As the lead audit engagement partner, I was
contacted by my SEC audit client regarding a social media
post, mentioning an event where personnel from both KPMG and
their firm were speaking. My client wanted to understand if
I was aware of the event and if it was permissible, given
the firm’s audit relationship. I hadn’t been aware of the
event and decided to reach out to the Independence Group to
further discuss. The Independence Group reviewed all
associated facts, which included a discussion with the KPMG
personnel set to speak at the event where our audit client
was also speaking. It was ultimately concluded that KPMG’s
objectivity and impartiality were not impaired with respect
to the audit client because KPMG and the client’s speaker
were one of several speakers, which included a mix of
non-audit and audit clients. The Independence Group pointed
me to firm guidance, which stipulates two non-audit client
speakers for every audit client speaker, to avoid the
appearance that we have a business relationship with our
audit client. Furthermore, the subject matter related to a
general industry topic, it didn’t include discussions of our
audit client relationship, a mutuality of interest with our
audit client was not created, nor were we advocating for one
another. However, it was determined that the KPMG personnel
scheduled to speak at the event violated firm policy because
they failed to submit the proposed speaking engagement to
the Brand Governance team, via the Business Relationships
Clearance Tool, or BRCT for review and approval. Although
the event was deemed not to impair KPMG’s objectivity and
impartiality with respect to the audit client, we did lose
some trust from our client that we would communicate such
arrangements prior to agreeing to them. They ultimately
wanted to gain comfort around how KPMG would prevent
something like this from happening again. I’ve now informed
my team that speaking engagements should always be submitted
to the Brand Governance team via the BRCT tool. In instances
where the team is presented with other similar
opportunities, we must be sure to understand the policies
and guidance related to the type of relationship by
referencing the evaluation of business relationship entities
section of the US Risk Management Manual. It’s how we
do our part to protect our brand reputation and comply with
firm policy.