WEBVTT

00:00.000 --> 00:04.590


00:04.590 --> 00:09.410
As the firm works towards our goals around quality, client experience and growth

00:09.410 --> 00:13.431
by collaborating to provide meaningful non-audit services to our audit clients

00:13.431 --> 00:18.744
and their affiliates, it’s crucial that when proposed services are identified

00:18.744 --> 00:22.344
and engagement teams submit service requests via Sentinel,

00:22.344 --> 00:25.789
they are assessed for permissibility appropriately.

00:25.789 --> 00:30.259
Service requests for our SEC audit clients and affiliates are routed

00:30.259 --> 00:34.939
to the Sentinel Lead Partner and delegate, requiring their manual approval.

00:34.939 --> 00:38.889
Each service request must include a draft engagement letter

00:38.889 --> 00:43.063
or statement of work that describes all elements of the proposed services,

00:43.063 --> 00:44.959
including the fee arrangement.

00:44.959 --> 00:50.019
If a draft isn’t included, requests should be sent back for revisions.

00:50.019 --> 00:54.546
For audits and attestation engagements, be sure the draft does not contain

00:54.546 --> 00:58.269
indemnification or limitation of liability provisions,

00:58.269 --> 01:01.589
which are impermissible for SEC audit clients.

01:01.589 --> 01:04.962
To help determine the permissibility of the service, you will need to

01:04.962 --> 01:08.560
review the documents to understand what services the client needs,

01:08.560 --> 01:12.631
the intended use of the service and deliverables.

01:12.631 --> 01:17.016
Confirm that all the information in the request is correct:

01:17.016 --> 01:20.398
have all the engaging parties been selected?

01:20.398 --> 01:24.281
Remember, when a service is being provided to an affiliate,

01:24.281 --> 01:26.954
they should be listed as the engaging party,

01:26.954 --> 01:29.804
not the Global Ultimate Parent.

01:29.804 --> 01:33.863
Review the taxonomy codes, do they represent all aspects of the

01:33.863 --> 01:37.979
proposed service including any technology components?

01:37.979 --> 01:43.522
Evaluate the request against the applicable independence rules and firm policy.

01:43.522 --> 01:46.863
Certain types of services and fee arrangements

01:46.863 --> 01:51.066
are prohibited for restricted entities, such as contingent fees,

01:51.066 --> 01:53.972
commissions, and referrals.

01:53.972 --> 01:56.984
Compare the description in the Sentinel request to the

01:56.984 --> 02:00.171
engagement letter, and confirm they are consistent.

02:00.171 --> 02:04.361
Assess whether the requestor appropriately evaluated and documented

02:04.361 --> 02:08.434
the threats and safeguards for each non-audit service.

02:08.434 --> 02:13.907
Did they use the Threats and Safeguards Evaluation and Documentation Tool,

02:13.907 --> 02:17.055
or otherwise document their evaluation?

02:17.055 --> 02:19.984
Work with the requesting team to check that the information

02:19.984 --> 02:23.642
included in the request is complete and accurate.

02:23.642 --> 02:28.614
Be mindful of proposed services that present opportunities for scope creep.

02:28.614 --> 02:32.014
Ensure all services are permissible, communicated to

02:32.014 --> 02:35.970
and pre-approved by the Audit Committee, when required.

02:35.970 --> 02:40.773
Pay special attention to service requests from non-US member firms;

02:40.773 --> 02:43.721
their engagements may include embedded activities,

02:43.721 --> 02:46.646
for example what would be viewed as legal services

02:46.646 --> 02:50.379
in the US may not be permissible for audit clients.

02:50.379 --> 02:53.081
If you have questions about permissibility,

02:53.081 --> 02:56.280
consult with Risk Management- Independence.

02:56.280 --> 03:00.090
As a best practice, obtain Audit Committee pre-approval

03:00.090 --> 03:02.811
prior to approving a Sentinel request.

03:02.811 --> 03:08.475
Services should be pre-approved in accordance with PCAOB and SEC rules,

03:08.475 --> 03:16.692
this includes compliance with PCAOB Rules 3524 and 3525, as applicable.

03:16.692 --> 03:21.864
Make sure you include your rationale for approving the service request.

03:21.864 --> 03:25.906
Have conversations with client personnel to discuss limitations

03:25.906 --> 03:30.648
on our services and remind the non-audit teams about any service limitations

03:30.648 --> 03:34.178
and possible areas of scope creep.

03:34.178 --> 03:40.216
For multi-year engagements, non-audit teams must submit a new Sentinel request

03:40.216 --> 03:45.357
before KPMG is engaged to provide services for each year’s engagement.

03:45.357 --> 03:49.973
For example, tax compliance services scoped for a three year period

03:49.973 --> 03:54.096
would require a new Sentinel request each financial year.

03:54.096 --> 03:57.734
It’s a best practice to reiterate this requirement within

03:57.734 --> 04:02.635
the Sentinel approval comments to raise awareness among non-audit teams.

04:02.635 --> 04:06.332
Setting a reminder when a new request should be submitted can help

04:06.332 --> 04:10.666
with ensuring requests are received and necessary Audit Committee pre-approval,

04:10.666 --> 04:16.840
if required is obtained prior to non-audit teams proceeding with recurring work.

04:16.840 --> 04:21.070
If there are any additional client requests, they must be evaluated

04:21.070 --> 04:24.911
for permissibility via an additional Sentinel request,

04:24.911 --> 04:29.736
added to the engagement letter or statement of work, and pre-approved by the Audit

04:29.736 --> 04:32.922
Committee prior to the non-audit team providing any additional service.

04:32.922 --> 04:36.317