Independence Australia

Transcription

1 Independence Australia Fact sheet internal use only Issued: July 2011 Independence requirements for new hires Introduction This fact sheet provides a brief summary of the main personal independence requirements that apply to Deloitte Australia Partners and employees to assist in accepting an offer of employment with Deloitte Australia or admission to the Deloitte Australia Partnership. The independence policies and guidance are set out in the Australian Independence Policy. Partners and staff joining the firm should take particular note of the requirement to disclose their officer appointments and promoter roles as detailed below. Links to the policy summaries are located on the second page of this fact sheet. Officer appointments and promoter roles Mandatory disclosure of officer appointments and promoter roles New employees are required to notify Independence Australia before joining Deloitte of all Officer appointments or promoter roles they currently hold or have held within the past 12 months. Employees are required to Independence Australia via the secure address independence_aust@deloitte.com.au and provide the following details: your name, start date and position within Deloitte position held (only provide details of officer roles or promoter roles (as relevant) for example; company director, company secretary, treasurer, board member etc) name of entity and entity s parent (if applicable) date appointment commenced date appointment ceased (if applicable) whether Deloitte are auditors or were auditors when the appointment was held whether Director & Officer s insurance is held (for current appointments only) Officer appointment policy summary Deloitte partners and employees are prohibited from holding office or accepting appointment as a Director or officer of any entity in Australia or elsewhere. There are limited exceptions as follows: Employees are permitted to hold office or accept appointment as a Director or Officer of a proprietary company whose sole function is for the relevant employee s personal tax and estate planning purposes Employees may be permitted to hold office or accept appointment as a Director or Officer of: a proprietary company in which the employee or an Immediate Family member holds a significant interest, or an entity that is a community, charitable, cultural or other not-for-profit organization subject to all of the following conditions being met: the appointment is expressly approved in writing by the Independence Partner, and firm does not and will not perform any "fee for service" work for that entity, and the position is covered by D&O insurance Member of Deloitte Touche Tohmatsu Limited 2011 Deloitte Touche Tohmatsu

2 Independence summaries Click on the relevant links below to review the independence policies that will apply to you: Conceptual approach to independence - applicable to all staff Personal independence - Partners Personal independence - professional staff Conceptual approach to independence What is independence? As an audit firm, Deloitte provides a level of assurance that the financial statements of our audit clients are true and fair view in accordance with certain accounting standards. To perform the role, Deloitte must be free from any circumstance that could appear to reduce our objectivity to provide this independent opinion. Independence is: Independence of mind the state of mind that permits the provision of an opinion without being affected by influences that compromise professional judgment, allowing an individual to act with integrity, and exercise objectivity and professional skepticism; and Independence in appearance the avoidance of facts and circumstances that are so significant a reasonable and informed third party, having knowledge of all relevant information, including any safeguards applied, would reasonably conclude a Member Firm s or a member of the Assurance Engagement Team s integrity, objectivity or professional skepticism had been compromised. Audit clients and other clients in respect of which Deloitte, its partners and staff are required to maintain independence are called restricted entities. What is the conceptual approach to independence? The policies in the Australian Independence Policy are based primarily on a conceptual approach that takes into account threats to independence, accepted safeguards, and the public interest. This approach is very different to a rules based approach which would provide a list of do s and don ts. Why does independence apply to me? Under the conceptual approach to independence, all Deloitte partners and staff has an obligation to make his or her best effort to: Identify circumstances or relationships that might create threats to independence: Evaluate whether these threats are clearly insignificant; and In cases where the threats are not clearly insignificant, consult with Independence Australia, and when appropriate, the Lead Client Service Partner to identify and apply appropriate safeguards to eliminate the threats or reduce them to an acceptable level. What are the threats to independence? 2

