Independence rules prohibit KPMG, including its Covered Persons, from having certain business and employment relationships with SEC audit clients and their affiliates.
Business relationships

Key steps for audit engagement teams:

  1. Make written inquiries of the clients’ directors and officers about relationships with KPMG (including those of their spouse and dependents)
  2. Responses should cover the audit period
  3. If undisclosed relationships are reported, consult with the Independence Group
  • Firm activities outside of delivering professional services that involve third parties (e.g., sponsorships, hosting events) are considered business relationships
  • Allow sufficient time to assess permissibility before engaging in firm activities outside of professional services
  • Be mindful of independence considerations even when we anticipate the termination of an audit relationship
  • Consult the Independence Group prior to proposing any impermissible business relationship or non-audit service before the issuance of the firm’s final audit report
  • Refer to the Business Relationships Toolkit available on the Independence Portal
Employment relationships

Required procedures for audit engagement teams:

  • When any former KPMG professional joins an audit client, engagement teams must:
    • Consider the need to modify audit procedures to adjust for the risk that the former professional's prior knowledge could reduce audit effectiveness
    • Determine that financial ties with KPMG are severed
    • Consult with the Independence Group before a former partner joins an audit client in an accounting or financial reporting oversight role
  • When the former KPMG professional had been a member of the engagement team or in the chain of command for an SEC audit client:
    • Must comply with cooling-off period requirements before accepting a financial reporting oversight role
    • Consult with the Independence Group if aware of client’s intent to offer a financial reporting oversight role within the cooling-off period.
Must consult with the Independence Group if the Audit Partner has become aware of the client’s intent to offer a financial reporting oversight role to a former member of the audit engagement team or chain of command within the
cooling-off period.
Business relationships

Key steps for audit engagement teams:

  1. Make written inquiries of the clients’ directors and officers about relationships with KPMG (including those of their spouse and dependents)
  2. Responses should cover the audit period
  3. If undisclosed relationships are reported, consult with the Independence Group

Refer to the Business Relationships Toolkit available on the Independence Portal.

Employment relationships

Required procedures for audit engagement teams

  • When any former KPMG professional joins an audit client, engagement teams must:
    • Consider the need to modify audit procedures to adjust for the risk that the former professional's prior knowledge could reduce audit effectiveness.
    • Determine that financial ties with KPMG are severed
    • Consult with the Independence Group before a former partner joins an audit client in an accounting or financial reporting oversight role
  • When the former KPMG professional had been a member of the engagement team or in the chain of command for an SEC audit client:
    • Must comply with cooling-off period requirements before accepting a financial reporting oversight role
    • Consult with the Independence Group if aware of client’s intent to offer a financial reporting oversight role within the cooling-off period.