DTTL Tax Practice Manual

Welcome to the DTTL Tax Practice Manual

BRAZIL Level 3 Tax Practice Manual

The DTTL Tax Practice Manual is the function specific policy and guidance set forth for Member Firm tax practices. Please review the section 5000 Introduction and Overview to understand the context and applicability of these policies.

In Brazil we have incorporated the Level 3 policies into the Level 2 and this should be read as part of the Brazil Tax Practice Manual. The Brazilian Tax Firm specific policies and guidelines are marked in red and italic letters.

Insofar Deloitte Legal in Brazil does not have a specific Level 3 Practice Manual, which is under preparation. Therefore Deloitte Legal in Brazil will preliminary and temporarily adopts the Tax Practice Manual and use the same guidelines and policies; except only if a specific policy/ guideline conflicts with Brazilian law dispositions applicable to legal practice.

The Brazilian Tax Practice Manual (Level 3) comprises the following Sections

5000 - Introduction and Overview 5001 - Marketing and Business Development Activities 5002 - Client Acceptance & Retention 5003 - Engagement Acceptance and Continuance 5004 - Engagement Letters 5005 - Engagement Performance and Delivery 5006 - Referral of Tax Services and Performance of Tax Services Across Borders5007 - [Not used] 5008 - Arrangements with Third Parties for Professional Services 5009 - Tax Issue Consultation/Escalation 5010 - Document Retention and Access 5011 - Confidentiality of Client and Member Firm Information 5012 - Termination of Engagement or Client Relationship 5013 - Learning and Development 5014 - Reputation, Quality, and Risk Management 5015 - Tax Practice Review Program 5016 - Tax Portfolio Risk Review Glossary

There are also the following Attachments (“Anexo”), which comprises forms referred to within the TPM, as follows

Anexo 1 – [Não utilizado/ Not used]Anexo 2 – [Não utilizado/ Not used] Anexo 3 – Formulário para aprovação de honorários contingentesAnexo 4 – Risk classification table - types of servicesAnexo 5 – Registro de consultas verbaisAnexo 6 – Consultoria Tributária e societária revisão de concordânciaAnexo 7 – Consultoria Tributaria e societária revisão de concordância - correspondência eletrônica/e-mail

Last revision: October 16, 2014

5000. Introduction and OverviewIntroduction

This Section of the Manual provides policies and guidance for Member Firm Partners and Professional Staff who provide Tax services. The following 5000 series of policies are Tax Level 2 policies; in Brazil we have incorporated the Level 3 policies into the Level 2 and this should be read as the Brazil Tax Practice Manual (marked in red and italic letters). Level 1 policies apply to an entire Member Firm. For a detailed explanation of Deloitte Touche Thomatsu Limited ("DTTL") and the structure of the policy manuals please refer to Section 1000, DTTL Policies Manual: Introduction, Overview and Policy Approval.

Its objective is complementing Level 2 policies with the ones and guidance established in Brazil for Quality and Risk Control over the services provided to our clients. Such guidelines aims at complying with independence, conflicts of interest, background checks and risk management rules related to our clients and the respective engagements, among other aspects established in applicable manuals and regulations. It would also help make practice management and practice reviews more efficient and compliant with DTTL Desired State standards.

Policies and Guidance1. In planning and performing Tax Engagements, Member Firm Tax Practices should comply

with the policies set forth in this Manual. The policies contained in this Manual are not intended to, nor can they override, the laws in a Member Firm's jurisdiction. Accordingly, all Member Firm Tax Practices should conduct their practice in accordance with applicable laws of the Member Firm's jurisdiction, if such laws provide higher or different standards than the DTTL policies. If a conflict exists between the policies set forth in this Manual and the applicable laws of the Member Firm's jurisdiction, the Member Firm Tax Risk Leader should consult the Member Firm Reputation and Risk Leader, the DTTL Regional Reputation and Risk Director and the DTTL Global Risk Group. 

2. Compliance with the Policies included in this Manual is compulsory for Member Firm Tax Practices. If a Member Firm Tax Practice is unable to comply with a Level 1 or Level 2 policy because of conflicting professional standards or generally prevailing practices in a Member Firm's jurisdiction or because it would impose unreasonable or inappropriate burdens on the Member Firm Tax Practice when contrasted with the standards of professional conduct generally prevailing in the jurisdiction in which the Member Firm is operating, then, as set forth in Section 12.2(c) of the Articles of DTTL, the Member Firm Tax Practice should request a waiver from compliance with the policy or obtain approval of an alternative policy from the DTTL Board of Directors (or its designee).  

3. The Tax function is in a changing environment. The policies that follow are not exhaustive and are subject to revision and additions. Additionally, this Manual may be supplemented periodically by policies, guidance and procedures issued by DTTL Global Tax Executive. 

4. Taxes include but are not limited to levies on income or property (including income and turnover taxes, capital taxes, customs duty, environmental, licenses, excise tax and VAT, and taxes on wealth or inheritance) by any government or its authorized agent upon persons or organizations under its jurisdiction. For the purpose of this Manual, taxes are levied for

the support of the government and do not include fines or penalties imposed for violation of a law unless the fine or penalty is related to a tax. 

5. Tax services include any or all of the following areas, as well as any other services offered by the tax function of a particular Member Firm:

a. Business Tax Consulting, Compliance & Reporting Services

b. Tax Management Consulting

c. Private Company Services

d. R & D and Government Incentives

e. Global Employer Services

f. Employed Wealth

g. Customs and Global Trade

h. Indirect Tax (VAT or GST)

i. International Tax

j. Transfer Pricing

k. Mergers and Acquisitions

M&A Transaction Services - There is a lack of uniformity among the Member Firms regarding the functional classification of certain Professional Services (e.g., due diligence services may be within the Financial Advisory function in one Member Firm and in the Audit and/or Tax functions in another Member Firm). The Member Firm Functional Leaders should determine which services are covered by their function and include such services in their Level 3 policies. Member Firm professionals performing such services should follow those Level 3 policies, regardless of the function in which the professional resides. (See also the FA Policies manual, M&A Transaction Services Manual.)

In Brazil due diligence services are primarily performed within the FA - M&A Transaction Services. However Tax due diligence services can be performed by Tax Professionals, depending on some specific circumstances (provided that the FA M&A Transaction Services Leader is properly communicated). In these specific circumstances then the Tax Practice manual standards and guidance will be applicable.

The Tax Function in Brazil is headed by Cristina Arantes A. Berry (caberry@deloitte.com). The following are the Service Lines leaders through which Tax Services are rendered in Brazil:

Corporate Income Tax – Cristina Arantes A. Berry (caberry@deloitte.com)

International Tax – Marcelo Natale (mnatale@deloitte.com)

Transfer Pricing – Carlos Ayub (cayub@deloitte.com)

VAT – Douglas Lopes (dolopes@deloite.com)

GES – Carlos Nogueira Nicácio (cnicacio@deloitte.com)

Labor – Fernando Ázar (fazar@deloitte.com)

6. Additionally, any tax service that is complimentary or ancillary to one of the above services or that related to tax is covered by this Manual. Such services may include the provision of the following:

a. Consultation—Advising and assisting Clients in all matters to achieve the most appropriate tax position under the applicable tax laws

b. Compliance—Preparation and/or review of tax returns, reports, notices, and related elections and amendments

c. Representation—Assisting Clients with the examination of their tax returns by the tax authorities during the course of tax audits, as well as representing Clients before a tax court, if permitted by local law.

Tax Practice does not represent Clients before Tax Courts. However, these services can be provided by Deloitte Legal in Brazil; and Tax Practice can provide technical tax support in such disputes (review of computation, collection and preparation of relevant facts and data, rendering of technical opinions), provided that such services satisfy Independence and Conflict of Interest requirements (please see 5002 - Client Acceptance & Retention)

Tax Provisions—Where allowed, the preparation and/or review of tax provisions and other tax accounts in audited financial statements.

 

7. Legal services performed by Member Firm Partners and Professional Staff are covered by the DTTL Legal Practice Manual. The Legal Practice of a Member Firm is a practice or part thereof, of a Member Firm, that provides legal services to clients, and any associated law firm that does not qualify as an independent law firm under the SEC rules as interpreted by DTTL.

Tax Practice does not provide legal services to Clients in any Courts. However some specific legal services can be provided by Deloitte Legal in Brazil, which is constituted as an independent legal entity (“Carvalho e Natale Advogados Associados”).

Deloitte Legal has to comply with the same Client Acceptance (see 5002 - Client Acceptance & Retention) and Engagement Acceptance (5003 - Engagement Acceptance and Continuance), mainly when it comes to Independence, Conflict of Interest, and management of Risk.

8. Definitions applicable to this Section are included in the general glossary of the DTTL Policies Manual ("DPM"). 

9. The policies included in this Manual are general in nature and apply to each of the Member Firm's Tax Practices and all professionals that provide tax services. Each Member Firm Tax Practice should comply, at a minimum, with all policies in this Manual in preparing its own Member Firm Tax Practice Manual.  

10. All tax services should be performed by Partners and Professional Staff within the Member Firm's Tax Practice. However, if any services are provided by professionals outside of the Member Firm's Tax Practice then they should be governed by the policies set forth in this Manual.  

11. Partners and Professional Staff should be aware of, and comply, not only with their function's policies and guidance, but also with the functional manual that governs the Professional Service to be performed. Where it appears that two DTTL functional manuals overlap with respect to a matter or contain inconsistencies related to the provision of a Professional Service, the Member Firm Risk and Reputation Leader, in consultation with the appropriate Member Firm Functional Risk Leaders, the appropriate DTTL Managing Directors-Global Functional Risk, and the DTTL Global Managing Director—Regulatory and Risk (or his or her designee), should determine which DTTL functional policies and guidance should be followed by Partners and Professional Staff within the Member Firm when performing the Professional Service in question. The conclusion as to which DTTL functional manual is to be followed should be documented by the Member Firm in its policies and procedures.  

12. Member Firms should have an up-to-date copy of their Member Firm Tax Practice Manual available in the English language. However, Member Firms are not required to use English in their Tax Practice Manual.

Updating this Manual is primarily responsibility of the Tax Functional Risk Leadership. The partner currently in charge is Mario Nascimento Souza Neto (marionascimento@deloitte.com).

 

13. The following Level 1 policies contain relevant information which should also be followed by Professionals performing Tax services and are hereby incorporated as part of this tax practice manual. Please click on the respective links below for further information:

DPM 1000 - Introduction, Overview and Policy Approval   DPM 1420 - Independence   DPM 1430 - Potential Conflicts of Interest DPM 1511 - Exclusivity   DPM 1515 - Facilitating Cross-Border Engagements   DPM 1530 - Custodianship of Client Funds   DPM 1540 - Know Your Client Inquiries and Research   DPM 1611 - Roles and Responsibilities of a Lead Client Service Partner serving Designated Global

Clients   DPM 1650 - Addressing Differences of Opinion (initially refer to 5009) DPM 1660 - Consultation   DPM 1670 - Protection and Use of the Deloitte Brand   DPM 1800 - Directorships   DPM 1920 - Professional Services: Trustee and Executor Appointments   DPM 2050 - Talent Management and Human Resources   DPM 2060 - Ethics   DPM 2070 - Member Firm Compliance Framework   DPM PM30 - Claims and Events Management   DPM OM05 - Admission of Member Firms  

DPM OM10 - Mergers and Acquisitions  

GLOBAL STRUCTURE & DTTL NETWORK

“Deloitte” is the brand under which professionals in independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk management, tax and related services to select clients.

These firms are members of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). Each DTTL member firm provides services in particular geographic areas and is subject to the laws and professional regulations of the particular country or countries in which it operates. Each DTTL member firm is structured in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in its territory through subsidiaries, affiliates, and other related entities. Not every DTTL member firm provides all services, and certain services may not be available to attest clients under the rules and regulations of public accounting. DTTL and each DTTL member firm are legally separate and independent entities, which cannot obligate each other. DTTL and each DTTL member firm are liable only for their own acts and omissions, and not those of each other. DTTL (also referred to as “Deloitte Global”) does not provide services to clients.

It is through strong, well-conceived governance and leadership structures that DTTL’s member firms maintain high levels of quality and integrity and sustain the trust of their clients, their people, the capital markets, and the public.

As a global network comprising member firms and their affiliates in more than150 countries, the Deloitte network of member firms has governance and management structures at both the global and member-firm levels. DTTL global policies form the basis for member firms to tailor their policies to comply with local rules and regulations. DTTL and the member firms constantly work to identify areas for improvement and new ways to anticipate regulations, enabling the ability to maintain the highest level of confidence among their stakeholders.

It is through strong, well-conceived governance and leadership structures that DTTL’s member firms maintain high levels of quality and integrity and sustain the trust of their clients, their people, the capital markets, and the public.

Member firm structure

As a global network comprising member firms and their affiliates in more than150 countries, the Deloitte network of member firms has governance and management structures at both the global and member-firm levels. DTTL global policies form the basis for member firms to tailor their policies to comply with local rules and regulations. DTTL and the member firms constantly work to identify areas for improvement and new ways to anticipate regulations, enabling the ability to maintain the highest level of confidence among their stakeholders. DTTL does not provide services to clients.

The partners of DTTL’s member firms are generally the sole owners of their practices. DTTL member firms are organized on an individual country or regional basis, and each operates within the legal and regulatory framework of its particular jurisdiction. They are separate and independent firms that are owned and managed locally. These firms have come together to practice under a common brand, methodologies, client service standards, and other professional standards and guidelines.

Flexibility within a strong network

The structure of the Deloitte network allows it to be a leader at all levels—locally, nationally, and globally—because its central governance policies are sensitive to the professional environment and culture of individual member firms. At the same time, individual member firms have access to the cross-functional skills, knowledge, and consultation of the entire network, as well as its market recognition and reputation.

DTTL has adopted standards regarding specific leadership and governance structures. Each DTTL member firm has a managing partner, senior partner, or equivalent. In addition to the responsibility for the executive management of their respective member firm practices, these partners are responsible for local implementation of global policies and strategies and for aligning national policies and strategies with those put forward by DTTL.

Each member firm is required to have a governing body, such as a board of directors or board of partners, to facilitate the sound governance of the individual practice, the implementation of local rules and regulations, and the implementation of DTTL global policies and procedures.

Each member firm also appoints a representative to serve as a liaison to DTTL and to represent the member firm at the DTTL World Meeting. This meeting is held annually to update member firms on strategy and initiatives proposed by DTTL management and to vote on specific matters pertaining to DTTL, such as approval of board members, financial statements, voting entitlements of the member firms, and changes in the governing documents.

The member firm structure fosters compliance with rules of local ownership and management governing the accountancy profession in most countries. It also reflects the fact that the member firms are not subsidiaries or branch offices of a global parent. Rather, they are locally formed entities that have voluntarily joined into a global network to coordinate their approach to client service. This structure also confers significant strengths: a deep understanding of local markets, and a sense of responsibility and initiative among its professionals, who have a direct stake in the integrity and growth of their practices.

Under its governing documents, DTTL exists to further the international alignment, cooperation, and agreement among Member Firms, including ensuring they conform to the highest quality professional standards.

However, DTTL neither manages nor controls Member Firms, nor does DTTL provide services to clients. No Member Firm has any liability for the acts or omissions of any other Member Firm. When referring to DTTL, it is essential not to use terms such as “global firm” or “DTTL firm” but instead utilize terms such as “global organization” and “DTTL Member Firms.”

To fulfill its purpose, DTTL has an organizational structure that focuses on specific roles designated to DTTL. A DTTL Risk Committee oversees the DTTL responsibility to establish and maintain effective risk management for the global organization.

DTTL Risk Management

A number of different DTTL groups are responsible for different aspects of risk management at the DTTL level.

The DTTL Risk Group prepares and/or assists in the preparation of DTTL Level 1 policies (core, cross-functional policies) for inclusion in the DTTL Policies Manual (DPM) for final approval by DTTL senior management and DTTL governance bodies.

This group of core, cross-functional, high-level policies (Level 1 Policies) comprises the DTTL Policies Manual (DPM), which is published on Deloitte Resources. Level 1 policies are directed to the DTTL Member Firms. The name of the Global Managing Partner—Risk and Regulatory and leadership is available on the Global Regulatory and Risk page (https://global.deloitteresources.com/Quality/dpm/Pages/DTTLRiskLeadership.aspx).

Brazilian RRL is Mr. Mauricio Pires Resende (mresende@deloitte.com).

DTTL Ethics and Compliance

This group is responsible for supporting Member Firms in their implementation of and compliance with the DTTL ethical principles. Its activities include consultation on related matters, development of ethics learning programs and other communications, and conduct of forums for networking and knowledge sharing among Member Firm ethics and compliance officers. The name of the DTTL Chief Ethics and Compliance Officer is available on the Global Ethics and

Compliance page (https://global.deloitteresources.com/Quality/glbethics/Pages/contact-info.aspx).

