INTEGRITY MATTERS

Winter 2015

Ethics and Compliance Supports You

Welcome to the inaugural edition of the Integrity Matters newsletter.
As the titles double meaning suggests, this communication is designed to
provide practical information about ethics and compliance topics (matters)
and demonstrate the many ways our core value of above all, we act with
integrity is important.
KPMG has made it a priority to ensure that we have an ethical culture where everyone
embraces personal responsibility for the firms ethical environment. The firms culture
of professionalism and integrity is supported by our ethics and compliance (E&C)
program, which includes a robust governance framework; compliance processes;
resources and tools; and training and communication. Thisnewsletter is one of the
ways we communicate with you about the importance of ethics andintegrity.

Leadership

Sven Erik Holmes

Vice Chairman
Legal, Risk and Regulatory
KPMGs goal is to have an ethics and compliance
program that is a model for our profession. To achieve
this goal, we must ensure that every individual feels
personally responsible for fulfilling the firms Promise of
Professionalism by doing the right thing in the right way
for our people, for our clients, and for the capital markets
we serve.

Videos On the Lighter Side

KPMGs latest Integrity Survey, conducted by our Advisory practice, shows that a
companys focus on ethics and integrity can have an incredibly positive impact on a
businesss culture. For example, businesses that had E&C programs had significantly
more people report that they felt motivated to do the right thing and were comfortable
raising concerns.
Integrity Survey Findings Perceptions & Behaviors

Whose Line Is It? Hotline

Rating Agree or Strongly Agree

100

People Feel Motivated & Empowered

to Do the Right Thing

80

82%

100

80

79%

60

60

40

40

39%
20

20

Without Program

With Program

People Feel Comfortable Raising

& Addressing Ethics Concerns

These brief, humorous teaching videos are

produced by SecondCity Communications.

Ethics and Compliance Team

We are available to assist you.

33%

Without Program

With Program

TheIntegrity Survey results are consistent with the results of several other studies.
Research by CEB showed companies with high levels of integrity within their
corporate cultures outperformed those with the lowest levels by more than 16
percentage points when it came to shareholder returns.
CEB also found that managers exhibiting corporate values can improve employees
performance by 12 percent.
A 2004 Georgia State University study, commissioned by Institutional Shareholder
Services, Inc., found that stronger corporate governance was directly correlated to
positive performance in four areas: shareholder returns, profitability, risk (measured
by stock price volatility), and dividend payouts andyields.
For those reasons and many others, we are happy to reaffirm KPMGs commitment to
ethics and integrity through this newsletter and more communications like it.

Thomas S. DiLeonardo
Chief Compliance Officer
Washington, DC
Victoria V. Sweeney
Principal in Charge E&C
Montvale, NJ
Jose R. Rodriguez
Ombudsman
Greensboro, NC

Feedback or Suggestions
Please let us know your thoughts
on this newsletter and if you are
interested in seeing stories about
other ethics or compliance topics.
Send a note to the E&C group at
us-eandc@kpmg.com.

1 / Integrity Matters
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2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. NDPPS 316604

Relationships Can Cause Risks

Given how much time we spend with people at work, its
not surprising that romantic relationships develop. In fact,
CareerBuilders latest annual survey on office romance in
2014, conducted by HarrisPoll, found 38 percent (nearly two
in five) of US workers have dated someone who worked for
the same company.
Although they may be relatively common, certain romantic
relationships in the workplace come with significant risk.
Specifically, relationships with co-workers can cause:
Impaired judgment and objectivity if a dating couple makes
decisions about work-related schedules or tasks, travel, etc. in a
manner that is not in the best interest of the firm

Sometimes we need to adjust engagement assignments or

reporting lines to ensure there are no conflicts of interest or
perceptions of unfairness or favoritism, said Tom DiLeonardo,
Chief Compliance Officer.
The response is stricter regarding workplace romances that
involve people in high-level positions (who have a greater
level of influence and responsibility), especially when the
difference in seniority or job levels of the individuals involved
is significant. Contact your local HR representative or the
E&CGroup if you have questions orconcerns.

