WEBVTT 00:00:02.820 --> 00:00:05.670 Our ability to be objective and impartial in 00:00:05.670 --> 00:00:09.060 relation to an audit can be impaired by certain employment 00:00:09.060 --> 00:00:12.240 relationships and those of our close family members, 00:00:13.800 --> 00:00:17.400 which include your immediate family members (meaning, your 00:00:17.400 --> 00:00:21.240 spouse or spousal equivalent and dependents), and your 00:00:21.240 --> 00:00:24.180 parents, non-dependent children and siblings. 00:00:25.440 --> 00:00:28.819 It’s important to examine prior and current employment 00:00:28.882 --> 00:00:32.637 relationships and those of close family members to make sure 00:00:32.700 --> 00:00:36.142 any potential issues that could impact independence are 00:00:36.204 --> 00:00:39.522 identified. For example, a tax manager performing Tax 00:00:39.584 --> 00:00:42.964 Compliance Services, or an advisory manager performing 00:00:43.026 --> 00:00:46.344 advisory services for an audit client is considered a 00:00:46.406 --> 00:00:50.099 Covered Person to that audit client. If the tax manager has 00:00:50.161 --> 00:00:53.917 a sibling employed by the audit client in an accounting role 00:00:53.979 --> 00:00:57.672 or financial reporting oversight role, such as the director 00:00:57.734 --> 00:01:01.427 of internal audit, the tax manager would be prohibited from 00:01:01.490 --> 00:01:04.995 providing the services to the audit client or any of its 00:01:05.057 --> 00:01:08.750 affiliates while their sibling is in that role. Maintaining 00:01:08.812 --> 00:01:12.442 independence is a shared responsibility. So you'll need to 00:01:12.505 --> 00:01:16.198 think about this for yourself and make sure engagement team 00:01:16.260 --> 00:01:20.016 members are also aware of applicable requirements. for audit 00:01:20.078 --> 00:01:23.270 engagement team members, including tax and advisory 00:01:23.333 --> 00:01:27.088 professionals participating in the audit previously employed 00:01:27.150 --> 00:01:30.718 by the audit client or its affiliates? For example, as an 00:01:30.780 --> 00:01:34.035 intern? if so, they'll need to confirm they were not 00:01:34.098 --> 00:01:37.290 employed during the period covered by the financial 00:01:37.352 --> 00:01:40.732 statement audit. They will also need to dispose of all 00:01:40.794 --> 00:01:44.362 financial interests, including any employee benefit plans 00:01:44.424 --> 00:01:47.867 sponsored by the audit client or their affiliates. What 00:01:47.929 --> 00:01:51.622 about engagement team members doing work outside of KPMG to 00:01:51.685 --> 00:01:55.064 help out a friend or to make some extra cash? All work 00:01:55.127 --> 00:01:58.882 outside of KPMG requires approval through the firm's Outside 00:01:58.945 --> 00:02:02.700 Employment process prior to starting the position (or in the 00:02:02.763 --> 00:02:06.455 case of a new hire maintaining existing employment prior to 00:02:06.518 --> 00:02:07.770 starting with KPMG). 00:02:08.910 --> 00:02:12.116 If you become aware of a professional who has outside 00:02:12.177 --> 00:02:15.565 employment and hasn't received firm approval, you should 00:02:15.625 --> 00:02:19.074 direct them to the outside employment policy found on the 00:02:19.135 --> 00:02:22.644 Portal to submit an outside employment variance request as 00:02:22.704 --> 00:02:26.274 soon as possible. Awareness around this obligation needs to 00:02:26.335 --> 00:02:29.904 be increased, specifically among staff level professionals. 00:02:29.965 --> 00:02:33.535 Although some forms of outside employment may be permitted. 00:02:33.595 --> 00:02:36.681 It's important to note that professionals cannot be 00:02:36.741 --> 00:02:40.251 simultaneously employed by the firm and an audit client or 00:02:40.311 --> 00:02:43.881 its affiliates, even for one day. If this occurs, the audit 00:02:43.941 --> 00:02:47.209 engagement team must report the violation to the Audit 00:02:47.269 --> 00:02:50.899 Committee, even if the professional already terminated their 00:02:50.960 --> 00:02:52.110 outside employment. 00:02:53.550 --> 00:02:57.090 Examples of this would be working weekends at a retail store 00:02:57.149 --> 00:03:00.690 that is owned by an audit client or teaching yoga classes at 00:03:00.749 --> 00:03:03.935 a fitness center owned by an audit client affiliate in 00:03:03.994 --> 00:03:06.060 exchange for a free gym membership. 00:03:07.140 --> 00:03:10.773 Potential future employment must also be considered. Anytime 00:03:10.834 --> 00:03:14.468 any professional in the firm has conversations with an audit 00:03:14.528 --> 00:03:17.738 client, including its affiliates, regarding potential 00:03:17.799 --> 00:03:21.311 employment opportunities. Even if they have never directly 00:03:21.372 --> 00:03:24.643 provided services to the entity. They must report this 00:03:24.703 --> 00:03:28.276 activity to the Business Unit Professional Practice Partner 00:03:28.337 --> 00:03:31.971 - Audit by contacting them directly or by submitting a BUPPP 00:03:32.031 --> 00:03:35.302 consultation request through the Professional Practice 00:03:35.362 --> 00:03:38.875 Inquiry Management application PPIM, which can be accessed 00:03:38.936 --> 00:03:42.448 by typing PPIM forward slash into your browser. If someone 00:03:42.509 --> 00:03:46.082 on the audit engagement team is considering employment with 00:03:46.143 --> 00:03:49.474 the audit client, they should be removed from the audit 00:03:49.534 --> 00:03:53.047 engagement team immediately and their audit work should be 00:03:53.108 --> 00:03:56.681 reviewed to assess if they exercised appropriate skepticism 00:03:56.741 --> 00:03:58.680 while working on the engagement. 00:03:59.790 --> 00:04:03.213 These procedures help ensure we comply with independence 00:04:03.274 --> 00:04:06.943 rules around potential employment and an audit client, which 00:04:07.004 --> 00:04:10.489 state that such situations can create undue influence and 00:04:10.550 --> 00:04:14.035 self-interest threats resulting in a non-objective audit. 00:04:14.096 --> 00:04:17.214 It's essential that these employment situations are 00:04:17.276 --> 00:04:20.883 identified and reported right away. It's what's expected of 00:04:20.944 --> 00:04:24.307 us as KPMG professionals and what's consistent with our 00:04:24.368 --> 00:04:25.530 Value of Integrity.