Brazilian Ethics Officer is Mr. Mario Nascimento (marionascimento@deloitte.com).

DTTL Independence Group

This group is responsible for taking the lead on all significant global independence issues in conjunction with DTTL’s global leadership. The group drafts policies for approval by the DTTL Executive, and also publishes tools, forms, and other guidance for use in learning, the annual confirmation process, the inspection and testing process, and the disciplinary process. These initiatives help ensure that the Member Firms meet their responsibilities under DTTL policies, thereby complying with applicable independence standards. Member Firms are responsible for providing timely information to the Global independence group, which maintains the Deloitte Entity Search and Compliance (DESC) system and Global Independence Monitoring System (GIMS). Member Firms are required to confirm annually that they are in compliance with DTTL’s independence policies.

The name of the DTTL Global Managing Partner—Independence is available on the Who’s Who Independence page (https://global.deloitteresources.com/Quality/gindep/Pages/WhosWho_17274.aspx?nid=glb_topnav_quality_indep_whoswho).

Brazilian DOI is Mr. Fernando Elias da Costa (fecosta@deloitte.com).

Last revision: October 16, 2014

5001. Marketing and Business Development Activities

IntroductionThis Section of the Manual provides policies and guidance related to marketing and other promotional activities produced or performed by a Member Firm Tax Practice. It addresses business development, print and internet promotional materials, participation at conferences, and appropriate use of the Deloitte brand. For detailed information on use of the Deloitte brand see Section 1670, Protection and Use of the Deloitte Brand and the Deloitte Brand Space website.

Policies and Guidance

General Policy 

1. Each Member Firm Tax Practice should implement policies and procedures to ensure that marketing and business development activities:

a. Are pursued in alignment with its strategy and scope of practice.

b. Do not lead to violation of applicable and relevant legal, regulatory, professional or ethical rules.

c. Do not establish an unintended duty of care or responsibility to the recipient (Client, Target or prospective Client, etc.).

2. Examples of relevant legal, regulatory, professional or ethical rules are those which govern marketing and solicitation activities, privacy laws, scope-of-service restrictions for audit Clients, and copyright laws. 

Style, Tone and Brand Applicable to All Marketing and Business Development Materials 

3. All marketing and business development materials should comply with the Deloitte brand requirements and include required DTTL legal language-i.e., the Standard Legal Description, Copyright and Disclaimers. Refer to the DTTL Language and Style Guide for the specific language and appropriate usage. Also refer to Section 1670, Protection and Use of the Deloitte Brand and the   Deloitte Brand Space website. 

4. All marketing and business development materials should maintain a professional tone and should not exaggerate anticipated benefits or overstate the experience of the Member Firm Tax Practice or its Partners and Professional Staff. 

5. Superlatives are rarely, if ever, appropriate in marketing and business development materials. The use of superlatives such as "foremost," "best," or "most qualified" or claims made regarding the likelihood of success can cause unnecessary exposure if the Tax professionals actually rendering services do not meet those self-imposed standards. This is particularly evident where materials

originally intended for one purpose are used for another (e.g., proposals documents that become part of the contractual arrangement with the Client). 

6. The Member Firm Tax Risk Leader (or his or her designee) should be consulted if there are concerns regarding tone or content of marketing and business development materials.  It is expected that the Member Firm Tax Risk Leader would involve Clients and Markets appropriately. 

Confidentiality in Marketing and Business Development Materials 

7. The Member Firm Tax Practice should not disclose Client or Member Firm proprietary information in marketing and business development activities. All marketing and business development materials should comply with applicable confidentiality and privacy rules. Also, refer to Section 5011, Confidentiality of Client and Firm Information. 

8. Written approval should be obtained from the Client and documented before performing any of the following: 

a. Referring (either orally or in writing) to the Client name or services performed for the Client in any publication, proposal, or marketing or promotional materials.

b. Must adhere to confidentially rules (Section 5011, Confidentiality of Client and Firm Information) when quoting the Client in an open forum (whether orally or in written form) either internally or externally.  

c. Using the Client's logos, brand name, or other intellectual property that is trademark- or copyright-protected in any form (including presentations within the Member Firm, within the network of Member Firms, or in the public domain). 

d. Each Member Firm Tax Practice may consider including consents in their business terms with Clients to cover the items in paragraph 8a-c.

Proposals 

9. Each Member Firm Tax Practice should establish policies and procedures stating that before written proposals (including electronic proposals) for either prospective Clients or new Tax Engagements for existing Clients are issued, the following actions should be performed: 

a. Proposals are reviewed to ensure they are Deloitte brand-compliant and reflect the required DTTL legal language

b. Proposals are reviewed and approved by the proposed Engagement Tax Partner.  c. Prospective Client or Engagement acceptance procedures are completed, in particular

with reference to identifying Independence, conflicts of interest or scope of service issues. 

d. If the proposal includes contractual obligations or terms or may form part of the contractual arrangement with the Client, it should be subject to the same review and approval processes as for Engagement letters. See Section 5004, Engagement Letters. 

10. The Tax Engagement Partner review should consider factual accuracy, style and tone of the proposal, the ability of the Member Firm Tax Practice to provide the services, and whether the Member Firm Tax Practice's policies have been complied with. Particular care should be taken if the proposal is likely to form part of the contractual arrangement with the Client.

 

11. Member Firm Tax Practices would ordinarily consider setting thresholds for the types or size of proposals requiring review by an independent Partner. For example, certain types of Engagements or Professional Tax Services with greater than normal risk may require additional reviews. Additionally, proposals with a certain level of discount from standard rates or budgeted less than average recovery may also require additional review. 

12. When Member Firm Tax Practices collaborate on a proposal, there should be no time charges, billings, or fees charged between the Member Firm Tax Practices for participation in the proposal, unless specifically agreed upon in advance by such Member Firm Tax Practices.

Publications and Other Promotional Materials 

13. The term "publications and other promotional materials" includes advertisements, brochures, web pages, articles, speeches, conference presentations and handouts, press releases, and similar publicly disseminated materials. 

14. Member Firm Tax Practices should establish policies stating that all such publications and other promotional activities produced or performed by members of its Tax practice or that refer to Tax: 

a. Are reviewed and approved by a Tax Partner, other than the author, recognized as having appropriate experience and competence in the relevant subject matter.

b. Are Deloitte brand-compliant and reflect the required DTTL legal language.

c. Contain adequate protection of the Member Firm Tax Practice's right to use and reuse its intellectual capital.

15. The purpose of the review and approval is to establish the following:

a. Accuracy and technical merit of the contents A.

b. An appropriate style and tone and, in particular, proper reflection of the Member Firm Tax Practice's views or positions without compromising Client or other key relationships (e.g., with regulators or the tax authorities).

c. Compliance with relevant Member Firm Tax Practice policies, which would ordinarily include

consideration of the appropriateness of a publication, or where wider approvals are required.

16. Publications and other promotional materials should be retained in accordance with each Member Firm Tax Practice's record retention policy and Local Laws. 

Distribution of Marketing Materials 

17. Member Firm Tax Practices should have policies establishing that relevant laws and regulations concerning data protection, privacy, unsolicited mailings (by post or electronically), and "cold calling" are observed. 

18. Many jurisdictions have enacted stringent legislation regarding privacy or data protection and the effect thereon of unsolicited mail or e-mail or "cold calling." The mailing and cold calling rules would ordinarily require either "opt-in" or "opt-out" consent. "Opt-in" consent ordinarily requires obtaining express consent prior to sending marketing materials, while "opt-out" consent ordinarily requires that recipients are provided with an easy method to avoid receiving further materials. Mailing lists and similar communication tools will often be categorized as personal data and are subject to data and privacy laws. 

19. Each Member Firm Tax Practice should implement regular training to establish that all its Tax Partners and Professional Staff are aware of the fundamentals of mailing, data protection, and privacy laws as they apply to the disclosure of personal data to any unauthorized persons and the distribution of promotional materials within its jurisdiction. 

20. Member Firm Tax Practices may include data protection and privacy consents in their business terms, to the extent permissible by applicable Local Laws. 

External Events and Sponsorship 

21. Member Firm Tax Practices should follow applicable DTTL or Member Firm guidance regarding sponsorship or participation in external events, including co-branding with another party. If no such guidance exists, Member Firm Tax Practices would ordinarily include consideration of the following:

a. The nature and reputation of the other parties involved.

b. Whether participation will support or enhance one or more of the Member Firm Tax Practice's strategic objectives.

c. The effort-to-reward ratio, bearing in mind the size and makeup of the expected audience.

d. Regulatory or other restrictions, such as restrictions on business relationships with audit clients.

e. Whether individuals representing the Member Firm Tax Practice possess the appropriate skills and qualifications.

f. Potential conflicts of interest.

g. Perceptions of existing Clients or targets.

22. Member Firm Tax Practices should develop policies to govern public appearances by individuals representing the Member Firm Tax Practice, including conference presentations, speeches, comments to the press and public broadcast appearances. Brazilian Tax practice has a Seminars Group, that has the primary responsibility for organizing and managing major events, which are client oriented. Marcelo Natale is the partner in charge and Yara Bellini is the key person on such team.

23. Such policies would ordinarily include consideration of the following:

a. Criteria and approvals required for involvement in public events of this nature.

b. Determination that appropriate Member Firm personnel represent the Member Firm at such public events.

c. Firm representatives receive appropriate training in dealing with media and public speaking, as appropriate.

d. Appropriate review and pre-approval of content.Whenever a tax professional has to participate in a press/ public (broadcast) appearance or interview, then it is mandatory to communicate such participation to Marketing department who will provide qualified media personnel to support the tax professional in dealing with press. Preferably, only Tax Partners shall make public statements or press conferences/ interview; in exceptional situations senior managers could make such statements provided that previous approval was granted by Brazilian Tax Lead Partner. Media training shall be provided and coordinated by Marketing department, whenever considered needed.

Last revision: October 16, 2014

5002. Client Acceptance and ContinuanceIntroduction

This Section of the Manual provides policies and guidance regarding Client acceptance and continuance. It also considers situations where a prospective Client of a Member Firm tax practice may be either:

1. A prospective Client of another Member Firm; or 2. An existing Client of another Member Firm or another function of the same Member Firm.

For policies on Engagement acceptance and continuance see Section 5003, Engagement acceptance and continuance. For cross-border work and work referred by other Member Firms, see Section 5006, Referrals and performance of tax services across borders.

This policy is divided into the following sections:

Requirement to evaluate prospective Clients Scope of Client acceptance Timing of Client acceptance Approval and documentation Review requirements Appendix 1: Risk factors to consider for prospective Clients

Policies and GuidanceRequirement to evaluate prospective Clients

1. All prospective Clients should be evaluated by the Tax Engagement Partner in the Member Firm tax practice proposing acceptance of the Client to enable that tax practice to reach a conclusion regarding the acceptability of potential risks associated with such Client. The policies included in this Section and any additional policies, guidance, and tools provided by the DTTL Global Managing Director—Regulatory and Risk and the DTTL Managing Director—Global Tax Quality, Risk and Regulatory or the Member Firm outline the basis for this evaluation.

2. Each Member Firm tax practice should accept or reject a prospective Client based on its own evaluation process and its responsibility to comply with the policies set forth in this Section.

3. The acceptance of each Client should always be considered on its own merits for each individual entity. The acceptance of a Client does not imply that other related Clients will be accepted and the acceptance of one corporation/entity as a Client does not imply acceptance of other group or affiliated entities, unless they have been considered as part of the Client acceptance process. This includes joint ventures where for example, an existing Client (A) agrees with another party (B - not an existing Client) to set up a new entity (C) and the Member Firm tax practice is asked to provide tax services to this entity C, the Member Firm would be expected to perform full Client acceptance procedures on entity C. As part of Client Acceptance practices, Background Check shall be done whenever i) a new client for which no other Function in Brazil (or abroad) has rendered services; or ii) when a change happened in an existing Client management (CEO, CFO, Tax Director, Tax Manager, Controller, among others). Moreover, a renew of Background Check is highly recommend after 3 years for existing clients, and mandatory after 5 years of continuous relationship.Background Checks can be made directly through SmartNet in the existing or new opportunities associated to a given client.

4. After consideration of all the relevant factors, the Member Firm tax practice should conclude whether or not the prospective Client should be accepted as a Client. A Member Firm tax practice should not accept a Client if, after taking all factors into consideration, such acceptance would pose excessive risk to the Member Firm or its reputation or the reputation of other Member Firms in the network or to the Deloitte brand that cannot be mitigated for the particular Client being considered.

Client Acceptance procedures and assessment are documented through DRMS system.5. A Member Firm that intends to reject a prospective Client that is a Client of one or more other

Member Firms or another function of the Member Firm, should consult with the LCSP or Global Lead Tax Partner (GLTP), if appointed, before making any final decision. See also Section 5006, Referrals and performance of tax services across borders .

Scope of Client acceptance

6. Each Member Firm tax practice should establish policies, procedures and guidance on the scope of inquiry that it requires with respect to a prospective Client and for the continuance of an existing Client relationship including inquiries and research in accordance with 1540, Know Your Client Inquiries and Research .

7. A Member Firm tax practice should assess the integrity of a prospective Client. Client relationships should be established and maintained only with individuals and entities who are engaged in legitimate undertakings, and whose association with the Member Firm tax practice will not result in an unacceptable level of risk for the Member Firm or the network of Member Firms. See Appendix 1 for factors which may be relevant to considering the acceptability of a new or existing Client. Potential conflicts of a professional, legal, regulatory, or business nature may be relevant to both Client and Engagement acceptance evaluations.

8. Each Member Firm tax practice should establish policies, procedures and guidance regarding the circumstances in which it may rely on Client acceptance procedures performed by another function of the Member Firm or by another Member Firm. Such policies, procedures, and guidance would ordinarily be expected to distinguish circumstances in which the Member Firm tax practice may accept a Client:

1. Without performing additional local Client acceptance procedures. In such cases it may be sufficient for the Member Firm tax practice to obtain confirmation from that function or other Member Firm that the Client has been accepted by that function or other Member Firm pursuant to its own applicable Client acceptance requirements, and what (if any) specific risks exist that may be relevant for the Member Firm tax practice.

2. With significant reliance on the procedures performed by that function or the other Member Firm but supplemented by additional procedures as required by Local Laws or Member Firm policies.

3. Once it has performed its own acceptance procedures, with no reliance on the procedures performed by the other function or Member Firm.

9. In developing such policies, procedures and guidance, Member Firm tax practices’ would ordinarily be expected to be guided by the principle that to the fullest extent possible they do not need to repeat procedures unless they are specifically required under Local Laws or to manage local risk and reputation matters, but recognize that other functions or other Member Firms can weigh risk factors differently and different legal or regulatory environments may apply. See also Section 5006, Referrals and performance of tax services across borders .

Brazilian Tax firm can rely on the client acceptance procedures performed by another Member Firm The documentation that should be retained on the permanent file to indicate completion of client acceptance procedures in relation to international referrals comprises the DTTL IWRF (Inter-firm Work Referral Form) and the relevant e-mail responses (either your response to the Referring Member Firm, or if you are the Referring Member Firm, the responses from the Participating Member Firms). For further information regarding the procedures to be followed in relation to these procedures, refer to 5006 - Referral of Tax Services and Performance of Tax Services Across Borders.

Timing of Client acceptance10. The Client acceptance process should ordinarily be completed before commencing work.

However, it is recognized that there may be exceptional or urgent circumstances when it is necessary to commence limited (preparatory) work before the Client acceptance process has been completed. In these circumstances, the following principles should be adhered to:

a. There should be no or very little doubt that when the Client acceptance process is completed the Client will be accepted.

b. The prospective Client should be informed in writing that the Client acceptance

process has not yet been completed and that provision of services is subject to appropriate completion of these processes.

c. It should be determined and documented that the prospective tax Client is not a Restricted Entity (or affiliate thereof) and for such entities, approval of the LCSP obtained.

d. No deliverable or draft deliverable should be provided to the Client until after the Client acceptance process has been completed

See also Section 5003, Engagement acceptance and continuance. 

Generally, you should not issue a proposal letter before completing the client acceptance procedures. If you do need to issue one before doing so, you must obtain the approval of the Tax Risk Leader. You should also include the following text in the letter:

“This proposal is submitted in advance of the completion of our usual new client acceptance procedures and, accordingly, our obligation to provide services is subject to satisfactory resolution of those procedures.”

You should avoid to issue an engagement letter before completing the client acceptance procedures, In general, you should not start work on any engagement until the client acceptance procedures have been completed. If it is absolutely necessary to start work prior to completing the client acceptance procedures, you must seek the approval of the Tax Risk Leader.