Favoritism if there is improper influence on assignments,

performance reviews or promotions, it could be further
perceived as discrimination by those who feel passed over
Confidentiality if the couple improperly shares sensitive
business or client information with each other
Disruption of the workplace if the couple behaves
unprofessionally at work or if a relationship ends, causing a
negative work environment
Perceived sexual harassment if one person is making
romantic advances towards another who is not interested
Dating the client Romantic relationships with individuals
at an audit clientalso can create independence concerns,
especiallybut not onlywhen the relationship is between
someone in authority on the engagement team and
someone in a high-level financial management position with
the client.
Reporting-Chain Relationships
Many of the issues noted above are exacerbated when the
relationship is between individuals in the same reporting
chain. The Society for Human Resource Management
(SHRM) 2013 Workplace Romance Survey found that,
amongorganizations that have workplace romancepolicies,
almost all indicated that romance between a supervisor
and a direct report is not permitted. Forty-fivepercent of
such companies prohibited romantic relationships between
employees of a significant rank difference, and thirty-five
percent prohibited relationships between employees who
report to the same supervisor.
According to KPMG policy, familial*, personal or romantic
relationships between a person in a supervisory role and a
person subject to his or her supervision, management, or
indirect authority must be disclosed to Human Resources.

Improper Relationships
Statistics for FY14
Total Reports Investigated: 18
Total Reports Substantiated: 7
Sanctions Imposed:
3 partners and 1 senior manager were separated
from the firm
1 senior manager received a written reprimand,
a rating reduction and nobonus
1 senior manager received a written reprimand
and loss of a managing director promotion
3 managers and 2 senior associates received
written reprimands
1 associate was counseled

* For the purposes of this policy, familial relationships include those with a: spouse, domestic partner, parent, son, daughter, brother, sister, niece, nephew,
firstcousin, uncle or aunt, either by blood or through marriage or domestic partnership.

2 / Integrity Matters
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2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. NDPPS 316604

A Teaching Series of Actual Cases atKPMG

From Our Files

FOF #7

FOF #15

Hiding a Romantic Relationship

Traveling Together Was the Tip-Off

An anonymous report was made through the E&C Hotline,

that two professionalsin a direct reporting linewere
involved in an inappropriate relationship. Specifically, the
reporter alleged that the junior professional was receiving
preferential treatment because of the relationship.

A report was made to Firmwide Security about the concurrent

travel of a partner and an employee, questioning whether the
two were involved in an inappropriate romantic relationship.

Firmwide Security conducted an investigation, which determined

that the individuals were involved in a romantic relationship that
had not been disclosed as required by firm policy. In addition,
the individuals involved were not truthful in responding to the
questions asked of them during the course of the investigation
first denying the relationship and later admitting it, but claiming
that it had ended, when in fact it had not.
The findings were shared with the individuals functional
leadership, who determined that the senior professional
should be separated from the firm. The junior professional
received a written reprimand and the performance review
rating was negativelyimpacted.
Romantic relationships between superiors and subordinates
create risk for the firm and the individuals involved. If not
properly disclosed and managed, they can damage the
individuals credibility and the morale of their co-workers.
Absolute candor is expected of individuals involved in such
relationships: disclosure to HR is required, and if the matter is
investigated, cooperative and truthful answers are mandatory.
As this case illustrates, dishonesty compounds the problem
and in all cases will make any sanction more severe.

The E&C Group conducted an investigation, which determined

that the individuals were in a romantic relationship and both
had traveled together although not required by their job duties.
The findings were shared with the individuals functional
leadership, who determined that both individuals should be
separated from the firm.
Individuals who engage in romantic relationships in
the workplace can have their objectivity and judgment
compromised, resulting in ethical missteps beyond those
related to the relationship itself. If you are starting a relationship
with a colleague, disclose it to HR, and ensure that you take the
steps necessary to protect your judgment and your career.
If you, or someone you know at work, is dealing with
unwanted advances, notify Human Resources or report
it to the E&C Hotline.

Questions or Concerns?

Retaliation is not Tolerated

To ask questions contact the

Ethics and Compliance Group at:

KPMG prohibits retaliation against anyone who, in good faith,

reports possible inappropriate behavior or participates in an
investigation. The firm will take appropriate action against any
individual engaged in retaliatory conduct. Behind the scenes,
KPMG has an active, cross-functional retaliation monitoring
program to watch for signs of overt or subtle reprisals.

us-eandc@kpmg.com
1-800-KPMG-HELP
(option 3, and then option 3)

To raise a concern or report a violation (law/policy):

There are a number of methods available to confidentially raise a concern or report a violation,
including: your PML; your engagement partner; your professional practice leader; Human Resources;
Risk Management; the Office of General Counsel; the Chief Compliance Officer; the Ethics &
Compliance Group; or the Ombudsman.
However, when you are not comfortable, for whatever reason, raising a concern or reporting a violation
through any of these methods, you are always free to contact the E&C Hotline (especially when you
wish to remain anonymous):
1-877-576-4033
www.kpmgethics.com

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2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. NDPPS 316604