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The firm’s System of Quality Control works

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to prevent and detect independence violations, allowing us

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to provide reasonable assurance of compliance with

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independence requirements. To maintain its effectiveness, we

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rely on receiving quality data from the audit client. It’s

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important to have discussions with our clients about the

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importance of timely communicating planned mergers and

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acquisitions, materiality and ownership changes, or other

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corporate transactions. This allows teams to appropriately

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assess independence and make necessary updates in Sentinel.

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It also allows the firm to promptly exit any prohibited

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services or relationships with any new affiliates, in

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advance of the effective date of a transaction.

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When activities occur that may result in new affiliates or

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affiliated persons, audit engagement teams can seek

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assistance by submitting an inquiry to Professional Practice

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Support via the Audit Operations Portal.

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As important as it is to receive quality information from

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our audit clients, it is equally important for audit

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engagement teams to provide quality communications to the

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client’s Audit Committee to enable them to exercise their

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oversight role effectively. Prior to accepting a new SEC

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audit client and annually thereafter, PCAOB Rule 3526

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requires our firm to report to the Audit Committee, in

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writing, all relationships that may be reasonably thought to

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bear on independence, and to discuss with them the potential

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effects those relationships may have on our independence.

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Documentation of the substance of the discussion with the

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Audit Committee is required to be included in KCw; only

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attaching the written communication will not satisfy this

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requirement and As part of our annual written

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communications, we are also required to affirm in writing

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that the firm is independent, in compliance with PCAOB Rule 3520.

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Furthermore, the SEC requires all proposed audit and

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permitted non-audit services provided to the audit client

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and its subsidiaries to be pre-approved by the client’s

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Audit Committee. Additional PCAOB pre-approval requirements

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exist for tax services and non-audit services related to

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internal control over financial reporting. IESBA also

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requires concurrence from the Audit Committee of any public

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interest entity, including our SEC audit clients, prior to

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providing non-audit services to upstream entities that

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control the audit client, and downstream entities that the

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audit client controls, regardless of consolidation. To aid

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in the preparation of required independence communications

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with the Audit Committee, including communications necessary

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for obtaining pre-approval or concurrence, teams should

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refer to “The Audit Committee Communications User Guide”

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found on Alex.

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In order for the Audit Committee to make an informed

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decision about a proposed service, we need to provide them

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with sufficient information about the service, to enable

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them to evaluate the potential effects on our independence.