11. Each Member Firm tax practice should develop policies, procedures, and guidance so that actions, which might convey the impression that Client acceptance is complete before this is in fact the case, are avoided. In certain circumstances, the following may signify acceptance of a Client:

a. Oral agreement.b. Issuance of a proposal letter or bid document without an appropriate clause indicating that it

is subject to proper completion of Client and Engagement acceptance procedures.c. Issuance of an Engagement letter without an appropriate clause indicating that it is subject

to proper completion of Client and Engagement acceptance procedures.d. Provision of services, including oral or written advice

12. To manage potential reputational damage, to the extent practicable, Client acceptance evaluations should take place before submitting a bid or proposal.

Approval and documentation

13. The acceptance of each Client should be adequately documented, taking into account applicable Local Laws, such as privacy and other laws. Member Firm tax practices should establish policies, procedures, and guidance requiring Partners and Professional Staff to document that the appropriate procedure has been followed, that all required steps have been taken in accordance with the Member Firm tax practice policies and procedures on Client acceptance and the conclusions reached. 

14. Client acceptance should be approved by the tax Engagement Partner as well as by the persons appointed by Member Firm leadership for that purpose.

15. Each Member Firm tax practice should establish policies, procedures, and guidance requiring additional approvals for Clients deemed to have characteristics that tend to elevate the risk profile. For prospective Clients with a higher risk profile, documented consultation with the Member Firm Tax Risk Leader, and any other persons appointed by Member Firm leadership, should occur. Whether additional approval is warranted for acceptance or continuance will require judgment on the part of the Member Firm tax practice and an evaluation of all relevant facts and circumstances.

16. One or more of the Member Firm Tax Risk Leader, Member Firm Tax Practice Leader, DTTL Managing Director—Global Tax Quality, Risk and Regulatory or the DTTL Global Managing Director—Tax, may from time-to-time identify circumstances that require additional levels of consultation before a Client is accepted.

Review requirements

17. Existing Client relationships should be reviewed on a periodic basis or when there is a change in the Client’s circumstances that may significantly affect the Client or Member Firm’s or network of Member Firms reputation to assess the continued acceptability and/or adjust the risk profile, as required and with reference to paragraph 15. Such periodic review is separate from the annual portfolio risk review (see Section 5016, Tax Portfolio Risk Review) although Member Firms may wish to combine an annual periodic review with the portfolio review.

18. Tax Engagement Partners and, as appropriate, the Member Firm Tax Risk Leader and the Tax Practice Leader (or their designees) should actively review their Client relationships on a continuous basis to be alert for changes in circumstances that may affect the risk profile of a Client. In particular, a review of the acceptance profile would ordinarily be performed when there has been a significant change to any of the relevant risk factors outlined in Appendix 1.

19. Each Member Firm tax practice should develop and implement ongoing processes to ensure the effectiveness and timeliness of its Client acceptance and continuance processes.

Key steps required under the client acceptance process are listed below:

1. Gather basic client information.2. If the client has already been accepted by audit or any other DT Brazil function, this client

could be automatically accepted by the tax function, unless there are circumstances that would require a different analysis or consideration.

3. Identify all client and any other parties that may be involved (e.g., subsidiaries and financing parties).

4. Identify any audit relationships and check independence status. 5. Seek approval from the Lead Client Service Partner and Lead Tax Partner that the client

can be accepted.6. Perform reputation checks7. Submit Client Acceptance Form /DRMS to the Tax Risk Leader or designee.8. Obtain various concurring partner signatures to the Client Acceptance Form / DRMS (this

number will depend on the overall risk profile).

You should complete all client acceptance procedures prior to taking any action that could be construed as acceptance of the client or any related engagement

Proposal letters generally include the following:

A description of our qualifications Fee information, including terms of payment Our suggested approach to the work Names of the intended client service team (engagement partner, staff, etc.).

Documentation and filing

Each client should have a “Permanent” file containing all relevant documentation, including signed client acceptance forms and other permanent data. Please refer to the standard “Permanent” file to be adopted by the various DT Tax Offices.

You should document acceptance of every client adequately, bearing in mind relevant privacy and other laws.

When performing client acceptance procedures, you should always review and refer to the permanent client file to prevent repetition of research (e.g., where the client is already a client of another function).

DRMS – Deloitte Risk Management System

A Client Acceptance Form is required to be performed before accepting all new clients. You should not begin work until the appropriate approvals have been received. Allow at least 48 hours for the forms to be approved. This section includes the steps involved in completing the Client Acceptance Forms.

The Deloitte Risk Management System (DRMS) is an Intranet site (accessible through Deloitte Resources) that we use to complete the process of documenting and approving client and engagement acceptance and continuance decisions.

Deloitte Resources contains specific training material, best practices, and FAQs that will help you to better utilize the system. Refer to DRMS on Deloitte Resources.

The engagement partner is responsible for completion of the form with the support of the engagement team. In practice, the engagement manager will often complete the form for approval by the engagement partner.

The form contains eight parts, which are appointed below.

1. General client information: 2. Information concerning individuals3. Client shareholders, ultimate beneficial owners, directors, key management, affiliates,

and significant influencers4. Independence 5. Assessment of client integrity, reputation, and other risk factors

Our reputation hinges on both the clients we serve and the quality of our work. You should ask the Lead Client Service Partner of all entities (regardless of whether they are restricted or not) whether there are any reputation issues that would affect our decision to accept them as clients.

In general, conflicts occur at the engagement level. However, you need to check that the acceptance of one client does not conflict with instructions from or the requirements of, another client. We should manage our work to avoid the interests of one client adversely affecting those of another. Note that there is nothing improper with our organization’s having two or more clients whose interests may be in conflict, if managed properly.

In conjunction with the independence and reputation checks, you should ask the Lead Client Service Partner of all entities (regardless of whether they are restricted or not) whether there are any conflict issues that would impact our decision to accept them as clients.

6. Classification of client risk

Once all sections have been completed, the Recommending Partner should determine whether the client profile requires additional approvals due to an elevated risk profile. Where there is uncertainty, the Tax Risk Leader should be consulted.

Anti-money Laundering and Know your client

In Brazil there is no anti-money laundering legislation

Advisors

After completing the client acceptance procedures and prior to issuing an engagement letter, we should confer, if applicable, with the previous advisors to ensure that there is no reason for us not to act.

Client administration

Once we have accepted a client, there are additional processes to monitor the progress of our engagements and avoid duplication of effort.

All clients must have a client code so that you can record your time, post expenses, and allocate third-party costs. Prior to creating the new client code, you must have completed the required DRMS client/engagement acceptance procedures.

 Appendices

Appendix 1: Risk factors to consider for prospective or existing ClientsListed below are some factors to consider in the identification of prospective Clients. See also 1540 Know Your Client Inquires and Research.Industry and general suitability

         Nature of business activities         Prospect of adverse publicity         Industry trends

Elevated risk indicators include a prospective Client:         With whom association may result in adverse publicity or increased litigation risk to the Member Firm tax

practice or the network of Member FirmsBackground and behavior

         Reputation and integrity         Publicity issues that may affect the Client or the Engagement and the potential for adverse publicity for

the network of Member Firms         Reasons for changing advisors         Backgrounds of officers, directors, and owners         Prior knowledge of the Client by any Member Firm, Partner or Professional Staff         Reputation of previous or existing tax advisors, legal counsel, accountants, or similar.         History of disputes, adverse events, and litigation         Skill and competence of management

Financial, organizational, and cultural attitudes         Corporate culture including attitude to aggressive tax accounting structures and schemes         Financial stability         Complexity of organizational structure         Staff turnover         Dependence on key staff

Elevated risk indicators include a prospective Client:         Seeking a Member Firm's services in connection with the marketing of tax opinions or tax opinions for

public offerings Legal, regulatory, and conflicts of interest

         Past or current difficulties involving legal, regulatory, tax or other governmental authorities         Suspicion of participating in illegal acts         Business and professional conflicts of interest in particular where a Member Firm may be acting for two

or more parties to a transaction         Delinquent tax filings         Litigation risk

Elevated risk indicators include a prospective Client that:         The Member Firm suspects may have committed an illegal act         Has a criminal record or is under civil or criminal or regulatory investigation         Has had fraud penalties asserted against them         Has been censured by regulatory authorities for violations of rules and regulations or is under

investigation by a regulatory authority

Original publish date: 26 July 2007Revised date: 15 August 2012

5003. Engagement Acceptance and Continuance

IntroductionThis Section of the Manual provides policies and guidance regarding Engagement acceptance which includes evaluating prospective Engagements, the continuing acceptability of existing/recurring Engagements, and the re-evaluation of Engagement risk assessment for Engagements that span more than one year.

For policies on Client acceptance, see Section 5002, Client acceptance and continuance. For cross-border work and work referred by other Member Firms, see Section 5006, Referrals and performance of tax services across borders.

This policy is divided into the following sections

Requirement to evaluate prospective Engagements Scope of Engagement acceptance Timing of Engagement acceptance Approval and documentation Review requirements Appendix 1: Risk factors to consider for prospective Engagements

Policies and Guidance

Requirement to evaluate prospective Engagements

1. Each Member Firm tax practice should establish and document policies, procedures, and guidance to evaluate the acceptability of every Engagement and assess the related Engagement risk.

It is important to recognize that the engagement acceptance procedures are designed to assess the risk associated with and properly plan a proposed engagement. You should not see this as a form-filling or administrative exercise.

Before accepting an engagement, we should assess the acceptability of the engagement and consider the following key factors:

Professional, legal, regulatory, and business conflicts Independence Engagement risk.

Engagement acceptance is required for all new engagements.

Sometimes one service line contributes to a wider engagement of another service line. Only one engagement acceptance process needs to be completed for the engagement as a whole; therefore, the contributing service line does not need to repeat the process. Where we are the contributing service line, a separate engagement acceptance form does not need to be completed as this is not a separate engagement.

We should obtain a copy of the completed engagement acceptance form for the overall engagement to complete our practice management system requirements.

Member Firm referrals and International Tax Clients

The engagement acceptance procedures performed by another Member Firm may be relied upon for the following:

International Tax Clients (in general, D1000 clients or client/target groups where global tax are fees expected to exceed US$1m annually)

International referrals, other than International Tax Clients Global compliance work under a global engagement letter (generally Global Employer

Solution compliance engagements).

The documentation that you should retain on the permanent file to indicate completion of engagement acceptance procedures in relation to these types of work comprises the DTTL inter-firm work referral form and the relevant e-mail responses (either your response to the Referring Member Firm or, if you are the Referring Member Firm, the responses from the Participating Member Firms). For further information regarding the procedures to be followed in relation to the first two points, refer to 5006 and 5007 Policies for International engagements.

2. Each Member Firm tax practice should accept or reject a prospective Engagement based on its own evaluation process and its responsibility to comply with the policies set forth in this Section.

3. The acceptance of each Engagement should be considered on its own merits. The acceptance of an Engagement does not imply that other similar Engagements will be accepted by the Member Firm or other Member Firms in the network of Member Firms.

4. After consideration of all the relevant factors, the Member Firm tax practice should conclude whether or not the Engagement should be accepted. A Member Firm tax practice should not accept an Engagement if, after taking all factors into consideration, such acceptance would pose excessive risk to the Member Firm or other Member Firms in the network that cannot be mitigated for the particular Engagement being considered.

5. A Member Firm that intends to reject a prospective Engagement for a Client that is a Client of one or more other Member Firms, should consult with the Lead Client Service Partner (LCSP) or Global Lead Tax Partner (GLTP), if appointed, before making any final decision. See also Section 5006, Referrals and performance of tax services across borders .

Scope of Engagement acceptance

6. Each Member Firm tax practice should establish policies, procedures, and guidance on the scope of the Engagement acceptance inquiries to be performed by a tax Engagement Partner prior to accepting an Engagement. Such policies, procedures, and guidance should include but are not limited to: a. Independence checks to identify Restricted Entities and any limitations on scope of

service or fee structures and obtaining all relevant approvals (such as from the LCSP, GLTP, if appointed and Clients’ audit committee). See also DPM 1420, Independence.

b. Consideration of the potential for legal, regulatory, or business conflicts. See also DPM 1430, Potential Conflicts of Interest and 1920, Trustee and Executor appointments. Conflicts most typically arise in circumstances where third parties are relevant to an Engagement. For these purposes, tax authorities, a Client's affiliate(s), and legal counsel are not usually considered third parties. If a Member Firm judges that the nature of the proposed tax services are such that a conflict is unlikely (for example tax return preparation Engagements), it may be sufficient to limit procedures to documenting this conclusion in accordance with the Member Firm tax practice’s requirements, if any. In other cases, a full conflict check and appropriate mitigation may be required. Examples of tax Engagements in which potential conflicts could arise include, but are not limited to:

i. Merger and acquisition Engagements in which a Member Firm tax practice is advising one or more parties to the same transaction.

ii. Engagements in which a Member Firm tax practice is advising a Client entity, and its owners or management.

iii. Transfer pricing Engagements. iv. Engagements where a tax authority is a Client.

v. Assisting a Client with respect to litigation against another party other than the tax authority or serving as an expert witness (including work reasonably foreseeable as part of an anti-dumping issue).

c. Allocation of a risk classification. A Member Firm tax practice should classify tax Engagements using at least two classifications of risk: normal and greater-than-normal. Member Firm tax practices may add further classifications or ranges of risk within the greater-than-normal risk category. See Appendix 1 for factors which may be relevant to considering the risk classification of Engagements.

d. Consideration of operational factors which may affect the acceptability of an Engagement (for example the fee arrangements or the availability of appropriately skilled resources).

e. Determination of any risk mitigation measures required. A Member Firm tax practice should take measures to manage any risks identified in connection with a particular Engagement. These measures may not change the risk classification but may affect the acceptability or management of the Engagement. The appropriate mitigation will depend on the circumstances and nature of the risk identified and may be applied at several different stages of an Engagement life cycle. Examples of mitigation may include:

i. Assigning specialists and/or more experienced resources to the Engagement.ii. Requiring a concurring review or involvement of a second Partner or specialist in

the Engagement, for example in case of a due diligence conducted by the Tax Area, the TS Tax Partner should be appointed as the concurring review partner.

iii. Implementing additional operational procedures, for example to safeguard confidentiality, implement ethical walls, or brief the Engagement team about the need to be sensitive to different roles a Client may have or reminding them of insider trading rules.

iv. Clearly defining and/or limiting the scope of services in both the Engagement letter and the deliverables themselves.

v. Obtaining additional legal protection in the Engagement letter by including additional business terms for example indemnification by the Client or assumption of risk by the Client.

vi. Obtaining written Client acknowledgement of the potential conflict and consent to the Member Firm accepting an Engagement.

7. Each Member Firm tax practice should establish policies, procedures, and guidance regarding the circumstances in which it may rely on Engagement acceptance procedures performed by another function of the Member Firm or by another Member Firm. In developing such policies, procedures and guidance, Member Firms would ordinarily be expected to be guided by the principle that to the fullest extent possible procedures are not repeated unless specifically required under Local Laws or to manage local risk and reputation matters but recognize that other functions or other Member Firms can weigh risk factors differently and different legal or regulatory environments may apply. In particular, it would ordinarily be necessary for a Member Firm to evaluate its own local independence and conflict considerations. See also Section 5006, Referrals and performance of tax services across borders.

Timing of Engagement acceptance

8. The Engagement acceptance process should ordinarily be completed before commencing work. However, it is recognized that there may be exceptional or urgent circumstances when it is necessary to commence limited (preparatory) work before the Engagement acceptance process has been completed. In these circumstances, the following principles should be adhered to:

a. There should be no or very little doubt that when the Engagement acceptance process is completed the Engagement will be accepted.

b. Client should be informed in writing that the Engagement acceptance process has not yet been completed and that provision of services is subject to appropriate completion of these processes.

c. It should be determined and documented whether the tax Client is a Restricted Entity (or affiliate thereof) and for such entities, approval of the LCSP obtained.

d. No deliverable or draft deliverable should be provided to the Client until after the Engagement acceptance process has been completed.

See also Section 5002, Client acceptance and continuance. 9. Each Member Firm tax practice should develop policies, procedures, and guidance so that

actions which might convey the impression that Engagement acceptance is complete before this is in fact the case, are avoided prior to the completion of the formal acceptance process. In certain circumstances, the following may signify acceptance of an Engagement:

a. Oral agreement.b. Issuance of a proposal letter or bid document without an appropriate clause indicating that

it is subject to proper completion of Engagement acceptance procedures.c. Issuance of an Engagement letter without an appropriate clause indicating that it is subject

to proper completion of Engagement acceptance procedures.d. Provision of services, including oral or written advice.

     10. To manage potential reputational damage, to the extent practicable, Engagement acceptance

evaluations should take place before submitting a bid or proposal.

Approvals required

Tax engagements for existing or new clients which pose high risk or are of an unusual nature should be approved by the engagement partner or other equivalent designate by the Tax Practice Leader as well as by the persons appointed by Deloitte management for that purpose.

