The confirmation came as the government raised concerns about legal constraints handicapping it from getting out of existing PwC contracts following revelations a former partner shared confidential tax policy information to drum up business.

Australian Federal Police commissioner Reece Kershaw told a Senate hearing on Thursday he had received a referral from Treasury.

Departmental secretary Dr Steven Kennedy confirmed on Wednesday night the referral related to PwC Australia’s former head of international tax, Peter Collins, who was accused of improperly using confidential Commonwealth information.

“The emails that the Tax Practitioners Board tabled in parliament on May 2 highlighted the significant extent of the unauthorised disclosure of confidential Commonwealth information and the wide range of individuals within PwC who were directly and indirectly privy to the confidential information,” Kennedy said in a statement.

AFP deputy commissioner Ian McCartney told the Senate committee an investigation had been launched into the Treasury matter, but it could be broadened beyond the one identified PwC employee.

“We will seek to identify other persons who allegedly committed an offence,” he said.

McCartney said the investigation would be thorough, but it was at an early stage.

“We’ve designated this matter as a sensitive investigation … it’ll be oversighted by the sensitive investigations oversight board,” he said.

“For us, it’s a priority investigation.”

The AFP revealed it had nine contracts with PwC relating to its internal audit processes.

Senators were told there were appropriate confidentiality agreements in place and all contractors had been through security vetting processes.

The AFP was re-examining the contracts but there was nothing indicating any confidentiality breaches, the committee heard.

PwC said in a statement that it noted the Treasury comments and it would continue to co-operate fully with any investigations into the matter.

Home Affairs Minister Clare O’Neil said the actions of the consultancy firm were “a grotesque betrayal of trust” and the government was working to ensure it was held to account.

But the minister said there were potential legal repercussions for dropping PwC from existing government contracts.

“We can’t break the law just because we’re the government,” she told ABC radio on Thursday.

“But we are doing everything we can to make sure there is accountability here.”

The partner shared Treasury information on measures to bolster tax laws, including rules stopping multinationals from lowering their tax bill by shifting profits from Australia to other jurisdictions.

PwC Australia’s chief executive has stepped down and the firm has announced an investigation into its governance, culture and accountability led by former Telstra boss Ziggy Switkowski, who sits on a number of corporate boards.

Finance department officials are set to be grilled on how the government plans to respond to the scandal.

The government has taken steps to strengthen the Tax Practitioners Board to stamp out unethical behaviour and flagged further action, but it is yet to detail what that will look like.

Finance Minister Katy Gallagher, who will appear at a Senate estimates hearing alongside officials in Canberra on Thursday, has described the behaviour at PwC as “outrageous”.

It seriously challenged the trust between government and such private sector firms, and the government would be seeking to reduce its reliance on consultants, she said.