Andrea is a Partner at KPMG. Her dependent children are interested in technology and sustainability. They wish to invest in companies that have environmentally responsible practices using a mobile phone app. What does she need to do?
a- Advise her children that they should only invest amounts that are not material to their total savings.
b- Advise her children that they can only invest in technology and sustainability companies that are listed and in the “Top 100”.
c- Advise her children that before selecting any shares through the app, they must check with Andrea, who will check if the investment is restricted and record it in KICS.
d- If KPMG audits the company who developed the mobile phone app, Andrea needs to consult with the EIP.
The correct answer and explanation is :
The correct answer is:
c- Advise her children that before selecting any shares through the app, they must check with Andrea, who will check if the investment is restricted and record it in KICS.
Explanation:
Andrea, as a Partner at KPMG, is subject to strict independence and compliance rules, particularly regarding investments made by herself and her immediate family. KPMG’s policies require partners and their dependents to disclose and seek approval before making any investments to ensure compliance with auditor independence regulations.
Since Andrea’s children are dependent on her, their investments must also adhere to KPMG’s independence policies. If they wish to invest in technology and sustainability companies, Andrea must first verify whether these companies are considered restricted entities. KPMG maintains a list of restricted entities, including audit clients and certain affiliated entities, which partners and their dependents cannot invest in to avoid conflicts of interest.
To comply with these rules, Andrea must use KPMG’s KICS (KPMG Independence Compliance System) to check whether the investment is permitted. If the investment is not restricted, she can record it in KICS to maintain transparency and compliance. If the company is restricted, her children cannot proceed with the investment.
The other answer choices are incorrect because:
- (a) While investing small amounts is generally a good practice, KPMG’s independence policies apply regardless of the amount.
- (b) There is no rule stating that investments must be limited to “Top 100” companies.
- (d) The key issue is whether the investment itself is restricted, not whether KPMG audits the app’s developer.
Following this process ensures compliance with KPMG’s strict independence policies, protecting Andrea’s professional standing and maintaining ethical investment practices.