All approvals must be obtained prior to accepting the engagement and commencing work.

The following table summarizes the approvals required for engagement acceptance:

Notes:1. If the client is a local audit client and an SEC restricted entity or International

restricted entity, you will need to obtain all relevant approvals for both types of client, as outlined above.

2. — Approval required in writing by signing of the engagement acceptance form OR via e-mail.

CLIENT CHARACTERISTICS

APPROVALS

Normal riskGreater than normal risk: normal risk approvals plus

theseMuch greater than normal risk: greater than normal

risk approvals plus these

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Nonrestricted client Local audit client (restricted

entity)

SEC restricted entity International restricted entity Reverse-restricted or

relationship entity

Approval and documentation

11. The acceptance of each Engagement should be adequately documented, taking into account applicable Local Laws, such as privacy and other laws. Member Firm tax practices should establish policies and guidance requiring Partners and Professional Staff to document that the appropriate procedure has been followed, that all required steps have been taken in accordance with the Member Firm tax practice policies and procedures on Engagement acceptance and the conclusions reached.

12. If Engagement risk is evaluated as:a) Normal risk:

                    i.       And routine in nature, (typically compliance engagements or simple advisory) the tax Engagement Partner may accept the Engagement without further approval, unless the Member Firm or Member Firm’s tax practice’s policies require otherwise. The Member Firm tax practice should identify those service lines and describe the scope of work that is contemplated to fall within this category.

                  ii.      But not routine in nature for the tax Engagement Partner accepting the Engagement, there should be documented concurrence on acceptance by at least one other Partner in the Member Firm.

b)    Greater-than-normal-risk or much-greater-than-normal (where applicable), there should be documented concurrence on acceptance by the Member Firm’s Tax Risk Leader (or their designee) and any other persons appointed by the Member Firm leadership. Based on the nature and extent of potential risks, the Member Firm Tax Risk Leader may consider consultation with the Member Firm Reputation and Risk Leader (RRL) and/or Member Firm Tax Leader (or their designees). Whether additional approval is warranted will require judgment on the part of the Member Firm tax practice and an evaluation of all relevant facts and circumstances.

As As far as engagement classified as “Greater than Normal Risk” the concurrence review should be performed by the one of the following partners: Service Line Leader, Office Tax Leader, Tax Risk Leader and/or Tax Practice Leader.

13. One or more of the Member Firm Tax Risk Leader, Member Firm Tax Practice Leader, DTTL Managing Director—Global Tax Quality, Risk and Regulatory or the DTTL Global Managing Director—Tax, may identify circumstances that require additional levels of consultation before an Engagement is accepted and the Engagement risk is classified.

The acceptance of each engagement should be considered on its own merits. All prospective engagements should be evaluated by the Recommending Partner based on the policies, guidance, and tools provided, and he or she should reach a conclusion regarding the acceptability of potential risks associated with an engagement after appropriate consultation and approvals.

The engagement tax partner should classify the tax engagement into one of three risk categories:

Normal Risk — All engagements other than those classified as GTN or MGTN riskGreater than Normal (GTN) RiskMuch Greater than Normal (MGTN) Risk.

(Please refer to the Engagement Risk Classification Table, provided at the Exhibit 4)

Assessing engagement risk

Before accepting any engagement, the Recommending Partner should assess the engagement risk. This may include considering the implications of the following:

Client risk: Knowledge of client characteristics that increase potential risk (e.g., management characteristics and integrity; organization and management structure; nature of the business, industry, business environment; financial results; business relationships

and related parties; ongoing audits; prior knowledge of and experience with the client). Service risk: The nature of the service being provided inherently increases potential risk. Engagement-specific issues that increase potential risk (e.g., planned use of Member

Firm’s report, transaction size, and related revenue to the Member Firm, terms and conditions under which the engagement will be accepted, and status of the client’s internal controls).

Regardless of whether or not a particular type of tax service is included in the following table, the Recommending Partner must still consider the client risk and specific engagement risk factors when assessing the overall risk for that engagement, together with the following general risk factors:

Planned use of our organization’s report Transaction size Revenue to our organization Terms and conditions under which the engagement will be accepted (e.g., Limitation of

liability, indemnities) Status of the client’s internal controls.

You should take measures to manage the engagement risk. These measures should not change the risk classification but may affect the acceptability of the engagement. These measures may include the following:

a. Assigning specialists and more experienced resources b. Requiring a Quality Assurance Review c. Implementing additional procedures d. Clearly defining and/or limiting the scope of services in the Engagement letter and in

practice

Review requirements

14. Existing Engagements should be reviewed on a periodic basis or when there is a change in circumstances that may significantly affect the risk profile of the Engagement, to assess the continued acceptability of the Engagement and/or adjust the risk profile and mitigation measures, as required. This periodic review is separate from the annual portfolio review (see Section 5016, Tax Portfolio Risk Review) although Member Firms may wish to combine an annual periodic review with the portfolio risk review. If there have been material changes, the existing Engagement should be treated as a new Engagement for this purpose and new Engagement acceptance procedures should be performed.

Examples of a change in Engagement circumstances or increased complexity include the:

a. Addition of Client entities or other parties to the Engagement.b. Change of Client activities or profile such a private company becoming listed.c. Change in scope of the Services being requested

15. The tax Engagement Partner and, as appropriate, the Member Firm Tax Risk Leader and the Member Firm Tax Practice Leader (or their designees), should actively review their Engagements on a continuous basis, to be alert for changes in circumstances that may affect the risk profile of an Engagement and to monitor the continued appropriateness of Engagements lasting longer than one year. In particular, a review of the Engagement profile would ordinarily be performed on occurrence of any of the factors outlined in Appendix 1. Engagement continuance

If an engagement is in process for longer than one year, the tax engagement partner should determine, at least annually, if there are material changes since the engagement was entered into or last assessed, and, if so, complete new engagement acceptance procedures accordingly.

For all engagements, the engagement partner should continually assess whether the engagement has changed risk categories. This does not require a formal process. However, any material

changes that impact the engagement (e.g., changes in scope, independence rules or status, use of product, or availability of engagement team members) may require the performance of engagement acceptance procedures.

The engagement partner and, as appropriate, Tax Risk Leader and the Tax Leader, or their designees, are responsible for monitoring the continued appropriateness of engagements lasting longer than one year.

The engagement partner recommending that our organization accept the new engagement is responsible for engagement acceptance.

Engagement Acceptance Process:

The engagement acceptance process involves four steps:

Step 1: Scope and plan: Obtain a proper and clear understanding of the scope, purpose, use of work, and economics of the engagement

Step 2: Assess/evaluate the risks Perform conflict checks.

o Identify conflict management steps, if required. Perform independence checks

o Consider whether there are any scope of service restrictions. Consider engagement risk classification (Normal, Greater than Normal,

Much Greater than Normal) o Identify risk mitigation steps, if required.

Step 3: Recommend or reject: Decide whether to recommend or reject the engagement.

Step 4: Approvals: Obtain required approvals for the engagement

These steps culminating in the acceptance of the engagement are documented on Deloitte Risk Management System. A copy of the DRMS must be filed on the client file as evidence that the engagement is approved together with any supporting documentation. The Deloitte Risk Management System (DRMS) is an Intranet site (accessible through Deloitte Resources) that we use to complete the process of documenting and approving client and engagement acceptance and continuance decisions.

16. Each Member Firm should develop and implement ongoing processes to ensure the effectiveness and timeliness of its Engagement acceptance and continuance processes ("Monitoring Process") that covers all functions and service lines within its Member Firm (see DPM 1510, Engagement Acceptance and Risk Classification). Member Firm Tax Risk Leaders would ordinarily be expected to cooperate with Member Firm leadership to ensure compliance with the Monitoring Process. Such monitoring is separate from the annual portfolio review (see Section 5016, Tax Portfolio Risk Review) although Member Firms may wish to combine monitoring with the portfolio risk review.

Conflicts of interest

The tax engagement partner is responsible for considering if proposed engagements may create a conflict. If it appears that a conflict may arise that cannot be resolved, the tax engagement partner should consult with the Tax Risk and Independence Leader – Cristina Berry or the National Independence Leader – Agenor Yamamoto.

Identification of actual and perceived conflicts in respect of new clients or new engagements for existing clients is an important process in the client/engagement acceptance process.

We have a duty to clients and each other to:

Provide clients with high-quality service. Fulfill responsibilities to one client without disregarding responsibilities to another client. Avoid situations that would put us, other functions, and Member Firms or client

relationships at risk.

To satisfy this duty, we should act in a manner that reflects personal and professional integrity and complies with all applicable laws, regulations, professional standards, ethical codes, and rules of various licensing authorities.

Conflicts of interest can arise in the following circumstances:

An actual or perceived conflict between our organization’s obligations to an existing or a potential client and the commercial interests of our organization itself.

An actual or perceived conflict between the respective interests of two or more existing or potential clients. Conflicts of this type generally arise from accepting engagements that may be adversarial in nature in that they may adversely affect another existing or potential client.

Examples of tax engagements in which potential conflicts could arise include, but are not limited to, the following:

a. Merger and acquisition engagements in which the tax practice is advising one or more parties to the same transaction

b. Engagements in which the tax practice is advising a client entity as well as its owners c. Assisting a client with respect to a litigation.

There are two main types of conflicts: Potential professional, legal, regulatory conflicts Potential business or commercial conflict.

Potential business conflicts

The tax engagement partner should consider whether any aspects of a proposed engagement might result in a potential conflict, so that any such concerns can be resolved prior to engagement acceptance.

The test used to assess a potential conflict entails whether a reasonable person would perceive that an unacceptable threat to our organization’s objectivity is posed by the relationship between either of the following:

The client and us, another function (e.g., corporate finance), or another Member FirmTwo clients.

Business conflicts may arise from any action that we undertake in a setting of adversarial or competing interests if the action has the potential to negatively affect our business interests.

How do I do a “conflict check”?

Please refer to Conflict Check Procedures at Exhibit 2

Contingent Fees

You may not enter into contingent fee arrangements except in certain limited circumstances.

Contingent fee engagements often facilitate win/win situations for our organization and our clients. Before entering into a contingent fee engagement, all practitioners should consult and follow the procedures and guidance in this section and consult with the Tax Risk Leader.

A contingent fee is a fee established for the performance of any service pursuant to an engagement in which no fee will be charged unless a specified finding or result is attained, or in which the amount of the fee is otherwise dependent upon the finding or result of such service. A contingent fee includes a fee that is based on a percentage of the refund shown on a return or on a percentage of the taxes saved, or that otherwise depends on the specific result attained.

Contingency fees — “Much greater than normal risk” classification

A contingent fee will establish a risk classification of Much Greater than Normal Risk for the engagement; your Tax Risk Leader, Tax Practice Leader as well as the Firm Risk Leader are required to approve the engagement and fee. Please refer to Contingent Fee Form, as presented at Exhibit 3.

Please refer to contingent fee language in the engagement letter, at Section 5004, Engagement Letters

Contingent Fees and Independence

SEC Restricted Entities

We are prohibited from providing contingent fee arrangements for any SEC Restricted Entity or affiliate thereof.

 AppendicesAppendix 1: Risk factors to consider for prospective EngagementsListed below are some factors to consider in the identification of elevated risk Engagements.

         Engagements in which there will be third-party reliance on work performed.          Engagements that request relief from the tax authorities. Depending on the Member Firm tax practice’s

prior involvement, the Client may attempt to hold the Member Firm responsible if the request fails.          Expert witness Engagements. Positions advocated in testimony may be different from past testimony or

with positions taken by other Clients.          Lobbying. Engagements that involve representing a Client before legislative, administrative, or regulatory

bodies. Positions lobbied for may be adverse to other Clients’ interests.          Contingent fee arrangements. Acceptance of such fee arrangements may violate professional or

independence regulations.          Risk of litigation. The Member Firm tax practice may have claims filed against it regarding the work to be

performed.          Formal tax opinions. Clients may place undue reliance on conclusions reached in a formal tax opinion.          Transactions with significant tax savings or that involve transactions that are very material in size. The

size of the tax savings and the transaction itself will increase the risk involved.          Opinions used in securities offerings, including both public offerings and private placements.          Engagements requiring the management of conflicts of interests.          Assuming management responsibilities, including bookkeeping services, cash handling and/or check

writing, loan staff or secondments.          Tax return reviews where the Member Firm tax practice does not prepare the return but only reviews the

return.          Engagements in which the Member Firm tax practice reviews or prepares the tax provision for a client’s

financial statements.          Delinquent filings and voluntary disclosures where a Client discloses to the tax authority prior non-

compliance.          Engagements where there are separate or additional non-disclosure or confidentiality agreements which

may be difficult to comply with or monitor.          Specialized Engagements or service lines that may be designated as high risk by Member Firm tax

practices or the DTTL Managing Director—Global Tax Quality, Risk and Regulatory.         First-time or Engagements for Global Priority Clients (or equivalent) or Engagements that have sensitivity

to the Client relationship.          Lack of available knowledgeable, experienced, and qualified Partners and Professional Staff and /or the

adequacy of time and resources to provide the proposed Professional Services. If a Member Firm tax practice does not have all the necessary competencies, assistance may be sought from another Member Firm tax practice or, in appropriate circumstances, from third party specialists.

         Engagements in which part of the work will be performed by third parties, retired Partners, contract staff, independent correspondent firms, and other professionals that are not employed professionals of a Member Firm. See Section 5008, Arrangements with Third Parties for Professional Service.

         Engagements relating to new service offerings, unusual, novel or first-time Engagements for which there is no precedent in the Member Firm tax practice.

Original publish date:        26 July 2007Revised date:                      15 August 2012

5004. Engagement Letters And Equivalent Contractual Agreements

IntroductionThis Section of the Manual provides policies and guidance on agreeing and documenting contractual arrangements for the provision of tax and related services to Clients. In addition to protecting Member Firms, these policies are intended to facilitate efficient processes for agreeing terms and conditions with Clients and other parties.  

Engagement letter or similar contractual agreement means the written document that, if acknowledged by both the Member Firm and the Client establishes the terms for the legal and business relationship between them. Such agreements can take different forms, but the most common are:

An Engagement letter (sometimes referred to as a contract) which sets out matters specific to the Engagement such as the names of the Client entities, the scope of the services, deliverables to be provided, fee arrangements, and other practical matters associated with the specific Engagement. The Engagement letter is accompanied by business terms which are the detailed standard contractual provisions. An Engagement letter may also include a mechanism for agreeing additional services to be provided under its terms, often referred to as a "work order," "statement of work," or similar.

A Master Services Agreement (MSA) or Master Tax Framework Agreement (MTFA) is often used in circumstances where more than one tax service line or function or Member Firm will provide services. This type of contract may include a:

o Primary document between the lead Member Firm and the Client (often the parent company) which establishes the contractual basis and principal business terms intended to apply to any tax (or other) services to be provided to that Client or Client group.

o Mechanism whereby other Member Firms can provide services under the agreement and can vary any terms in the primary document that are inappropriate to their local circumstances or services or to add new business terms relevant to that Member Firm or add new Client group entities to the arrangements. This may be referred to as a "participation agreement," "local agreement," "implementation agreement," or similar.

o Mechanism to document and agree the scope and fee arrangements for a particular piece of work to be provided by any Member Firm that is a party to the arrangement, often referred to as a "work order," "statement of work," or similar.

The preferred contractual arrangement is a document originated by a Member Firm. However, in some circumstances (typically in connection with MSAs), a Client originated document may form the basis of the contractual arrangement, although such documents will often require modification to reflect DTTL and Member Firm contracting policies and needs. For the purposes of this Section, and as the context requires, the term Engagement letter is deemed to include MSA, MTFA and Client-led arrangements and all the elements of a contract or agreement, including business terms and pricing arrangements.

Organization of this Section

Requirement for Engagement letters Timing, renewal and retention Content and language Business terms for tax services Master service agreements (including MTFAs) Negotiating roles and responsibilities

Contracts between Member Firms Links

o Model Standard Tax Termso Model Master Tax Framework Agreement

See also Section 5006 Referrals and performance of tax services across borders for additional policies and guidance with respect to contracting arrangements involving referrals between Member Firms.

Policies and GuidanceRequirement for Engagement letters

1. Each tax Engagement should be covered by an Engagement letter acknowledged by the Client. We need to have a written and signed agreement with the client for each piece of work we undertake. This contract will usually be an engagement letter we have prepared which is based on our standard letters and Deloitte standard terms and conditions. Sometimes it will be a contract which the client has given us, or a master service agreement mutually agreed with our client. Either way, it is important to agree the terms of the engagement with the client before we start work. Only a partner can sign engagement letters. Partners should not delegate the responsibility for binding the organization in an engagement letter. The term "acknowledged" is used in this Section to describe when the Engagement letter arrangements are legally binding on the relevant parties. Whether the proper term is "acknowledged," "accepted," "approved," "signed," or any other term, the legally binding nature of the Engagement letter is determined under the governing law agreed to apply (normally the applicable Local Laws of the Member Firm's jurisdiction).

