KPMG “wrongly” treated two NSW departments battling over the creation of a multibillion-dollar transport asset agency as a single client instead of independently when working for them, the firm’s CEO Andrew Yates has admitted.

Mr Yates also acknowledged evidence of “inappropriate and derogatory messages” sent within KPMG related to the two project teams and noted the firm had taken steps to “counsel the people involved about the need to be respectful of others”.