WEBVTT

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Narration: Marco, the lead audit engagement partner,

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is meeting with Trina, a senior manager,

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to discuss the importance of documenting independence procedures

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outlined in KPMG Clara workflow, also referred simply as Clara or KCw.

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Let’s hear their discussion.

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Marco: As we plan for our audit, I want to remind you about the

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importance of independence and a vital component of our engagement,

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the completion of procedures in the independence module within KCw.

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Trina: Ahh yes, I’m familiar with documenting in KCw as a part of the audit program.

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I’ve been using KAEG as a guide within KCw to help with evaluating

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and documenting assessment of independence matters.

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Marco: That’s great because documenting the execution and results of

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independence procedures is just as important as any other area of the audit.

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And it helps us ensure that the firm can issue an independent auditor’s report.

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Trina: So, there are a number of required steps

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noted in the independence module of KCw.

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We need to evaluate the ongoing services and relationships with all new affiliates

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and confirm the Sentinel tree is complete and accurate.

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This also includes the correct placement of affiliates on the tree.

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Marco: Yes, it’s necessary to follow the procedures outlined for all the steps.

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I know of an engagement team with an independence violation

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because they didn’t follow the procedures correctly for assessing ongoing services

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we were providing to a company that their client acquired.

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Trina: Agreed. I recall you mentioned the importance of

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setting up the client profile correctly too.

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Marco: I’m glad you remembered that point.

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If their profile isn’t set up properly in KCw,

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the appropriate independence procedures may not be applied.

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If you set up an SEC profile, you’ll be provided SEC procedures.

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Similarly for an AICPA profile, AICPA procedures will be listed in KCw.

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By the way, I know you sent out the director and officer questionnaire to the client.

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Did you get it back from them yet?

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Trina: They actually reached out requesting a meeting to confirm related details.

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Marco: Well, to be in full compliance,

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all survey responses must be recorded within the questionnaire

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and documented in Clara.

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The information they include within the questionnaire helps us identify

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and avoid certain relationships and interests with related individuals,

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which include their spouses and dependents.

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Verbal responses are not sufficient.

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Trina: Got it. I’ll let them know we can discuss the details

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but they’ll need to respond directly within the questionnaire as well.

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Can we complete all independence procedures at year-end,

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once we’ve gotten through substantive testing?

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Marco: No, procedures in KCw are always active.

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They should be initiated when the engagement begins and managed throughout.

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If we wait until the engagement is almost finished,

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we might not have enough time to complete all procedures.

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So make sure to allocate enough time to perform each individual step correctly.

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We need to treat independence like any other audit area.

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Trina: Well this all makes sense.

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It will be my responsibility to complete independence procedures, correct?

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Marco: Yes, you may ask staff level professionals to assist,

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but managers should have primary responsibility for completing procedures

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and ensuring all documentation is included in KCw.

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Partners, including Engagement Quality Control Reviewers,

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are then required to review the procedures in Clara

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and ensure they’ve been completed properly and to sign-off.

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Trina: That’s what I thought. I’ll be sure to document everything.

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Marco: Thank you. These procedures are our evidence

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that we performed our due diligence, helping us avoid independence violations,

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which directly supports Trust in our firm.

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And remember, if you have any questions, just reach out.

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Narrator: With the guidance of Marco, Trina worked through

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the independence procedures during the course of the audit engagement.

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She was able to wrap up all procedures within the independence module of KCw

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by year-end and after partner review,

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procedures were determined to be complete

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and accurate and received partner sign-off.

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