2. A separate Engagement letter may be issued each time a Client requests a Member Firm tax practice to provide Professional Services. Alternatively, an "umbrella," "general" or "evergreen" Engagement letter that covers several pieces of work or advice over a longer period may be appropriate. In such cases, the scope and fee basis for each individual project/piece of work would ordinarily be agreed in writing with the Client (e.g., using a work order). This type of Engagement letter is usually suitable for ongoing or smaller, ad hoc advisory work that is considered "normal risk" work under local Member Firm policy. Separate Engagement letters are usually advisable for distinct or higher risk projects or those requiring specific business terms (e.g., a major restructuring or due diligence report or transfer pricing work). Member Firms should have policies governing the types of tax service that may be provided under general Engagement letters and those for which a separate Engagement letter is required.

3. There may be rare instances when a Member Firm concludes that Local Laws and/or market practice mean certain de minimis or low-risk work, of a short duration, or involving generic advice may be provided to Clients without an acknowledged Engagement letter. In such cases, the Client deliverables and/or other related documents should include language which makes clear the basis on which the work has been performed and the limitations on the Member Firm's role and responsibilities. Member Firms wishing to provide a tax service without an acknowledged Engagement letter should have policies governing the circumstances when this may be acceptable and these should be agreed by the Member Firm Reputation and Risk Leader and in consultation with the DTTL Managing Director—Global Tax Quality, Risk and Regulatory. To avoid doubt, such a policy is not appropriate for:

   Clients, other than individuals with recurring work.  Engagements that involve more than one Member Firm or Client party.   Engagements categorized as above normal risk under local Member Firm policies.  Litigation related work.   Engagements involving more than de minimis fee levels.

4. Member Firm tax practices may consider establishing policies which determine when the services should be provided under its own Engagement letter with the Client and when work may be performed as a subcontractor to another function and/or Referring Member Firm. See also Section 5006, Referrals and performance of tax services across borders.

Timing, renewal and retention

5. Except in extraordinary circumstances, an Engagement letter should be issued and acknowledged by the Client, before an Engagement Team commences significant work on the Engagement. Extraordinary circumstances might result from market practices (e.g., certain M&A transactions), urgent work provided to an existing Client, or simple and low risk tax compliance work where the Engagement letter sign off is part of the provision of the deliverable). Acknowledgment by the Client should always be actively sought by the Engagement Team and obtained as soon as practicable. A final work product should ordinarily not be delivered until after the acknowledged Engagement letter is agreed with the Client. In rare circumstance where deliverables may need to be issued before such time, they should indicate that they are draft and subject to the terms of the Engagement letter being discussed with the Client.

6. Engagement letters should be reviewed periodically to ensure that the business terms take account of relevant changes in Local Laws, the Client relationship, or the nature of the services being provided (e.g., a Client becoming a Restricted Entity) and remain consistent with DTTL policies or other guidance. Subject to Local Laws or other commercial considerations, it is recommended that Engagement letters are refreshed at least every three years.

7. The acknowledged Engagement letter should be retained electronically or in hard copy, in accordance with the Member Firm tax practice's document retention policy and applicable Local Laws. See also Section 5010, Document retention and access. The signed hard copy or the acknowledged document of the letter must be retained on the permanent client file.

As part of our organization’s client retention procedures, you should review your engagement letters with your clients every year or maximum of three years to ensure that they are still up-to-date. If there is a change in the client circumstances, such as an acquisition or disposal, you should also issue a new engagement letter. You should also comply with the new engagement acceptance procedures. You can usually agree to any minor updates in a supplemental engagement letter, while for more substantial changes you will need to issue a new engagement letter.

Content and language

8. Each Member Firm tax practice should develop standard Engagement letters. To avoid repetition and potential inconsistencies, it is generally considered good practice not to repeat matters that are dealt with in the business terms elsewhere in an Engagement letter. A cross-reference to the relevant clause in the business terms is recommended instead. Engagement letters would ordinarily include:

a) Names of the Client parties using their proper legal names and including their legal or registered addresses.

b) Start date for the Engagement letter.c) The scope of the services covered by the Engagement letter, including any underlying

assumptions and exclusions.d) Nature of deliverables, including timing, as appropriate. e) Fee and billing arrangements.f) Name of the Tax Engagement Partner (and Engagement Team, if appropriate).g)   Member Firm business terms suitable for tax Engagements (see paragraphs 12 -16 below).

9. An Engagement letter is a contractual commitment and not a proposal, marketing, or sales tool. As such, its description of services is ordinarily expected to be limited to services that have been agreed the Member Firm will provide and not include references to additional future or prospective services other than in a general way. The description of Professional Services and capabilities should be set forth in a professional and factual manner and should avoid any statements that could explicitly or implicitly set unjustified expectations of a favorable outcome. For example, the use of terms designed to characterize a Member Firm tax practice's experience as "superior," "market-leading," "the best," or other such superlatives or language that promises tax savings or to help a Client maximize tax positions in absolute terms (e.g., "to ensure tax savings") are to be avoided in Engagement letters. The legal benchmark that is appropriate for an Engagement letter is one of due professional care and to provide services that help a Client manage its tax obligations and implement tax efficient transactions. Member Firms are expected to avoid putting themselves in a position where they may be held accountable for outcomes that they cannot

control or are more properly the Client's responsibility. See Section 5001, Marketing and business development activities.

10. Where there are changes to the scope of the services to be provided, it is the responsibility of the Tax Engagement Partner to determine whether the changes are sufficient to warrant revision of the contractual arrangements. Mechanisms for documenting changes in services may include a work order or an addendum to the original Engagement letter or a new Engagement letter.

11. A Member Firm Partner should ordinarily sign an Engagement letter for tax services on behalf of the Member Firm tax practice. However, each Member Firm may establish policies to allow other senior employees to sign Engagement letters, as appropriate.

Standard language

You should use the standard engagement letters that are on the Tax QRR pages on Brazil Intranet site. There are two parts to these letters.

1. The letter itselfIn the body of the letter itself, you should set forth the scope and nature of the services to be provided, terms of the fee arrangement, and details of any factual representations, data, assumptions, or other relevant factors upon which our services or opinions are to be based. You should set forth the description of our professional services and capabilities in a professional and factual manner. You should avoid assertions or comments regarding superiority and the use of superlatives, such as “foremost,” “best,” or “most qualified.”

2. The AppendixYou should attach to each standard engagement letter the “Standard Tax Terms” that are applicable to the services described in the letter. Any modification to the required “Standard Tax Terms” requires the approval of DTTL Tax Quality, Risk and Regulatory Leader.

How to complete the letter

The letter sets out the general basis for the engagement and should contain a detailed description of the services.

The engagement letter contains the following sections:

The scope of services: This section is the most important section in the entire letter. You should carefully describe the services you are providing in order to avoid later misunderstandings concerning the work required.

The basis of the work: This section provides that the services performed are based on current law and provides that we do not have any obligation to update any deliverables or information provided under the engagement.

Our service team: This section names the professionals who will work on the project and also specifies that a team of professionals from DTTL and/or other Member Firms of Deloitte Touche Tohmatsu, their subsidiaries, or affiliates, may support the engagement as the engagement team deems appropriate. Deloitte also reserves the right to change personnel responsible for the engagement with others of similar competence.

Information and documents: This section specifies that the client must provide all necessary and relevant information and documents in a prompt and timely manner and that Deloitte will rely on the information given. This section confirms that the client is responsible for the completeness and accuracy of information provided.

Interest, surcharge, and penalties: This section states that we are not responsible for interest and penalties assessed to the client. It further states that our liability shall be governed by the liability clauses as set forth under the liability cap.

Fees: Our standard fees are based on time spent at the appropriate hourly charge-out rates for the grade. However, depending on the circumstances, other acceptable fee bases include the following:

Fixed fees Value billing Contingent fees.

Due to SEC prohibitions and other restrictions, you should use contingent fees sparingly and in consultation with DTTL Tax Quality, Risk and Regulatory Leader. Some of these bases may be prohibited in overseas jurisdictions, and there may also be restrictions on the ratio of overall non-audit to audit fees. If your work will involve other Member Firms, you should always confirm that the fee arrangements will be permitted.

1 ) Fixed feesAttention to drafting is essential. The fee and scope of work appendices should be closely cross-referenced to ensure that you retain flexibility in the event of a change in scope or circumstances. If the engagement is to run for more than one year, you must include wording that allows you to vary the fees for variations in scope or increases in the fees due to cost increases.

2) Value billingWe should not hesitate to charge value for money and can agree to a reduction or increase to a fixed or time-based fee as part of the normal negotiations based on the quality of our advice and services.

3) Contingent feesA contingent fee is an arrangement made at the outset of an engagement under which a pre-determined amount, a specified commission on, or a percentage of any consideration or saving, is payable upon a defined outcome.

You may not enter into contingent fee arrangements except in certain limited circumstances (Please refer to comments performed above – 5003. Engagement Acceptance and Continuance).

Any of the following is a contingent fee: The amount payable is based in whole or part on the tax savings or tax refund

obtained. An apparently fixed fee includes an adjustment mechanism dependent on outcome. There is a side letter or oral understanding that such fee adjustments will be made.

For all contingent fees, the engagement letter should specify the consequences if, for example, the client decides not to proceed with the planning or if other events cancel all or part of the benefits anticipated.

Liability Caps: liability caps are an essential part of the way we manage risk through contract terms. Liability caps:

Make it clear that we do not accept unlimited liability or provide “reinsurance” for a client’s business decisions.

Help generate a risk reward relationship for the project. Set a limit of what we think is a fair and reasonable liability given the nature of the

work.

DTTL Brazil standard liability cap is limited to the value of the fees charged.

Basic Protection language in a contingent fee engagement letter:“Where all or part of the fees include a contingent fee element and prior to the receipt of such fee (i) Deloitte is precluded from receiving the fee by the operation of professional, legal or regulatory restriction or (ii) you decide to terminate the project under the terms of this Contract, you agree to negotiate in good faith an alternative fee for the Services provided and benefit received in connection with the Services”

In some cases it may also be appropriate to establish the basis of the “alternative fee”, for example:“Such alternative fee shall be equivalent to an amount not less than {}” or “Such alternative fee shall be equivalent to an amount not less than {}% of the time spent by Deloitte personnel in connection to the Services at the prevailing charge out rates of the personnel involved.”

Guidance describing the contingent feeIn addition, the following guidance applies on how to describe the contingent fee so as to avoid misunderstanding as to how it will be calculated and when it will become due:1. Only in exceptional cases shold 100% of the fee be contingent. The client should also

make some investment/commitment. Accordingly consider including a non refundable fixed element that contributes to our costs. For example: “The fees for this project will be a fixed fee of {} due {describe } and a contingent fee element calculated an due as follows…”

2. Describe the basis for calculating the fee. For example:- “{}% of the amount of savings achieved y the client as a result of the Services”- “{}% of the tax recover in connection to the Services provided”.- “a {}% of {describe} but subject to a cap of {}”.

3. Specify what will be included and what is excluded. For example:- “the level of savings shall be calculated as the difference between…”- “… for these purposes the tax recover shall mean the amount claimed to be

recovered before any approval by tax authorities or after the approval by tax authorities”

4. Specify the event which will trigger the fee becoming due and how this will be identified.

In a cross-border engagement, involving an “International Tax Client” the Primary Member Firm for the Engagement (“Primary MFE”) can agree to a cap up to €5 million on behalf of all participating Member Firms in the engagement. The Primary Member Firm for the Engagement shall make decisions through the Lead Tax Partner in the Primary Member Firm for the Client (“Primary MFC”) and those who must be consulted within that Member Firm or otherwise in order to make the required decision. Where the overall client relationship could be impacted, the Lead Client Service Partner should be consulted. Caps in excess of €5 million must be negotiated on a case-by-case basis with the Member Firms involved. Member Firms should attempt to negotiate a lower cap for Member Firms with smaller input. Please refer to Section 5007 – International Tax Client

Business terms for tax services

12. Standard Tax Terms (STTs) are general business terms and conditions for use by Member Firm tax practices in their Engagement letters or other contracts with Clients. They set out the legal arrangements and protections that would ordinarily be appropriate for providing non-assurance tax services to Clients. They are considered leading practice, in particular in circumstances where more than one Member Firm may be involved in the provision of the services to the Client group, whether as a subcontractor to another Member Firm or under a separate Engagement letter. Member Firms are expected to use their Member Firm version of the STTs for Engagements involving more than one Member Firm (see Section 5006, Referrals and performance of tax services across borders). Detailed guidance as to the purpose of each clause in the STTs and some common Client negotiating requests are available on the Cross-border tax work website.

13 Each Member Firm tax practice should develop a set of business terms applicable for tax Engagements. It is expected these will reflect the principles of the model STTs as amended from time-to-time and will vary only where:

   Specific national, legal or regulatory terms are required by a Member Firm; or    To the extent a Member Firm believes that its local market requires alternative or modified terms, or will accept terms that are more favorable.

14. In particular, Member Firm business terms for tax would ordinarily be expected to include a liability cap, appropriate provisions dealing with confidentiality and intellectual property ownership and protections for other Member Firms. Member Firm business terms would ordinarily not expected to include terms which:

    Acknowledge that time is of the essence with respect to the performance of the services and delivery of deliverables.

    Include most favored pricing provisions.    Have non-competition restrictions on any Member Firm.    Have confidentiality provisions or obligations to destroy or return documents that conflict with Local

Laws or Member Firm policies.    Provide for service performance obligations to survive Engagement completion or termination.

    Include a broad ban on soliciting Client or Client group personnel.    Oblige disclosure of Member Firm insurance arrangements (including those pertaining to

professional liability).    Purport to bind another Member Firm.

15. To facilitate effectiveness and consistency in Member Firm contracting, if requested Member Firm business terms for tax services should be discussed with the DTTL Managing Director—Global Tax Quality, Risk and Regulatory who may share such Member Firm terms across the network of Member Firms, as appropriate. Member Firms are responsible for keeping any such published versions up-to-date by advising the DTTL Managing Director—Global Tax Quality, Risk and Regulatory of proposed changes on a timely basis. See also Section 5006, Referrals and performance of tax services across borders for Member Firm obligations in respect of Standard Tax Terms for cross-border engagements.

16. A copy of the Member Firm Standard Tax Terms, or similar Member Firm business terms for tax services, should always be attached or incorporated by reference to the Engagement letter. Without these, an Engagement letter on its own would ordinarily not provide adequate legal protection.

Master service agreements (including MTFAs)

17. At a Client's request or in circumstances where more than one service line and/or Member Firm will participate in the provision of services to a Client, an Engagement Partner in consultation with the Global Lead Tax Partner (GLTP), if assigned, may determine that a master services or framework approach is appropriate for the provision of tax services. Such arrangements are subject to the same policies and principles which apply to Engagement letters and the business terms within such agreements are expected to follow substantially the same principles and protections as the Standard Tax Terms. See links for a Model Master Tax Framework Agreement which is the preferred starting point for negotiating such agreements with Clients.

18. If so requested, to facilitate effectiveness and efficiency in global contracting, Member Firms should provide the DTTL Managing Director—Global Tax Quality, Risk and Regulatory with details of any specific business terms or documentation required by Local Laws or local market considerations to enable the Member Firms to participate in a MSA and keep this information up-to-date by advising the DTTL Managing Director—Global Tax Quality, Risk and Regulatory of changes on a timely basis. Examples, of such terms include agreements required for exchange control purposes, particular data privacy requirements, or SEC Restricted Entity language. The DTTL Managing Director—Global Tax Quality, Risk and Regulatory may share this information across the network of Member Firms, as appropriate.

Negotiating roles and responsibilities

19. It is the responsibility of the Tax Engagement Partner to use his/her best efforts to obtain the agreement of the Client to accept the Member Firm Engagement letter and associated tax business terms. In addition, the Tax Engagement Partner has primary responsibility for negotiating the terms of the Engagement with the Client in good faith and having regard to DTTL and Member Firm polices, the needs of other Member Firms or service lines, as appropriate, any long-standing terms that have previously been agreed with the Client, and the potential commercial consequences of disturbing such arrangements. Guidance on the purpose of each clause in the Standard Tax Terms and some common Client negotiating requests are available on the Cross-border tax work website.

20. Where a GLTP has been appointed for a particular Client, a Tax Engagement Partner wishing to engage with that Client is expected to consult with and follow the leadership of the GLTP and respect any contracting guidelines or protocols that have been established by the GLTP.