3 Partners and employees need to understand how threats to independence arise to ensure independence is maintained. Self-interest threat the threat that a financial or other interest will inappropriately influence a Partner s or staff member s judgment or behaviour. Self-review threat the threat that a Partner or staff member will not appropriately evaluate the results of a previous judgment made or service performed by them, or by another Partner or staff member, on which they will rely when forming a judgment as part of providing an assurance service. Advocacy threat the threat that a Partner or staff member will promote a restricted entity s position to the point that objectivity is compromised. Familiarity threat the threat that due to a long or close relationship a Partner or staff member becomes too sympathetic to the entity s interests or to the interests of its Directors, officers or employees. Intimidation threat the threat that a Partner or staff member will be deterred from acting objectively because of actual or perceived pressures, including attempts by the Directors, officers or employees of a restricted entity to exercise undue influence over the Partner or staff member. How are threats to independence evaluated? In considering the significance of any threat to independence, qualitative as well as quantitative factors should be taken into account. A threat should be considered clearly insignificant only if it is deemed to be both trivial and inconsequential. To make this determination, Partners and staff must consult as appropriate with relevant Partners, Independence Australia or the firm s Independence Partner. What do I need to consider when thinking about independence? As well as the services we are providing to our clients, independence needs to be considered in light of your own personal arrangements. Personal arrangements will include: Financial arrangements e.g. do you own shares in a client? Personal relationships e.g. do you know someone who is employed by a client? Personal appointments e.g. are you the Director of a company or organization that is a client? Are you the Executor of an Estate that owns shares in a client? Employment relationships e.g. were you previously employed by a client? Are you having employment negotiations with a client? Gifts and hospitality e.g. have you received a gift from a client? Business relationships e.g. do you or your spouse have a business relationship with a client? 3

4 Personal independence - Partners Introduction This document is intended only as a brief summary of the main personal independence requirements applying to Deloitte Australia Partners. The independence policies and guidance can be found in the Australian Independence Policy. Financial interests 1. Except as detailed in 2 and 3 below, Partners and their Immediate Family must not have a Direct Financial Interest or material Indirect Financial Interest in any Restricted Entity. Financial interests include shares, debt securities, managed funds and superannuation funds and rights and obligations to acquire such interests and derivatives directly related to such interest, eg share options. Immediate Family includes your spouse, spousal equivalent and dependents. You are not required to identify the financial interests of your Close Family (parent, non-dependent child, or sibling) but if you do happen to know, then you are required to consider any potential threats to independence. A Restricted Entity is any audit client of Deloitte globally and any entity that is affiliated to a Deloitte audit client globally, even if it is not an audit client itself (eg the non-client responsible entity of an Australian registered scheme audited by Deloitte, or the non-client subsidiary of a Deloitte audit client). A Direct Financial Interest is a financial interest owned directly by and/or under the control of an individual or entity, and includes: a financial interest beneficially owned through a collective investment vehicle, estate, trust or other intermediary over which the individual or entity has control (e.g. underlying investments in a self-managed superannuation fund or investments held by your family trust) investments made through discretionary fund managers where the fund manager has authority to make investment decisions without reference to the owner (e.g. discretionary fund manager arrangements, managed accounts, blind investment accounts, and blind trusts) investments held under control of a power of attorney or as trustee An Indirect Financial Interest is a financial Interest beneficially owned through a collective investment vehicle, estate, trust or other intermediary over which the individual or entity has no control (e.g. the underlying investments in a diversified mutual fund or the investments held in a trust of which you are a beneficiary but not a trustee). 4

5 2. Exception for restricted Australian super funds. Partners and their Immediate Family may invest in an eligible restricted Australian super fund provided they: are not located in the same office as the audit partner for the fund are not in the Chain of Command over the audit of the super fund do not provide (and have not provided in the current financial year) any professional services to the super fund and are not a member of the engagement team for the audit of the trustee of the super fund. For a restricted fund to be eligible, it must be a collective investment fund that is available to retail investors and diversifies its investments to spread the risk. Collective investment funds include managed funds, mutual funds (both open and closed ended), unit trusts, exchange-traded funds and similar investment vehicles that are available to retail investors and diversified. Funds that are not available to the general public and other specialist funds, such as certain wholesale funds and hedge-funds or non-diversified funds are not considered collective investment funds. Chain of Command includes those individuals who (i) supervise or have direct management responsibility for the audit and at all successively senior levels through the CEO, (ii) evaluate the performance or recommend the compensation of the Audit Engagement Partner, and (iii) provide quality control or other oversight of the audit. Chain of Command with respect to Australian Restricted Entities includes: the CEO, Members of the Board of Directors and members of the Executive Committee, any other Partners with Assurance management or quality assurance positions (e.g. Audit Leaders, Professional Practice Directors with Audit or Accounting responsibilities, Risk Management Partner) and the Director of Independence, the Managing Partner of the office in which the Lead Client Service Partner and Audit Client Service Partner are assigned, and the functional, industry, group or department leaders/heads to which the Lead Client Service Partner and the Audit Client Service Partner are assigned. 3. Exception for other restricted funds. Partners and their Immediate Family may invest in an eligible restricted fund provided: the fund is not audited by the Australian firm the Partner does not provide (and has not provided in the current financial year) any professional services to the fund or its affiliates, and the Partner is not a member of the engagement team with respect to the audit of the investment advisor, manager or responsible entity of the fund. Partners can check whether a fund is audited by the Australian firm by conducting a search in an online compliance system. 5

