressed their disappointment with KPMG and confirmed the company was preparing to find a new auditor after 68 years with the consultancy.
KPMG, one of the top four consultancies in the world, in May set up an independent review into the Lendlease concerns and apologised to the whistleblower.
The scandal has caused a political storm as KPMG handles sensitive public service contracts for the federal and various state governments.
The federal government has 297 active contracts with KPMG valued at $653 million.
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