21. Member Firms negotiating a MSA or Master Tax Framework Agreement or similar are strongly encouraged to consult a member of the Tax Negotiators Network at the earliest opportunity for

guidance and assistance, as required.22. Each Member Firm tax practice should establish policies and procedures to address the

review and approval of a Client's proposed modifications to a Member Firm's Engagement letter. It is recommended this include identification of material or key business terms in respect of which changes would ordinarily be discussed with the Member Firm Tax Risk Leader (or their designee) and/or appropriate legal counsel prior to acceptance. This would ordinarily include changes to the liability and indemnity provisions, the intellectual property clauses, protections for subcontractors including other Member Firms and requests to include any of the terms or conditions mentioned in paragraph 14 above.

23. A liability cap is an important term in any contract with a Client and would ordinarily be sought, to the extent legally permitted. Agreement of the liability cap is essentially the same as negotiating any other general business term. Parties to liability cap discussions should have regards to the likelihood that the cap will be relied on, the availability of insurance, market conditions in the contracting jurisdiction, the acceptability of alternative contracting arrangements to the Client, and any ways in which the risks may be mitigated during the performance of the services. See Section 5006, Referrals and performance of tax services across borders for additional policies and guidance with respect to contracting in referral situations.

24. Member Firms in jurisdictions where the use of liability caps is limited or prohibited should advise the DTTL Managing Director—Global Tax Quality, Risk and Regulatory of the particulars of such constraints and these may be published on the Cross-border tax work website.

Contracts between Member Firms

25. Member Firms are not expected to agree separate liability arrangements between themselves with respect to work referred between Member Firms. Inter-firm relationships including inter-firm liability arrangements are separately addressed by the DTTL Documents and DTTL policies. The use of Referral Instructions (see Section 5006, Referrals and performance of tax services across borders) would ordinarily be expected to be the normal mechanism by which Member Firms communicate and confirm referral arrangements.

26. A Member Firm should not seek to manage Engagement risk by seeking to transfer that risk to other Member Firms through the terms of a subcontract (e.g., by proposing the inclusion of a monetary limit on its liability to, or requesting an indemnity from the other Member Firm) other than in rare and exceptional circumstances. On occasional circumstances, a limited scope contract may be required between Member Firms, for example, under Local Laws or for exchange control purposes or with regards to the use of software. See Global Tax Advisories for certain country specific agreements that fall into this category. Such cases should ordinarily be discussed with the DTTL Managing Director—Global Tax Quality, Risk and Regulatory.

Links

  Model Standard Tax Terms

  Model Master Tax Framework Agreement

Original publish date:       26 July 2007Revised date:                      15 October 2012

5005. Engagement Performance and Delivery

IntroductionThis Section of the Manual provides policies and guidance on the performance of Engagements.

Policies and GuidancePerformance Standards 

1. Each tax professional is responsible for the quality of his or her work. Tax work should be performed by tax professionals in the Tax function. Personnel assigned to perform the work done by the Tax function should have the necessary professional expertise. Each tax professional should exercise due care in the performance of any Tax Engagement. Such due care should include the evaluation of all relevant facts, use of reasonable assumptions, and adherence to applicable Local Laws. All advice should be rendered in accordance with applicable rules and regulations. 

Engagement Responsibility 

2. Each Tax Engagement should be assigned to a Tax Partner, who has the overall responsibility for the supervision of the work and the quality of the services delivered. Each Tax Engagement should be adequately planned, controlled, and supervised. All conclusions should be adequately reviewed and documented, including all pertinent facts and assumptions relied on, and should be retained in the file. 

Content of Files 

3. Member Firm Tax Practices should retain sufficient documentation in the tax files to support the final work product. This should include a copy of the final work product, documentation of communications with the Client (both oral and in writing), and substantive support for the final work product, to the extent required by Local Laws. All extraneous information should be removed from the Engagement file. See Section 5010, Document Retention and Access.    

Electronic Files 

4. Member Firm Tax Practices should develop policies and procedures regarding the maintenance of relevant electronic files for each Client and/or Engagement. Electronic files, including e-mail, from both hard drives and networks, should be regularly archived. 

Communication With Clients 

5. The results of the tax work should be communicated to the Client and contain (whether oral or written) sufficient detail (including the relevant facts and assumptions relied upon) so that the Client is fully informed as to the results of work. Each Member Firm Tax Practice should develop policies to govern the review and signing authority for all Client communications, taking into account the nature and complexity of the work. It is expected that all communications that contain substantive advice on high risk Engagements should ordinarily be reviewed by a Tax Partner. Member Firms should ordinarily consider the security of advice provided electronically, including the use of the PDF format, for transmitting deliverables. Copies of communications conveyed to a Client should be retained in the file for that Client. Oral communication or consultations

performed by the client should be documented, please refer to Exhibit 5 – Oral Consultation.  

6. All advice should contain the relevant facts relied upon, the conclusions reached, and appropriate disclaimers and limitations, as appropriate. The information on which we base our tax service is critical to the outcomes that we reach. It is important that we are clear in our dealings with the client regarding the extent to which we are relying on the information provided to us, the extent to which we are reviewing the information provided, and that our final deliverable is based on the information that we have referred to in the deliverable.

We can ordinarily rely on information provided by a client for use in performing tax services without formal verification, but we should review this information for reasonableness.

We must advise our client that:

The responsibility for the accuracy and completeness of the particulars and information required to comply with a tax law rests with the taxpayer.

Any advice given to the client is an opinion only and is based on our knowledge of the particular circumstances.

There are limitations attached to tax advice and service, so that the client does not misinterpret an expression of opinion by us as an assertion of fact.

We should not represent to a client that any return reviewed or tax advice offered is beyond challenge. Instead, we should ensure that the client is aware of the limitations attached to the performance of the tax service so that they do not misinterpret an expression of opinion as an assertion of fact. 

Concurring Opinions 

7. All advice or opinions on material, complex, or sensitive issues should be concurred upon by acknowledged technical experts or other appropriate personnel. Each Member Firm Tax Practice should develop policies and procedures outlining the requirements for concurrence on advice and/or opinions conveyed to a Client on material, complex, or sensitive issues. Concurring review by a second partner is required in relation to all tax memorandums and letters with technical content sent to clients. Memorandums regarding tax compliance support work for DTTL Audit are not required to be submitted to a concurring review within tax, since the memorandum will be object of review by the DTTL Audit partner in charge of the engagement who would act in this instance as the concurring review partner. Concurring reviews should be documented by the persons performing both the primary and concurring reviews, please refer to Exhibit 6 – Concurring Review Form. Factors that may influence the decision to require an additional review or that indicate material, complex or sensitive

issues include the following:

a. Tax opinion Engagements in which third parties will rely on work performed.

b. Engagements that request relief from the tax authorities. Depending on the Member Firm Tax Practice's prior involvement, the Client may attempt to hold the Tax Practice responsible if the request fails.

c. Expert witness Engagements. Positions advocated in testimony may be different from past testimony or with positions taken by other Clients.

d. Lobbying. Engagements that involve representing a Client before legislative, administrative, or regulatory bodies. Positions lobbied for one Client may be adverse to another Client's interests.

e. Risk of litigation in which the matter is such that litigation is reasonably foreseeable.

f. Formal tax opinions, including opinions used in security offerings and private placements. Clients may place undue reliance on conclusions reached in a formal tax opinion.

g. Transactions with significant tax savings or which involve transactions that are material in size.

h. First-time Engagements or Engagements that have sensitivity to the Client relationship.

Application of Law of Other Jurisdictions 

8. Refer to Section 5006, Referral of Tax Services Among Member Firms, for additional policies and guidance relating to the application of the laws of a Member Firm other than the Member Firm rendering the service.  

Ongoing Engagement Risk Assessment 

9. The Engagement Risk determined at the time of Engagement acceptance should be continuously evaluated throughout the Engagement. The Tax Engagement Partner and the Lead Tax Partner should be alert to and monitor changes in factors and conditions, including those specified above, occurring during the Engagement that could alter the initial assessment of Engagement Risk. See paragraphs 16 and 17 of Section 5003, Engagement Acceptance and Continuance. 

The six-stage lifecycle

When providing advice, the following six stages should be adhered to as best practice:

Stage 1: Receipt of request for advice Have you completed relevant client and engagement acceptance procedures

before accepting the engagement? Have you acknowledged the request from the client and provided a time frame

for the response (refer to 5002 - Client acceptance and retention and 5003 -

Engagement acceptance and continuance)?

Stage 2: Scope of Advice Is there an engagement letter that covers the advice, or is a new engagement

letter required? Is the work within the scope of competence of the team and available

specialist support? How do we avoid performing services not contained within the scope of the

engagement letter (“scope creep”) and possibly also beyond our competence? What is the risk classification of the new work? Do we need to discuss the project with the DTTL Tax Quality, Risk and

Regulatory Leader/ DTTL Tax Service Line Leader?

Stage 3: Preparing the advice Creating the advice and obtaining specialist input. Deciding on the presentation format.

You must be constantly alert to the need to involve specialists, confer with colleagues, and manage engagement scope when preparing advice. Advice provided to a client should be complete, concise, and correct. Written advice should include the basis of our advice to assist in managing expectations and risk.

Stage 4: Reviewing the advice Review approvals needed for different types of tax advice.

Please refer to Concurring review comments performed above – item 7.

Stage 5: Delivering the advice How to deal with oral, written, and “draft” advice. Making sure the sign-off is correct. How to deal with electronic communications.

Oral Advice : Oral advice includes any advice that is not written advice (as described below). In addition to telephone calls (either one-on-one or conference calls), oral advice includes personal meetings, informal briefings, and video conferencing calls. All oral tax advice should be documented in a file note that is included in the client’s tax file.Where oral advice is provided we should agree with the client if any follow-up is required and the format of that follow-up based on the subject matter of the discussion. There are many circumstances where no formal follow-up is required.

Where the discussion is not confirmed in formal written communication, a brief file note should always be prepared covering:

Who took part in the discussion When the discussion took place The nature and subject matter of what was discussed, including

the relevant facts, issues identified, and initial tax advice provided Any agreed actions that arose from the discussion.

If the engagement manager and partner did not participate in the discussion, a copy of the file note should be made available to them to ensure that they are briefed on it. This file note is subject to the same vertical review, concurring review, and document management requirements as any other written advice (see below).

Written Advice: “Written advice” covers any communication in writing to a client that contains advice.

While the norm is to regard anything on paper as “written advice,” the development of electronic communication extends the definition to items sent in electronic format or electronic storage that is convertible to paper. It includes e-mail messages, CDs, DVDs, website pages, and scanned documents.

Written advice to a Client should be in a letter or report format, while written advice to another service line or Member Firm should be in a memo or report format.

All reports and letters containing advice must be issued to clients and signed in the name of the service line by a Tax Partner using Deloitte standard letterhead or standard service line templates.

Draft Advice:

Draft reports or letters containing professional advice (draft advice) must be labelled as a “draft”. Draft advice provided to a client should be sent under a cover communication to the client confirming that:

The information on which we have relied upon in producing the draft advice is accurate and complete.

There are no matters contained in the draft advice that are inconsistent with the client’s understanding of the particular transaction or matter.

The client has brought to our attention all matters that are relevant to the particular transaction or matter.

Draft advice may be sent by e-mail. All e-mail communications containing such advice are to be clearly marked “draft” and sent as a PDF file.

All draft advice should to be followed by a signed hard copy of the final advice.

Signing on behalf of another partner

In some cases, partners may be permitted to sign advice on behalf of (p.p.) another partner. This is only permitted if the other partner has verbally approved the advice but is not available for signing prior to release to the client.

In extenuating circumstances a principal or director may sign on behalf of the partner, provided the authorization of the partner is documented.

A partner/principal/director who signs on behalf of the partner should note on the file copy of the advice that the named partner has approved. When available, the named partner should sign off on the file copy as soon as possible after its release to the client.

Electronic signatures which have been scanned in to computer files may not be used on any advice without the prior consent of the signer. Use of electronic scanned signatures should be strictly limited.

Electronic Communication:

Advice in the body of an e-mail

In some circumstances the manner in which the engagement is performed makes it practically difficult to deliver appropriate and timely advice to the client without including advice in the body of an e-mail (e.g., when undertaking preliminary discussions and investigations in relation to appropriate tax structures as part of a cross-border acquisition).

In these limited circumstances it is recognized that advice may be included

in the body of an e-mail. Advice should not be sent in the body of an e-mail unless one of the following exceptions applies:

The e-mail should preferably originate from the engagement partner’s e-mail address. The engagement partner may authorize a tax principal/account director to send such e-mails, but only after appropriate review and if the relevant engagement partner has been copied.

The engagement letter should specifically provide for and the engagement should contemplate the delivery of a final tax structuring report to the client, in which the final tax position and advice is documented in sufficient detail.

Final advice must be completed and delivered to the client. It will not be acceptable to allow the advice to remain in draft form.

Brief advice to a Member Firm to be incorporated into the Member Firm’s report/advice

This is a limited exception and professional judgment is to be applied. Substantial advice to a Member Firm that is specific to a client should always be provided in the form of a letter or memo with appropriate sign-off.

Stage 6: Documentation Filing and knowledge sharing.

5006. Referrals And Performance of Tax Services Across Borders

IntroductionThis Section of the Manual provides policies and guidance for performing tax services across borders and for referrals of work among Member Firms. It applies to all tax services, and related services, regardless of their scope and complexity. The policies and guidance in this Section are intended to:

Help Member Firm Partners and Professional Staff deliver effective, consistent, and quality Professional Services across borders to Clients; and

Help Member Firms avoid duplicative or inefficient processes in making decisions regarding Client and Engagement acceptance and contractual terms and addressing the risks and concerns of the Member Firms involved.

If tax services are part of a multifunctional Engagement but the referral is between two or more tax professionals, the policies and guidance in this Section apply. If the referral is between the tax function and another function, the Engagement Partners in each Member Firm should consider relevant DTTL and Member Firm guidance but use judgment and flexibility in interpreting such policies or procedures in order to facilitate effective and efficient referrals and Client service.

It is important that Member Firms cooperate and work together to expedite agreement in relation to cross-border Engagements.

Organization of this Section

Section A: Performance of cross-border work

Member Firm territorial rights Advising on tax laws and related matters outside the Member Firm's jurisdiction Member Firm behaviors with respect to referred work

Section B: Referred work procedures and responsibilities

General requirements Client and Engagement acceptance Contracting and subcontracting Fees and billing arrangements Differences of opinion

Section C: Referral instructions

Purpose and timing Format and content

If a Member Firm has territorial rights in more than one jurisdiction, and as the context requires, any reference to a Member Firm should be deemed to refer to the tax practice in a particular jurisdiction, even if several such practices may be members of one Member Firm with territorial rights that cover a number of geographic locations.

 

DefinitionsFor the purposes of this Section, the terms and abbreviations used have the meanings provided below:

Global Lead Tax Partner (GLTP)

The Member Firm partner with overall responsibility for coordinating Deloitte’s global tax relationships with a particular Client. References to a GLTP should be read as applying only where a GLTP has been assigned and not as a requirement to have a GLTP. To identify if a GLTP has been assigned for a particular Client, visit the Global Tax Network Directory.

Inter-firm Work Referral Form (IWRF)

A tool for creating Referral Instructions that comply with this and other relevant DTTL policies. The IWRF is available on the Cross-border tax work website.

Master Service Agreement (MSA)

A contract in which one Member Firm agrees to general terms with the Client that the Client wishes to apply to the Deloitte network globally. Other Member Firms may agree to operate under the MSA terms. This is usually in the form of an implementation or participation agreement signed by the other Member Firm with either the Client or the local Client entity that is intended to supply terms applicable to multiple Engagements (rather than a single Engagement). It may incorporate additional business terms required under Local Law for Professional Services provided by that other Member Firm. Agreement to the specific Professional Services to be provided by any Member Firm under a MSA may be separately documented in a “statement of work” or “work order.”

Participating Member Firm (PMF)

The Member Firm that is providing assistance to another Member Firm or providing specific Professional Services that relate to a Client (or a Client’s subsidiary or otherwise related organization) of another Member Firm at another Member Firm’s request.

Referral Instructions The formal written communication between the Referring Member Firm and the Participating Member Firm meeting the minimum standards set forth in this Section 5006. The IWRF is a form of referral instructions.

Referring Member Firm (RMF)

The Member Firm requesting assistance from another Member Firm to provide specific Professional Services that relate to a Client or a Client’s subsidiary or otherwise related organization of such Member Firm.

Standard Tax Terms (STTs) A model set of business terms recommended for use in all tax Engagements involving more than one Member Firm and meeting the minimum requirements set out in Section 5004, Engagement Letters and Equivalent Contractual Agreements.

Member Firms will usually have their own Member Firm version of the Standard Tax Terms.

 

Policies and GuidanceA. Performance of cross-border work

Member Firm territorial rights

1. Each Member Firm has exclusive rights to provide services under the Deloitte brand in a designated territory. Article 12.3 of the DTTL Documents states: Each Member Firm shall respect the exclusive privileges of the other Member Firms within their jurisdictions. Any Member Firm serving in its own jurisdiction a Client of another Member Firm, or otherwise taking actions that are likely to have a direct effect on the practice of another Member Firm, shall inform and cooperate with that other Member Firm. No Member Firm shall knowingly act so as to harm the practice or reputation of another Member Firm.