6 Other financial relationships (insurance, loans, accounts) 4. Partners are generally allowed to have insurance products, loans and accounts (such as brokerage accounts and bank accounts) with Restricted Entities if the product, loan or account is provided in the ordinary course of their business and are obtained under normal lending procedures, terms and conditions. Note however that if any of these products have an investment element (eg insurance policy that is unit linked or a bank account that sweeps money overnight into investments) then you still need to consider the impact of those investments under the financial interest rules. There are stricter requirements in respect of all other financial relationships with SEC Restricted Entities (which are audit clients and their affiliates for which we are required to be independent under the US Securities & Exchange Commission s independence rules). If you do any work for any SEC Restricted Entity, you cannot: have a bank account with that SEC Restricted Entity take out a new loan with that SEC Restricted Entity and can only keep certain secured loans (e.g. mortgage on residence and car loan secured by car). have a brokerage account with that SEC Restricted Entity take out a new, or change an existing, insurance policy with that SEC Restricted Entity Monitoring 5. Partners must maintain an up to date record of all their and their Immediate Family s Direct and material Indirect Financial Interests and brokerage accounts in an online tracking system. An up-to-date record of all Partners permitted and approved officer appointments must also be maintained in a separate online tracking system. Partners are required to confirm whether entities are restricted entities by conducting a search in the tracking system before they or their Immediate Family acquire any new Direct or material Indirect Financial Interest. Financial interests must be recorded in the tracking system within 10 working days after an acquisition (e.g., for purchases of securities that need to be recorded, within 10 business days of the trade date) and should be removed no more than 30 days after the effective date of the disposal. Insurance policies are not required to be tracked, however if they have any investment element, then the relevant investments must be recorded. Officer appointments should be recorded within 10 working days of acceptance. 6

7 Trustee roles 6. Partners are not permitted to act as trustees (including acting as an Executor of an estate or Appointor of a Trust) for clients A Partner in such a role for a client, who is required to comply with the financial interest policies and prohibitions outlined above, will likely not be able to meet his or her fiduciary duty to act in the best interests of the trust. Personal appointments (e.g. as Executor of your parent s estate) may be permitted subject to an analysis of the financial interests held in the trust and a conclusion that the holding of such interests by the Partner as executor would not contravene our financial interest policies. Director / officer roles 7. Partners are prohibited from holding office or accepting appointment as a Director or Officer of any entity in Australia or elsewhere. There are limited exceptions as follows: Partners are permitted to hold office or accept appointment as a Director or Officer of a proprietary company whose sole function is for the relevant Partner s personal tax and estate planning purposes At the request of the firm, Partners are permitted to hold office or accept appointment as a Director or Officer of any entity in which the Australian Firm has a material interest Partners may be permitted to hold office or accept appointment as a Director or Officer of: a proprietary company in which the Partner or an Immediate Family member holds a significant interest, or an entity that is a community, charitable, cultural or other not-for-profit organization subject to all of the following conditions being met: the appointment is expressly approved in writing by the Independence Partner, and firm does not and will not perform any "fee for service" work for that entity, and the position is covered by D&O insurance 7

8 Personal independence professional staff Introduction This document is intended only as a brief summary of the main personal independence requirements applying to Professional Staff employed by Deloitte Australia. The independence policies and guidance can be found in the Australian Independence Policy. Financial interests Professional Staff who participate on any engagement for a Restricted Entity and/or their Immediate Family must not have a Direct Financial Interest or material Indirect Financial Interest that Restricted Entity. Professional Staff includes employees who participate in providing professional services (i.e. Audit, Enterprise Risk Services, Financial Advisory Services, Consulting, Tax or any other services ordinarily performed by Deloitte) to Deloitte clients. A Restricted Entity is any audit client of Deloitte globally and any entity that is affiliated to a Deloitte audit client globally, even if it is not an audit client itself (eg the non-client responsible entity of an Australian registered scheme audited by Deloitte, or the non-client subsidiary of a Deloitte audit client). Immediate Family includes your spouse, spousal equivalent and dependents. You are not required to identify the financial interests of your Close Family (parent, non-dependent child, or sibling) but if you do happen to know, then you are required to consider any potential threats to independence. Financial Interests include shares, debt securities, managed funds and superannuation funds and rights and obligations to acquire such interests and derivatives directly related to such interest, eg share options. A Direct Financial Interest is a financial interest owned directly by and/or under the control of an individual or entity, and includes: a financial interest beneficially owned through a collective investment vehicle, estate, trust or other intermediary over which the individual or entity has control (e.g. underlying investments in a self-managed superannuation fund or investments held by your family trust) investments made through discretionary fund managers where the fund manager has authority to make investment decisions without reference to the owner (e.g. discretionary fund manager arrangements, managed accounts, blind investment accounts, and blind trusts) investments held under control of a Power of Attorney or as trustee or executor. An Indirect Financial Interest is a financial Interest beneficially owned through a collective investment vehicle, estate, trust or other intermediary over which the individual or entity has no control (e.g. the underlying investments in a diversified mutual fund or the investments held in a trust of which you are a beneficiary but not a trustee). Internal Corporate Service (ICS) Managers in quality control or risk management functions, and their Immediate Family Members, must not hold any Direct Financial Interest or material Indirect Financial Interest in an Australian Audit Client. Manager generally includes employees with the title of director, principal, senior manager or manager. An Australian Audit Client means any Restricted Entity for which Deloitte Australia performs an audit engagement in accordance with the Australian Corporations Act

