All of the firm’s activities outside of the
professional services we deliver to clients are essentially
considered business relationships when a third party is
involved. Hosting or sponsoring a charitable event, and
posting to social media about an event that includes
external parties, engaging a third party as a subcontractor
on client engagements, teaming arrangements with third
parties, and using third party software are some examples.
KPMG is prohibited from having certain business
relationships with audit clients and their affiliates,
including relationships with our audit client’s directors,
officers and beneficial owners with significant influence
over the audit clients, also referred to as “BOWSIs”. Such
relationships may create a mutuality of interest or may be
seen as advocating for our client, affecting the firm’s
objectivity and impartiality or creating the appearance that
independence is impaired. One exception is if the business
relationship is as a consumer in the ordinary course of
business, where the firm or professional is acting in the
capacity of a consumer and the relationship is not material
to either party. That’s why it’s important that before
entering into prospective business relationships, they are
reviewed for permissibility. When assessing for potential
independence concerns, consideration needs to be given to
both independence in fact and in appearance.Typically, when
evaluating a business relationship, you will need to check
Sentinel to see if the prospective relationship is with a
company or individual that is an audit client or one of its
affiliates or affiliated persons. To determine if the
relationship is permissible, submit a Sentinel business
relationship request, where required. Also, there are
dedicated groups within the firm to assist you in the
evaluation process for certain types of relationships.
Marketing and sponsorship activities involving third parties
are to be submitted via the Business Relationships Clearance
Tool and reviewed by the Brand Governance team. Brand
Governance escalates matters to the Independence Group as
needed. Different business relationships call for different
action in order to verify permissibility, so it’s best to
review the US Risk Management Manual for guidance. A
Business Relationships Toolkit found on the Independence
portal can also be referenced. The toolkit includes
templates, questionnaires and guidance documents. It’s
important to remember that existing permitted business
relationships with unrestricted entities could become
problematic in the event they become restricted, for example,
through an acquisition by an audit client. It’s critical
that audit teams review the Sentinel services report when a
new entity is added to their client’s Sentinel family tree, as
well as when a private audit client is anticipating going
public to identify any business relationships for ongoing
permissibility. Furthermore, you need to be mindful to
include standard independence clauses in all business
relationship agreements. Using firm approved contract
templates ensures this. In instances where language is
modified, or a client would like to use their template,
consultation with OGC is required and should occur prior to
contract execution.