   

2. As a result, Member Firm A should not provide tax Professional Services in another Member Firm’s jurisdiction (Member Firm B) without first obtaining agreement from the Tax Practice Leader (or his/her designee) in Member Firm B. It would ordinarily be expected that Member Firm A will contact Member Firm B when it first becomes aware of an opportunity in Member Firm B's jurisdiction and not at a later stage.

   

3. In order to provide Professional Services to a Client across jurisdictions, Member Firms should cooperate and coordinate efficiently and in a timely manner.

 

Advising on tax laws and related matters outside the Member Firm's jurisdiction

4. No Member Firm should provide Professional Services with respect to tax or related matters that are governed by the laws of another country's or Member Firm’s jurisdiction, unless the Professional Services:

a. Have been subcontracted to, or the advice reviewed by or concurred with by appropriate tax professionals of the Member Firm whose jurisdiction’s tax laws are being applied; or

b. Are provided by teams or individuals in accordance with agreed arrangements between the countries or Member Firms; or

c. Are provided by a shared service center or similar operating entity. Such entities should be established through written

agreements between the Member Firms and in appropriate consultation with the DTTL Global Tax Executive and DTTL Managing Director—Global Tax Quality, Risk and Regulatory.

5. If Professional Services are being provided under the circumstances described in paragraphs 4b and 4c above, it is generally expected that Partners and Professional Staff providing such services will have access to the technical knowledge and learning resources of the Member Firm whose tax laws are being applied (Member Firm C), and the quality, risk, and reputation policies and procedures similar or equivalent to those operated by Member Firm C apply to such services.

 

Member Firm behaviors with respect to referred work

6. Article 12.3 of the DTTL Documents require that:Each Member Firm should make every reasonable effort to refer to the other Member Firms (i) client work that is to be performed in their jurisdictions and (ii) contacts that may lead to such work.

   

7. Cross-border referrals for tax or related services among Member Firms ordinarily involve either:

a. Passing on contacts — Contact Referral. One Member Firm (D) introduces a Client or contact to another Member Firm (E) but has no further interest or involvement in the relationship. Contact referrals usually take the form of a short email or phone call and the provisions of Sections B & C below do not apply to contact referrals. Member Firm E will follow its normal Client and Engagement acceptance procedures although it may consult with Member Firm D and take into account Member Firm D’s relationship, if any, with the Client.

b. Requesting work — Service Referral. One Member Firm requests assistance from another Member Firm regarding a particular piece of work for the Referring Member Firm’s Client or its affiliate. The policies and guidance in Sections B and C, below, apply to all service referrals regardless of the contractual arrangements that apply to that work.

8. In making a referral, a Tax Engagement Partner should consider the capacity and capability of the other Member Firm to provide the Professional Services that will be requested and, if he or she has any concerns, should consult with the relevant Tax Practice Leader, or a regional or global tax, clients & markets or service line leader, as appropriate.

   

9. For all referrals, Member Firms should:

a. Communicate with each other in a timely and transparent manner.

b. Respond to requests professionally and promptly.

c. Be reasonable with regards to fees, deadlines, and setting Client

expectations.

d. Apply policies and procedures that facilitate efficient, consistent, and quality Client service and risk management.

e. Respect each other's decisions.

f. Avoid duplication of similar procedures to the fullest extent possible.

g. Be sensitive to the availability of resources, including the timing of holidays and traditional vacation periods.

h. Follow the guidance and leadership of the GLTP, if assigned.

i. Escalate differences of opinion promptly. 10. The ultimate decision-making responsibility for all aspects of an

Engagement, including acceptance and contracting, rests with the individual Member Firms, and the decision regarding whether or not to accept a referral rests with the relevant Member Firm. No Member Firm or Partner of a Member Firm can commit another Member Firm to accepting a Client or an Engagement nor enter into a contract that binds another Member Firm. Therefore, no Member Firm or Partner of a Member Firm should take any action that purports to bind, oblige, or compel another Member Firm to participate in an Engagement without that other Member Firm's prior written confirmation or imply to a Client or prospective Client that it has the power to bind, oblige, or compel another Member Firm to participate in an Engagement without the prior express written authorization of the Member Firm concerned.

   

11. Notwithstanding the above, a Member Firm is not normally expected to decline a Services Referral if the:

a. Work requested is within the normal scope of its business;b. Client and the Engagement have been accepted by the Referring

Member Firm and no significant additional risks, conflicts, or prohibitions are identified by the Participating Member Firm;

c. Proposed fees represent an acceptable commercial return in light of all the circumstances; and

d. Principal provisions of the contract governing the work are consistent with the Standard Tax Terms or the normal commercial environment for the services in the Referring Member Firm’s jurisdiction. An example of normal commercial environment would be Local Laws that require certain terms or where a Member Firm may have a standard liability cap of a multiple of fees for most services, but for M&A work the market dictates a higher fixed cap. Although the cap for M&A work is higher than that in the Standard Tax Terms, it should still be accepted as reflecting the market terms for those services in the Referring Member Firm's jurisdiction.

12. Where a Participating Member Firm intends to decline to provide

services, it should do so on a timely basis before the Referring Member Firm commences substantial work and should consider reasonable requests to facilitate the conduct of work in its territory.

   

13. All referred work remains subject to the Participating Member Firm’s normal quality risk and reputation policies and procedures regardless of the size or complexity of the referred work. See Section 1610, Cross-Border Referrals and Contracting Among Member Firms-Non-Assurance Engagements with regard to responsibility for Interfirm loaned staff provided to another Member Firm.

 

B. Referred work procedures and responsibilities

General requirements

14. Both the Referring Member Firm and the Participating Member Firm are subject to the general policies and procedures set forth in Sections 5002, Client Acceptance and Retention , 5003, Engagement Acceptance and Continuance, and 5004, Engagement Letters and Equivalent Contractual Arrangements, as applied in their Member Firm Client and Engagement acceptance and contracting policies.

   

15. The Tax Engagement Partner in the Referring or the Participating Member Firm, as appropriate, is responsible for ensuring that the requirements set out in this Section are followed and for making decisions about matters entrusted to him or her under this Section in consultation with others within the Member Firm or the Deloitte network, as appropriate, and within any timeframes specified.

   

16. Each Member Firm Tax Risk Leader should provide guidance to its Partners and Professional Staff with regard to the requirements of this Section and its integration into its Member Firm policies and procedures.

   

17. If so requested, and to facilitate the efficient referral of cross-border tax services, each Member Firm should provide to the DTTL Managing Director—Global Tax Quality, Risk and Regulatory:

a. Details of their Client and Engagement acceptance requirements including specific procedures or documentation required under Local Laws. For example, relating to anti money laundering or audit Partner approvals.

b. A copy of their Standard Tax Terms and/or normal business terms and sample Engagement letters used with respect to cross-border tax services.

c. Details of any specific business terms or documentation

required by Local Laws in the Participating Member Firm to enable it to provide relevant Professional Services. For example, interoffice agreements required for exchange control purposes, particular data privacy requirements or SEC restricted entity language.

d. A tax escalation contact who can facilitate a quick resolution to any cross-border issues (see Section 5009, Tax Issue Consultation and Escalation) and an experienced tax negotiation contact to help resolve contracting issues on an expedited basis.

In principle International Tax Clients referred by another Member Firm should be accepted without requiring further procedure, unless the circumstances requires you to perform additional client acceptance procedures as part of the DRMS System

When the information requested above is provided the DTTL Managing Director—Global Tax Quality, Risk and Regulatory, he/she should publish such information to assist Member Firms and GLTPs with fulfillment of their obligations under this and other relevant DTTL polices. See the Cross-border tax work website. Member Firms are responsible for keeping published information up to date by notifying the DTTL Managing Director—Global Tax Quality, Risk and Regulatory of proposed changes on a timely basis.

 

Client and Engagement acceptance

18. The Referring Member Firm should ordinarily:

a. Promptly perform Client and Engagement acceptance procedures in accordance with its own Member Firm requirements. Prior to referring work to another Member Firm, the Referring Member Firm would ordinarily be expected to have performed sufficient Client and Engagement acceptance procedures to anticipate that it will more likely than not accept the Client and the Engagement.

b. Communicate the Client and Engagement acceptance procedures that have been performed to the Participating Member Firm, including the Engagement risk classification, and if these are not yet completed, fully inform the Participating Member Firm of status and progress. See Section C, Referral Instructions.

c. Follow any acceptance-related protocols or guidance established and communicated by the LCSP and/or GLTP (if assigned) for the Client. Such guidance would ordinarily cover issues such as the form, timing, and frequency of consultation regarding the provision of Professional Services and any necessary approval processes.

d. Consider the Client and Engagement acceptance procedures required by the Participating Member Firm, and if so requested and to the extent permitted by Local Laws, assist that Member Firm in obtaining any necessary information or documentation to allow the Participating Member Firm to satisfy its own Client and Engagement acceptance procedures.

e. Promptly consult with the LCSP and/or GLTP (if assigned) for the Client on becoming aware of any intention by a Participating Member Firm to decline to provide the Professional Services.

19. Each Member Firm should develop and implement policies and

guidance regarding the circumstances in which it may use and rely on the Client and/or Engagement acceptance procedures performed by a Referring Member Firm. Such policies and guidance would ordinarily be expected to distinguish circumstances in which the Participating Member Firm may accept a Service Referral:

a. Without performing any local acceptance procedures (e.g., a referral in the form of a limited conversation covering minor assistance, such as a request for factual confirmation of noncomplex tax treatment or confirmation of information widely available in the public domain).

b. With significant reliance on the procedures performed by the Referring Member Firm but supplemented by limited local procedures as required by Local Law or Member Firm policies (e.g., if a Participating Member Firm has specific anti-money laundering procedures required by Local Laws or considers issues that the Referring Member Firm will not have been in a position to evaluate, such as local independence restrictions or conflicts).

c. Only once it has completed its own acceptance procedures (e.g., if there are difficulties in understanding, or delays or concerns about, the adequacy of the acceptance procedures that have been performed by the Referring Member Firm).

In preparing such policies and guidance Member Firms would be expected to be guided by the principle that, to the fullest extent possible, they should rely on the acceptance procedures performed by another Member Firm and not repeat procedures unless they are specifically required under Local Laws or to manage local risk and reputation matters.

   

20. Participating Member Firms should ordinarily:

a. Use and rely on Client and Engagement acceptance procedures performed by the Referring Member Firm to the extent practicable. If the circumstances warrant, the Participating Member Firm may request discussion or review of the documentation underlying the Client acceptance decision of another Member Firm.

b. Perform any supplementary procedures required (for example under Local Laws or Participating Member Firm policies) to conclude its own Client and Engagement acceptance procedures promptly. This would ordinarily require consideration of local reputation, independence, conflicts, and anti-money laundering.

c. Utilize information provided by another Member Firm in making Engagement acceptance decisions, including the Engagement risk rating determined by the Referring Member Firm. If a Participating Member Firm is willing to accept the referral but concludes, based upon its own risk assessment criteria, that the proposed referral is a higher risk, it should develop a mitigation plan to address the identified risk issues and advise the Referring Member Firm as appropriate.

d. Promptly advise the Referring Member Firm of any additional information it may require and not contact the Client directly without with the agreement of the Referring Member Firm. Any such request should be made within a reasonable time (ordinarily within two to five working days of receipt of the Referral Instructions).

e. Promptly inform the Referring Member Firm of any intention to decline to provide the services. See paragraph 12.

Contracting and subcontracting21. The contractual arrangements for service referrals from another Member

Firm may take different forms including:

a. Subcontract. The Referring Member Firm has the Engagement with the Client (the prime or main contract) but requests the Participating Member Firm to perform some of the services as a subcontractor to the Referring Member Firm.

b. Separate contracts. The Participating Member Firm has its own separate contract for the work with the Client and/or its affiliates.

c. Participation in a global contracting arrangement.One Member Firm negotiates terms with a Client that the Client wishes will form the basis for other Member Firm contractual relationships with the Client globally. This may take the form of a Master Service Agreement. Negotiation of MSAs should always involve the GLTP if one is assigned.

Which one of these arrangements is appropriate will depend, among other things, on the Client's preferences, the nature of the work to be performed, Local Laws, market practices, and the degree of coordination required in performing the referred work. See also Section 5004, Engagement Letters and Equivalent Contractual Agreements.

   

22. Member Firms should establish policies that determine when services are to be provided under its own contract with the Client and when work may be performed as a subcontractor to the Referring Member Firm. As a general rule, subcontracting is most appropriate if the work is general advice being provided to the Referring Member Firm or is one part of a larger Engagement being led and managed by the Referring Member Firm. It may be less appropriate if the Participating Member Firm has an ongoing and a direct relationship with the Client or its local subsidiary that is independent of the Referring Member Firm or any Client relationship coordination and management role performed by the Referring Member Firm.

   

23. Member Firms should develop a Member Firm version of the Standard Tax Terms (or equivalent) discussed with and agreed to by the DTTL Managing Director—Global Tax Quality, Risk and Regulatory. See Section 5004, Engagement Letters and Equivalent Contractual Agreements. These are the recommended business terms to be used for Engagements involving cross-border services except:

a. If a separate Client-led contract based on the Client’s standard contractual arrangements or a global contracting arrangement applies.

b. For Engagements involving more than one function (including M&A Engagements) when use of the Standard Tax Terms is strongly encouraged but optional.

24. Other than in rare and exceptional circumstances, a Participating

Member Firm should not seek to manage Engagement risk by seeking to transfer that risk to the Referring Member Firm through the terms of a subcontract or Referral Instructions (e.g., by proposing the inclusion of a monetary limit on its liability to, or requesting an indemnity from, the Referring Member Firm). Interfirm relationships including interfirm liability are separately governed by the DTTL Documents and DTTL policies. On rare occasions, a limited form of contract may be required (e.g., for exchange control purposes), and DTTL Managing Director—Global Tax Quality, Risk & Regulatory will provide details of such cases as required.

   

25. Member Firms should ordinarily follow the leadership of the GLTP, if assigned, and respect any contracting guidelines or protocols established by the GLTP.

   

26. It is the responsibility of the Referring Member Firm to:

a. Communicate the proposed contractual arrangements (e.g., subcontractor, separate contracts, MSA arrangements) to the Participating Member Firm as soon as practicable. See Section C, Referral Instructions.

b. Endeavour to obtain the Client’s agreement to a contract based on the Standard Tax Terms.

c. Advise the Participating Member Firm of any relevant contractual requirements imposed by the Client.

d. When subcontracting:

i. Negotiate the terms of the Engagement with the Client in good faith and considering the needs of all Participating Member Firms and the leadership of the GLTP, if assigned. In providing leadership concerning any variations of the Standard Tax Terms for a particular Client, consideration would be given to the impact that such variation may have, if any, on the relationship that other Member Firms have with the Client or any long-standing terms that have been agreed with the Client and the potential commercial consequences of disturbing such arrangements.

ii. If requested, provide the Participating Member Firm with a copy of the Engagement letter/contract or proposed Engagement letter/contract, although Participating Member Firms would not normally be expected to request such copies routinely.

iii. Determine that the services requested of the Participating Member Firm are within the scope of work contemplated by the prime contract that the Referring Member Firm has or will have with the Client.

iv. Advise the Participating Member Firm of any business terms that vary materially from the Referring Member Firm’s approved version of the Standard Tax Terms. For the avoidance doubt, an effective liability cap of over €5 million should be considered a material variation. See paragraph 27c.iii for the approach to agreeing liability caps and paragraph 27c.i for examples of other terms particularly relevant to Participating Member Firms. Depending on the nature of the variance, the Referring Member Firm would consider whether it is advisable to review the proposed terms

with the Participating Member Firm and the GLTP, if assigned, prior to agreeing them with the Client.

