Being an immediate family member of a Deloitte professional

For Deloitte, Independence means maintaining integrity and objectivity with regards to the entities that we audit. This is required for the firm, as well as all individuals who work at Deloitte – irrespective of whether your family member works in Audit or another part of our business.

Independence is enforced by regulators through audit legislation, regulations, and professional standards.

 By complying with the independence requirements, we satisfy the expectations of our regulators whilst also maintaining the trust of our clients and the public which helps to protect the reputation of the firm. Effectively, this is Deloitte’s license to do business and getting it wrong can result in fines, loss of reputation and potentially disciplinary action being taken against individuals working at Deloitte involved in causing breaches. We therefore expect all Deloitte professionals to take accountability for complying with the independence rules at all times.

 Our regulators view Immediate Family Members (IFMs) of those who work at Deloitte as equivalent to the Deloitte professional in many situations. Audit firms are therefore required to be aware of, consider and monitor the financial relationships and interests of immediate family members, irrespective of whether they have joint or separate financial affairs. 

This means that although you may not work for Deloitte yourself, the financial and/or employment relationships that you hold can impact Deloitte’s ability to remain independent and to comply with the regulatory requirements.

For Independence purposes, an Immediate Family Member (IFM) is defined as:

• a spouse (husband, wife, civil partner or similar);
• a spousal equivalent (e.g. girlfriend, boyfriend) who lives with you 100% of the time, even if across more than one address; or
• a family member who is financially dependent on you for 50% or more of their cost of living, irrespective of whether or not they live with you.

Audit clients, their affiliates and any other clients for which the firm has to maintain its independence are known as “restricted entities”. At all times, Deloitte needs to ensure that its people, as well as their IFMs do not have financial and/or employment relationshipswith such entities.

The personal independence rules vary depending on the grade of your family member working at Deloitte. For instance,

• If they are a partner (or equivalent), you cannot invest in shares, bonds or other securities issued by entities audited by Deloitte globally.
• For staff not subject to partner rules, you cannot invest in an audit client that your family member provides services to.

If you, as an IFM, want to invest in a particular entity, you should first determine whether it is restricted for the Deloitte individual, based on the rules and the scope of their role. We refer to this process as pre-clearance.

 If it is restricted and impermissible for that individual, you should not acquire the financial interest or enter into a financial relationship with that entity.

 Similarly, if an individual has an existing financial investment or relationship and that company becomes restricted for them, you may need to dispose of the investment or take other actions to resolve any outstanding independence issues.

 Financial interests include (but are not limited to):

•  Stocks and shares
• Mutual funds, such as equity funds and bond funds
• Funds held in personal pensions and in employment pension schemes (both from current and former employers)
• Debt securities like bonds and certificates
• Share options as part of employee share schemes 
• Life Assurance / Endowment Policies
• Insurance Products with an Investment component
• Assets under your control or influence, e.g. via a Power of Attorney, executorship, or a family-owned investment company.

 Such financial interests held by either the Deloitte professional or their IFMs must be recorded on Deloitte’s Global Independence Monitoring System (GIMS): 

We know this seems like a big ask, and that you may be concerned about privacy. Please be assured we only require you to record the minimum information needed to comply with regulations. We do not record the
value of investments – just the details of the financial instrument held.

 So as to comply, we need you to:

1. Identify which financial interests (accounts and underlying investments) you have currently or are proposing to take out.
2. For any existing investments, the Deloitte professional will need to record these on GIMS in a timely manner.
3. For any new investments, you’ll need to pre-clear the investment prior to acquisition – to ensure it is permitted and not restricted – and if so, record these on GIMS within 10 days of acquisition. 

Other financial relationships are also subject to independence rules, but are not
required to be reported in GIMS. Generally, such relationships must be entered
into on normal commercial terms, but in some cases, are prohibited for IFM’s
and Deloitte professionals providing services to the entity. These relationships
include:

• Securities accounts (including Brokerage accounts)
• Bank accounts / deposit accounts
• Credit relationships, including credit cards, loans, mortgages, store cards
• Guarantees of another person’s credit relationships
• Insurance relationships
• Investments in private companies such as hedge funds, private equity funds and other limited partnerships

Other financial relationships are also subject to independence rules, but are not required to be reported in GIMS. Generally, such relationships must be entered into on normal commercial terms, but in some cases, are prohibited for IFM’s and Deloitte professionals providing services to the entity. These relationships include:

• Securities accounts (including Brokerage accounts)
• Bank accounts / deposit accounts
• Credit relationships, including credit cards, loans, mortgages, store cards
• Guarantees of another person’s credit relationships
• Insurance relationships
• Investments in private companies such as hedge funds, private equity funds and other limited partnerships

An area of independence which impacts many Deloitte professionals is the employment relationships of their spouses, their dependents and their close relatives. 

In addition to IFMs, we need to consider close relatives - including parents, stepparents and siblings, when considering employment relationships. 

These rules do not apply to your own close relatives, only those of the Deloitte professional. 

Does it matter where you work?

It could matter, it all depends on the role of the Deloitte professional and the role you (as their spouse or spousal equivalent) have with your own employer.

 If you are employed by a restricted entity, your spouse or spousal equivalent who works in Deloitte must disclose this as early as possible to the Personal Independence team. We can then analyse the facts and circumstances to see if there could be a conflict under any of the regulatory rules that apply to that specific client and provide your spouse with the advice and guidance that they need.

 How to know if you work at a restricted entity?

 The quickest way is for your spouse or spousal equivalent to search for your employer entity on Deloitte’s DESC system.

 Alternatively you can contact the Deloitte Independence team yourself at iegimsservicecentre@deloitte.ie and they can check for you. 

If you work at a restricted entity, what information will you need to disclose?

Different aspects of your employment and circumstances can impact independence, so Deloitte will need to consider a range of factors – including those below – to advise on the independence requirements:

• What type of position you have.
• Whether the Deloitte professional will provide services to the restricted entity or its affiliates or is in the Chain of Command of the Firm, such as being a member of the Executive Committee.
• Whether or not you have an employee pension plan with or investments in, the restricted entity (such as company shares).

Permissibility must be determined before acquiring a new investment, entering into a new financial relationship ormaking changes to an existing financial relationship.

 We have a dedicated team to help you navigate through the independence requirements. If you are in any doubt about how they apply to your circumstances, please discuss it with your Deloitte family member and they can consult with the Personal Independence team.

 You are also welcome to email the GIMS Service Centre directly if you have questions around permissibility of an investment or to get assistance with recording a new investment in your Deloitte family member’s GIMS account.

 For further details, please refer to this booklet or reach out to Deloitte’s Independence team at iegimsservicecentre@deloitte.ie