Our ability to be objective and impartial in
relation to an audit can be impaired by certain employment
relationships and those of our close family members,
which include your immediate family members (meaning, your
spouse or spousal equivalent and dependents), and your
parents, non-dependent children and siblings.
It’s important to examine prior and current employment
relationships and those of close family members to make sure
any potential issues that could impact independence are
identified. For example, a tax manager performing Tax
Compliance Services, or an advisory manager performing
advisory services for an audit client is considered a
Covered Person to that audit client. If the tax manager has
a sibling employed by the audit client in an accounting role
or financial reporting oversight role, such as the director
of internal audit, the tax manager would be prohibited from
providing the services to the audit client or any of its
affiliates while their sibling is in that role. Maintaining
independence is a shared responsibility. So you'll need to
think about this for yourself and make sure engagement team
members are also aware of applicable requirements. for audit
engagement team members, including tax and advisory
professionals participating in the audit previously employed
by the audit client or its affiliates? For example, as an
intern? if so, they'll need to confirm they were not
employed during the period covered by the financial
statement audit. They will also need to dispose of all
financial interests, including any employee benefit plans
sponsored by the audit client or their affiliates. What
about engagement team members doing work outside of KPMG to
help out a friend or to make some extra cash? All work
outside of KPMG requires approval through the firm's Outside
Employment process prior to starting the position (or in the
case of a new hire maintaining existing employment prior to
starting with KPMG).
If you become aware of a professional who has outside
employment and hasn't received firm approval, you should
direct them to the outside employment policy found on the
Portal to submit an outside employment variance request as
soon as possible. Awareness around this obligation needs to
be increased, specifically among staff level professionals.
Although some forms of outside employment may be permitted.
It's important to note that professionals cannot be
simultaneously employed by the firm and an audit client or
its affiliates, even for one day. If this occurs, the audit
engagement team must report the violation to the Audit
Committee, even if the professional already terminated their
outside employment.
Examples of this would be working weekends at a retail store
that is owned by an audit client or teaching yoga classes at
a fitness center owned by an audit client affiliate in
exchange for a free gym membership.
Potential future employment must also be considered. Anytime
any professional in the firm has conversations with an audit
client, including its affiliates, regarding potential
employment opportunities. Even if they have never directly
provided services to the entity. They must report this
activity to the Business Unit Professional Practice Partner
- Audit by contacting them directly or by submitting a BUPPP
consultation request through the Professional Practice
Inquiry Management application PPIM, which can be accessed
by typing PPIM forward slash into your browser. If someone
on the audit engagement team is considering employment with
the audit client, they should be removed from the audit
engagement team immediately and their audit work should be
reviewed to assess if they exercised appropriate skepticism
while working on the engagement.
These procedures help ensure we comply with independence
rules around potential employment and an audit client, which
state that such situations can create undue influence and
self-interest threats resulting in a non-objective audit.
It's essential that these employment situations are
identified and reported right away. It's what's expected of
us as KPMG professionals and what's consistent with our
Value of Integrity.