9 Professional Staff who are members of the Audit Engagement Team for an Australian Audit Client and/or their Immediate Family Members must not hold a Material Direct or Indirect Financial Interest in an entity that has a controlling interest in either: The Australian Audit Client; or The responsible entity for a registered scheme Australian Audit Client. If the audit client is material to the parent, then no Direct Financial Interest or material Indirect Financial Interest in the parent is permitted. Audit Engagement Team for an Australian Audit Client includes all Professional Staff of the Australian Member Firm who participate in the Audit Engagement for a company or registered scheme in accordance with the Australian Corporations Act 2001 including: Any Manager who, in the course of participating in the Audit Engagement, exercises professional judgment in relation to the application of or compliance with Accounting standards, Auditing standards or the provisions of the Australian Corporations Act 2001 dealing with financial reporting and the conduct of the Audit Engagement; Any other person who is in a position to directly influence the outcome of the audit because of the role they play in the design, planning, management, supervision or oversight of the audit; or Any person who provides, or takes part in providing, quality control for the Audit Engagement. Other financial relationships (insurance, loans, accounts) Professional Staff who are members of the Audit Team are generally allowed to have insurance products, loans and accounts (such as brokerage accounts and bank accounts) with a Restricted Entity if the product, loan or account is provided in the ordinary course of their business and are obtained under normal lending procedures, terms and conditions. Note however that if any of these products have an investment element (eg insurance policy that is unit linked or a bank account that sweeps money overnight into investments) then you still need to consider the impact of those investments under the financial interest rules. There are stricter requirements in respect of all other financial relationships with SEC Restricted Entities (which are audit clients and their affiliates for which we are required to be independent under the US Securities & Exchange Commission s independence rules). If you do any work for any SEC Restricted Entity, you cannot: have a bank account with that SEC Restricted Entity take out a new loan with that SEC Restricted Entity and can only keep certain secured loans (e.g. mortgage on residence and car loan secured by car). have a brokerage account with that SEC Restricted Entity take out a new, or change an existing, insurance policy with that SEC Restricted Entity. 9

10 Monitoring Client-facing Managers (including ICS Managers in quality control and risk management functions) must maintain an up-to-date record of all their and their Immediate Family s Direct and material Indirect Financial Interests in an online tracking system. Financial interests must be recorded in the tracking system within 10 working days after an acquisition (e.g., for purchases of securities that need to be recorded, within 10 business days of the trade date) and should be removed no more than 30 days after the effective date of the disposal. The online tracking system must also include details of brokerage accounts. Insurance policies, bank accounts and loans are not required to be tracked. However if the insurance policy has any investment element, then the relevant investments must be recorded. Director / officer roles Deloitte employees are prohibited from holding office or accepting appointment as a Director or Officer of any entity in Australia or elsewhere. There are limited exceptions as follows: Employees are permitted to hold office or accept appointment as a Director or Officer of a proprietary company whose sole function is for the relevant employee s personal tax and estate planning purposes Employees may be permitted to hold office or accept appointment as a Director or Officer of: a proprietary company in which the employee or an Immediate Family member holds a significant interest, or an entity that is a community, charitable, cultural or other not-for-profit organization subject to all of the following conditions being met: the appointment is expressly approved in writing by the Independence Partner, and firm does not and will not perform any "fee for service" work for that entity, and the position is covered by D&O insurance 10