Back in 2021, my team failed to meet all requirements of PCAOB Rule 3524
for permissible tax services provided to our SEC Issuer audit client.
Our team had described the tax consulting services and fee structure, in writing,
and discussed the potential impact the proposed service may have on our independence
with the Audit Committee delegate, obtaining their pre-approval and documenting the
discussion with the delegate in KCw. Because we received delegate pre-approval,
we then added the tax services to the audit results presentation that was provided to the
full Audit Committee. Shortly after, we issued a Sentinel Approval Number to the tax team,
they then executed the engagement letter and performed the services.
After the fact, during the firm’s internal independence review process,
it was discovered that we never discussed the potential effects of the service on
KPMG’s independence with the full Audit Committee. Although, we did discuss
the potential effects with the delegate and documented that discussion within KCw,
since this discussion with the full Audit Committee did not take place,
our documentation in KCw was incomplete.
Because of this oversight, although we met requirements for part (a), PCAOB Rule 3524
was violated because part (b) and (c) were not completely met.
This situation made me realize the importance of meeting all elements of PCAOB Rule 3524.
Even missing one part will result in a violation.
To avoid making this mistake again, my team and I will refer to KCw for guidance.