WEBVTT

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Narrator: Carol, an audit managing director, has been selected for

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an independence compliance audit. The auditor has identified

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independence violations related to her spouse opening a new brokerage

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account without her knowledge which held a restricted entity. She’s now

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become aware that her spouse opened another brokerage account

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last month, after she had submitted her documentation for audit.

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She’s now speaking with the auditor.

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Carol: I’ve been reviewing my KICS account during the quarterly

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confirmations, but you still uncovered issues during the audit.

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Working so much during busy season, I guess I didn’t complete a thorough

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enough review of our financial interests.

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Auditor: Many violations occur because a spouse or spousal equivalent

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makes changes without letting the professional know,

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or professionals don’t complete all of the steps to enroll and activate

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their accounts for KICS Broker Import. Taking small steps to correct

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these issues can make a big impact.

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Carol: I thought I was doing everything to comply with the Broker Import

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requirements. I should have my spouse join this call so he can hear

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first-hand how important it is that we get this right. These violations

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could impact my future promotions.

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Auditor: I’d be happy to discuss independence considerations with you both,

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but because your responsibility extends to your spouse, you should

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have regular discussions about your independence responsibilities,

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so they notify you of any changes before they occur.

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Carol: That’s good advice. Can you tell me more about your findings?

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Auditor: Sure, during the audit I identified that you had accounts activated

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for Broker Import, but when your spouse opened a new account

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at the same brokerage firm, it was never activated. New accounts

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won’t automatically be enrolled and activated. You must manually do this

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for each new account within 14 days of opening the account

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Carol: I get it. I also just found out that after I submitted my audit materials,

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my spouse opened another brokerage account that

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wasn’t timely activated for Broker Import.

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Auditor: Unfortunately, that will be counted as another independence violation.

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Make sure you complete all the steps to activate the account today.

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Any investments held through the account will need to be reported in KICS.

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Carol: Okay. I’m going to speak with my spouse so I’m aware of any new

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accounts in the future, and this doesn’t happen again. I understand

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that I must complete the entire process to enroll and activate accounts,

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which includes adding them to KICS and submitting the client

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authorization form in a timely manner.

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Auditor: A best practice to preventing independence violations

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in the future is to regularly complete a thorough review of the

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financial relationships you and your immediate family

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members hold. The quarterly confirmations are great opportunities

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to make sure you’re getting it right.

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Narrator: Carol acted in an ethical manner by reporting the additional

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independence violation to the auditor. After the call, she acted in a

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timely manner to enroll and activate the account for Broker Import and

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discussed her independence responsibilities with her spouse.

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