Sustaining objectivity protects the public interest
As auditors of public companies, Deloitte member firms comply with well-established policies and implement appropriate procedures to help safeguard their objectivity and the independence of the organization and their people. These policies and procedures help ensure that the member firms are acting in the public interest and the interest of member firm clients, as well as protecting the reputation of the Deloitte organization.
The independence specialists of DTTL assist member firms in creating, implementing, and monitoring quality controls over independence. DTTL and its member firms are continually making improvements to these programs.
During FY2012, the DTTL independence team released an internal training program on business relationships for member firm partners, principals, directors, and managers. Member firms are generally expected to customize the training program to include the policies and processes the member firm has implemented regarding business relationships. All member firm PPDs and managers are required to complete the program by the end of FY2013.
By providing assurance on the reliability of companies' financial statements, the independent audit serves a crucial function in maintaining investor confidence and the stability of the capital markets. As auditors of public companies, Deloitte member firms have a duty to protect the public interest.
To fulfill this duty, member firms must maintain independence from their audit clients. Standards for independence are shaped by legislation, regulations, professional guidance, and public expectations. Maintaining independence, therefore, is both a matter of compliance with rules and regulations and a matter of appearance.
The DTTL Board of Directors has adopted robust independence policies and processes to help DTTL and its member firms, and their people, safeguard their objectivity. DTTL requires all of its member firms to follow DTTL's independence policies and procedures, which address potential conflicts of interest, within or among member firms, arising from the proposed acceptance of client engagements or proposed business or financial relationships with third parties.
DTTL's independence policies and procedures are designed to allow member firms to comply with all applicable independence standards. These policies and procedures are based for the most part on the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants. When the national professional requirements that apply to a firm are more restrictive than the requirements in the DTTL policies, member firms must follow those requirements as well.
Deloitte member firms frequently serve the same clients in multiple jurisdictions. Each member firm considering whether to accept a new audit client must consider the independence of other member firms. For existing audit clients, a member firm must evaluate the independence implications of other member firms' relationships with that client, including the provision of non-audit services.
Each member firm has a partner assigned with responsibility for the independence quality controls in the member firm, including monitoring compliance with those controls. On an annual basis, all member firms report to DTTL that they have conducted procedures for determining that the firm and its professionals are in compliance with DTTL's independence policies. These procedures require all member firm personnel to confirm that they have complied with DTTL's independence policies during the year.
DTTL's independence specialists provide member firms with information and guidance on independence issues and management approaches, including frameworks and sample materials for inspection and testing programs. The DTTL independence specialists assess member firms' independence controls and compliance systems that assist member firm personnel in complying with independence requirements. These systems:
- List up-to-date information on international restricted entities, including audit clients
- Help confirm that services to be provided by member firms have been properly reviewed and approved by an audit committee or other appropriate governance body
- Enable individuals to review personal financial interests that may create threats to independence
- Affirm that member firm partners, professionals, and administrative staff are compliant with independence policies