WEBVTT

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As the firm works towards our goals around Trust and

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Growth by collaborating to provide meaningful non-audit

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services to our audit clients and their affiliates, it’s

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crucial that when proposed services are identified and

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engagement teams submit service requests via Sentinel, they

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are assessed for permissibility appropriately.

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Service requests for our SEC audit clients and affiliates

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are routed to the Sentinel Lead Partner and their delegates,

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requiring their manual approval. Each service request must

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include a draft engagement letter, statement of work, or

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equivalent document that describes all elements of the

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proposed services, including the fee arrangement. If such a

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draft document isn’t attached to the Sentinel request, it

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should be sent back for revision.

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For audit and attestation engagements where SEC independence

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rules apply, be sure the draft document does not contain

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indemnification or limitation of liability provisions.

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To help determine the permissibility of the proposed

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services, you will need to review the Description of

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Services field in the Sentinel request, along with the

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attached documents, to understand the scope, intended use and

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resulting deliverables of the proposed services.

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Confirm that all the information in the request is correct:

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Have all the engaging parties been selected? Remember, when

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a service is being provided to an affiliate, they should be

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listed as the engaging party, not the Global Ultimate Parent,

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unless it is a party to the engagement as defined in the

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Sentinel User Guide. Ensure the billing party is included as

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an engaging party.

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Review the taxonomy codes, do they accurately represent all

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aspects of the proposed services including any technology

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components? The proposed service should be consistent with

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the definition of the taxonomy code, which can be found by

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clicking on the taxonomy code in the Sentinel request.

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Independence guidance and any additional requirements, such

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as risk management approval, will also be noted in the definition.

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Evaluate the request against the applicable independence

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rules and firm policies. Certain types of services and fee

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arrangements are prohibited for restricted entities, such as

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contingent fees, commissions, and referrals.

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Assess whether the requestor appropriately evaluated and

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documented why the proposed service is permissible and the

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threats and safeguards for each non-audit service. For SEC

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audit clients and their affiliates, is the service in line

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with the SEC’s overarching principles and general standard

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of independence? Was use of the IESBA Advice and

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Recommendations exception detailed, where applicable?

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Check the engagement start and end dates to make sure they

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are appropriate. Sentinel approval should come before the

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start date of the engagement.

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Be mindful of proposed services that bring about

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opportunities for scope creep. Confirm all services are 

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permissible, communicated to and pre-approved by the Audit

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Committee or Those Charged With Governance, when required.

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Services should be pre-approved in accordance with PCAOB, SEC

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and IESBA rules, this includes compliance with PCAOB Rules

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3524 and 3525, as applicable.

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Pay special attention to service requests from KPMG member

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firms; their engagements may include embedded activities.

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For example, some member firms may perform financial

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statement preparation assistance services (including word

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processing or translation services) in connection with a

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statutory audit service. Such services should be

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specifically identified in the draft engagement letter as a

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non-audit service and the appropriate financial statement

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preparation assistance taxonomy code included in the

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Sentinel request so that pre-approval may be obtained (as

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relevant) when the service is permissible.

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When approving a Sentinel request, the Sentinel Lead

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Partners (or delegates) should indicate in the approval

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comments the relationship between the engaging party and any

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audit clients included in the Sentinel tree and the

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rationale for determining the service is permissible. Have

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conversations with client personnel to discuss limitations

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on our services and remind the non-audit teams about any

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service limitations and possible areas of scope creep.

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For recurring, multi-year engagements, engagement teams must

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submit a new Sentinel request before KPMG is engaged to

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provide services for each year’s engagement. For example,

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tax compliance services scoped for a three-year period would

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require a new Sentinel request each financial year. It’s a

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best practice to reiterate this requirement within the

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Sentinel approval comments to raise awareness among 

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non-audit teams.

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If there are any additional client requests, they must be

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evaluated for permissibility via an additional Sentinel

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request, added to the engagement letter or statement of work,

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and pre-approved by the Audit Committee prior to the non-audit

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team providing any additional service.

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