27. It is the responsibility of the Participating Member Firm to:

a. Review and agree the proposed arrangements with the Referring Member Firm and advise the Referring Member Firm promptly of any concerns. In particular, if a Participating Member Firm disagrees with the proposed contractual terms, it should raise the matter before substantial work is performed.

b. Respect the contract negotiations, commercial and legal environment of the Referring Member Firm, and the leadership of the GLTP, if assigned and take a rounded approach in assessing the overall risks implied by the contract. In this context, isolated consideration of the maximum liability exposure is not usually the most appropriate measure of Engagement risk, and the most effective form of risk mitigation is often operational rather than contractual.

c. When acting as a subcontractor:

i. Understand the key terms or proposed terms of the Engagement letter with the Client and whether it includes adequate protections. Suitable protections for the Participating Member Firm may include ensuring that the scope of its work is included; any Client subsidiaries involved in its jurisdiction are bound by its terms; subcontractors can enforce the terms in their own right; there are reasonable liability protections that apply to Member Firms; and the Client agrees only to take legal action against the Referring Member Firm. The Standard Tax Terms include these protections, which may make review of the actual contract unnecessary where these terms are used.

ii. Ordinarily agree to work as a subcontractor under contracts that do not vary materially from the Referring Member Firm’s version of the Standard Tax Terms or if there is no materially increased Engagement risk because of the variation.

iv. Ordinarily agree to work under contracts that include an effective liability cap of €5 million or less, and in cases where the effective liability cap is above €5 million, enter into good faith discussions with the Referring Member Firm and the GLTP, if assigned, to assess the acceptability of the liability cap. Parties to such discussions are expected to take into consideration to the likelihood that the cap will be invoked, the availability of insurance, market conditions in the contracting jurisdiction, the acceptability of alternative contracting arrangements to the Client, and any way in which the risks may be mitigated during the performance of the services.

When negotiating a liability cap for a tax engagement with an International Tax Client you should ordinarily use a liability cap that does not exceed the liability cap specified in the Standard Tax Terms.

Fees and billing arrangements

28. Member Firms should apply a fair fees approach and should not ordinarily seek to charge a premium or success-based fee in their dealings with each other unless this reflects the underlying fee arrangements with the Client.

   

29. The Tax Engagement Partner in the Referring Member Firm has primary responsibility for agreeing to fee arrangements and establishing payment arrangements with the Client in consultation with the Participating Member Firms and the GLTP, if assigned. In all pricing matters, Participating Member Firms would ordinarily respect the business judgment of the Referring Member Firm, and the leadership of the GLTP and, in the event of a disagreement, follow the pricing resolution mechanisms outlined in Section 5009, Tax Issue Consultation and Escalation. All parties are expected to have consideration of the objective of equitable and appropriate fees for all Member Firms involved and any relevant functional fair fee guidelines.

   

30. The level of fee is not, by itself, generally considered to be an acceptable reason for a Participating Member Firm to decline to participate in an Engagement where such guidelines are followed.

   

31. Any matters that impact the setting or recovery of fees should be communicated clearly and openly and on a timely basis by the Member Firms involved.

   

32. Unless otherwise agreed between the Member Firms, the Referring Member Firm is expected to: 

a. Request an invoice, or at least an estimate of the fees, from Participating Member Firms, before invoicing its Client.

b. Agree to billing and payment of the Participating Member Firm in the currency of the Participating Member Firm.

c. Settle Participating Member Firm invoices in accordance with its local payment terms (normally expected to be 30 days).

33. Unless otherwise agreed between the Member Firms, the Participating Member Firm is ordinarily expected to: 

a. Stay within any fee or range of fees specified in the Referral Instructions. If this is not possible, the Participating Member Firm is expected to notify the Referring Member Firm in advance and without delay, and agree on a revised fee basis.

b. Issue an invoice to the Referring Member Firm on a timely basis, usually within 30 days of the completion of the referred work.

34. The Member Firm dealing directly with collecting fees from the Client is expected to take all prudent steps to collect the fees originally agreed on. If

the recovery from the Client is significantly lower than initially anticipated due to bankruptcy (or similar event) of the Client or documented dissatisfaction with the services, the Tax Engagement Partners in the Referring Member Firm and the Participating Member Firm are expected to agree on an adjustment to the original fee arrangement in a manner that is equitable for all parties, taking into consideration the facts and circumstances that contributed to the loss.

   

35. If a Member Firm is seeking the assistance of another Member Firm on an Engagement or prospective Engagement for which no fees can be billed (e.g., in a research project or a proposal), the Referral Instructions should indicate clearly that it is a non-chargeable assignment. Subject to any Client or Engagement acceptance issues, it is expected that a Participating Member Firm would agree to contribute to a Client proposal without charging for its time. For other non-chargeable work, the Participating Member Firm may be willing to do so as a matter of goodwill.

 

Differences of opinion

36. If Member Firms have a difference of opinion with a person or another Member Firm with respect to any aspect of a services referral, it is important that such issue be resolved quickly and appropriately. It is expected that Member Firms would respond to each other's comments or proposals within two business days of receipt.

   

37. If a Participating Member Firm believes that the level of Client or Engagement risk is such that a Client or Engagement should not be accepted locally, or in the event of disagreement regarding contractual or pricing arrangements, it should consult with the Referring Member Firm, the appropriate risk professionals in the Member Firms, and the GLTP, if assigned.

   38. It is expected that such consultation would take place within three business

days of the Member Firm being notified or becoming aware of the difference of opinion and both parties use their best efforts to resolve the issue within two business days.

   

39. If the issue cannot be resolved, the matter should be immediately escalated pursuant to Section 5009, Tax Issue Consultation and Escalation and then, if necessary, pursuant to Sections 1515, Facilitating Cross-Border Engagements, and 1650, Addressing Differences of Opinion.

 

 

C. Referral Instructions

Purpose and timing

40. Member Firms should use written Referral Instructions to communicate service referrals to another Member Firm. In most cases, Member Firms are expected to use the Inter-firm Work Referral Form (IWRF) or its small projects equivalent (see paragraphs 47 to 51).

   

41. The purpose of the Referral Instructions is to improve the efficiency of Client service by providing a Participating Member Firm sufficient details to be able to: 

a. Understand quickly and easily what it is required to do and under what proposed arrangements.

b. Complete its local procedures without unnecessary duplication or delay.c. Conclude whether it is able to do the work.

42. The Referring Member Firm is responsible for issuing Referral Instructions as soon as possible after first becoming aware of the opportunity and ensuring that the Participating Member Firm is kept informed on a timely basis of relevant changes or developments in the Engagement as it progresses, including significant negotiations regarding contracting terms.

   

43. It is likely that in many cases the Referral Instructions will be supplemented by other or additional communications and it is generally preferable for a Referring Member Firm to issue partial or almost complete referral instructions (but which accurately reflect the position at the time) than to delay communication with the other Member Firm.  If a tight deadline is unavoidable, the Referring Member Firm may wish to contact the other Member Firm in advance of issuing Referral Instructions.

   

44. The Participating Member Firm is responsible for promptly reviewing the Referral Instructions and replying to the Referring Member Firm. In particular, a response would ordinarily be required within three business days if: 

a. The Participating Member Firm does not believe it will be possible to meet the Referring Member Firm’s expectations regarding timing, fees, scope, or any other matter.

b. The recipient of the Referral Instructions passes the communication to another Partner or professional in the same or another office of the Participating Member Firm.

c. The Participating Member Firm requires any supplementary information.

You should carefully review the client and engagement information provided by the Referring Member Firm in the instruction. As part of those instructions you are required to confirm by way of e-mail to the Referring Member Firm:

Your agreement to perform the work. You must advise either:

o That you agree to provide the work requested

o There are elements of the work that you do not agree to (provide details)

o You do not agree to provide the work requested.

Any local independence issues. You must advise either:

o No additional local independence restrictions apply in respect of any client

entities identified as participating in this engagement

o Additional local independence restrictions do apply in respect of any client entities, but that the services are permitted and any additional approvals received.

If relevant, any local anti-money laundering procedures have been performed.

If relevant, conflict checks have been performed.

The Inter-firm Work Referral Form, together with these responses sent by you, will generally comprise the entire client and engagement acceptance documentation required in relation to the referral

45. A Participating Member Firm may decide not to start work or confirm its participation until it has received all or substantially all the information outlined in paragraph 50 but is expected to exercise judgment, have regard to Client deadlines, and be flexible in this regard.

   

46. Referral Instructions should be included on the relevant Client file in both the Referring and the Participating Member Firm. They may also form part of the Participating Member Firms Client and Engagement acceptance documentation.

 

Format and content47. If fees for the Participating Member Firm are expected to be the

equivalent of €5,000 or more, the Inter-firm Work Referral Form (available on the Cross-border tax work website) should be used to generate the Referral Instructions.

   

48. If fees for the Participating Member Firm are expected to be less than the equivalent of €5,000, less formal documentation may be used, provided it meets the standards outlined in paragraphs 49 and 50 . The Small Projects IWRF (available on the Cross-border tax work website) is recommended for these lower value referrals.

   

49. Referral Instructions should be:

a. Addressed to the Tax Engagement Partner in the Participating Member Firm. If this is not known, an appropriate regional or global tax, clients & markets, or service-line leader may be consulted or the Referral Instructions may be sent to the Tax Practice Leader in the office of the Participating Member Firm with a request that a Tax Engagement Partner be assigned.

b. Clear and as complete as possible, avoiding technical jargon and terminology that would not be readily understood by the Participating Member Firm.

c. In English, unless another language is the first language of both the Referring Member Firm and the Participating Member Firm, in which case the Referring Member Firm may use such primary language instead.

d. Updated promptly for additional facts or documents received after the initial Referral Instructions have been issued.

50. Referral Instructions should include the following minimum

information:

a. Client name. The full legal name of the underlying Client, together with any subsidiaries or affiliates in the Participating Member Firms jurisdiction that may be included in the Engagement. This is essential for a Participating Member Firm to be able to fulfill its own quality and risk requirements, such as local Client and Engagement acceptance, and is required even for confidential or sensitive Engagements. The Referring Member Firm is not the Client for these purposes.

b. Scope of work.  The specific Professional Services to be performed by the Participating Member Firm, including the issues to be addressed by the Participating Member Firm and sufficient factual information to enable the Participating Member Firm to understand the specific topics relevant to the referred work. Changes in scope of the referred work being requested should be advised promptly in writing to the Participating Member Firm. For routine referred work it may be appropriate to indicate the suggested number of hours to be spent on the work.

c. Timetable. Any timetable or deadlines for the performance of the work.

d. Deliverables. A description and form of deliverables required from the Participating Member Firm (e.g., a report, an email, a summary table).

e. Fees arrangements. All necessary information regarding fees, billing, and collection procedures, including any limits on fees to be charged by the Participating Member Firm.

f. Client and Engagement acceptance. Any Client and Engagement acceptance procedures (including any relevant preapprovals) that have been performed by the Referring Member Firm in sufficient detail to help ensure the Participating Member Firm is able to reasonably assess what, if any, Client and Engagement acceptance procedures it needs to perform and not duplicate procedures.

g. Contracting arrangements. Sufficient details to allow the Participating Member Firm to understand the proposed contracting arrangements (e.g., subcontractor, separate contracts, participation in a global contract) any relevant contractual requirements required by the Client, the basis of the business terms, and any material variances to the Referring Member Firm’s approved version of the Standard Tax Terms. You must advise the Participating Member Firm of any terms that differ materially from the Standard Tax Terms. These would comprise material differences affecting the commerciality or risk arising from the arrangement. For example, the changing of the standard terms from 30 days to 45 days is not material; changing it to three years is material. Contractual arrangements will be deemed to vary materially from the standard tax terms and conditions if there are differences contained in the following clauses (or the following clauses are not included):

b) Clause 1(b)—Protection for subcontractors

c) Clause 4—Ownership of Deloitte property and work products

d) Clause 5—Limitation on Damages.

Accurate and full completion of the Inter-firm Work Referral Form (IWRF) will help ensure these requirements are fulfilled.

Original publish date: 26 July 2007Revised date: 15 February 2012

5007. Not Used

5008. Arrangements with Third Parties for Professional Services

IntroductionThis Section of the Manual provides policies and guidance on contracting with a third party that will be providing Client service on behalf of or in conjunction with a Member Firm Tax Practice. This includes services that might be provided through a joint venture or other arrangement with a third party as well as arrangements with Independent Correspondent Firms but excludes arrangements with other Member Firm Tax Practices. See also Global Tax Advisory 4.2009 for further guidance.

Policies and GuidanceApplication of Principles 

1. In providing Professional Services to a Client, situations may arise when necessary expertise is not available within the Member Firm Tax Practice or other Member Firm Tax Practices. Additionally, there may be circumstances when a Member Firm Tax Practice is requested by a third party to provide assistance to the third party in its provision of services to the third party's clients. These arrangements may take many different forms, such as subcontracting, joint ventures, co-advisors, or other arrangements. The arrangements may involve the Member Firm Tax Practice's provision of client services by (1) using third party professionals, (2) alliances with other firms, or (3) third parties utilizing the services of the Member Firm in conjunction with providing services to its Clients. 

2. Independent Correspondent Firms are not Member Firms of the Deloitte Network. Accordingly, they do not have the membership rights and obligations of a Member Firm, nor are they subject to the oversight processes over Member Firms. Independent Correspondent Firms should be treated as third parties. For the purposes of this Section, in addition to Independent Correspondent Firms, third parties are other firms, entities, or individuals that are not Member Firms. Third parties include but are not limited to other accounting firms, law firms, other professional service firms, banks, and other financial advisors. Client and Engagement acceptance procedures, including independence and conflicts of interest checks, should be performed on any third party, as if it were a prospective Client. 

3. The following policies should be followed for the third parties described in paragraph 2.  For arrangements with other Member Firms refer to and comply with Section 5006, Referral of Tax Services Among Member Firms. 

 

Service Restrictions 

4. A Member Firm Tax Practice should not subcontract with third parties to perform services if the result would circumvent Local Laws or professional restrictions on the Member Firm. The Client should contract directly with the third party. 

5. Similarly, if the Member Firm Tax Practice cannot perform the services directly for the Client,

the Member Firm Tax Practice should not be a subcontractor to the third party who would perform the services. 

6. If subcontracting or acting as a subcontractor, the Member Firm Tax Practice should ensure that it is allowed to subcontract under its Local Laws and professional regulations and make any necessary disclosures and/or obtain necessary approvals, as specified in paragraph 7. 

Approval of Third Party Contracts 

7. Contracts, subcontracts, joint ventures, or other arrangement with third parties to provide Tax Professional Services to a Member Firm Tax Practice's Clients should be in writing and approved by the Member Firm's Tax Practice Leader and the Member Firm Tax Risk Leader or their respective designee(s). Each Member Firm Tax Practice should ensure that any contract, joint venture, or other arrangement, entered into with third parties meet the legal requirements of its jurisdiction, including privacy requirements. 

Background Check 

8. Each Member Firm Tax Practice entering into a contract, subcontract, joint venture, or other arrangement with a third party in which that third party will provide services to Clients of the Member Firm's Tax Practice should consider performing a background check, as allowed under Local Law on that third party and its officers and directors.  Such background checks may be similar in nature to that conducted by a Member Firm Tax Practice on a prospective employee or prospective Clients. 

Disclosure to Client 

9. If a third party with whom the Member Firm Tax Practice has entered into a contractual arrangement will be providing services to a Client of the Tax Practice pursuant to that arrangement, the Tax Practice should consider disclosing such fact to its Client, and, if required by applicable Local Laws or professional regulations, obtain the advance informed consent of the Client. The manner of disclosure and advance consent may vary, but would ordinarily include specific reference to the contractual arrangement with the third party in the Engagement Letter with the Client. 

Client List 

10. The Member Firm's Tax Client list should not be made available to third parties for any purpose without the express written approval of the Member Firm Tax Practice Leader or his or her designee. If another Member Firm's Tax Client list is also involved in such a request, advance express written approval of the other Member Firm's Tax Practice Leader should be obtained. The Member Firm Tax Practice Leader should consult or obtain additional approvals as required from Member Firm Leadership. Considerations may include Local Laws and any Client contractual commitments. The confidentiality of Client information and the privacy interests of Clients are of the utmost importance. See discussion on Confidentiality on Marketing and Business Development Materials in Section 5001, Marketing and Business Development Activities. 

 

Referrals Involving Third Parties 

Referrals to Third Parties 

11. Each Member Firm Tax Practice should abide by Article 12.3 of the DTTL Constitution, which states that each Member Firm shall make every reasonable effort to refer to the other Member Firms Client work that is to be performed in their jurisdictions and contacts that may lead to such work.Cross-border arrangements with DTTL Member Firms are relatively straightforward. When referring work to or accepting work from third parties, including correspondent firms, arrangements need to be much more formal. Correspondent firms are firms that are not full members of the DTTL network but with whom we nonetheless have a “preferred supplier” relationship for the relevant jurisdiction. 

12. Each Member Firm Tax Practice should develop policies to govern when it will require the third party to establish its own contractual arrangement with the Client and when the third party may act as the Member Firm Tax Practice's subcontractor. This should include consideration of issues such as: 

a. Whether, on the facts of the case, there should be two distinct Engagements. b. Whether the Member Firm Tax Practice is authorized to provide the services the third

party will provide (if it is not, the Member Firm Tax Practice should not engage the third party as its subcontractor. However, Member Firm Tax Practices should consider the appropriateness of introducing the third party to the Client so that they can make their own arrangements).

c. The risk to the Member Firm Tax Practice's reputation and ability to provide quality control over the third party's work.

d. The Engagement terms with the Client.

When the third party establishes its own terms with a Client the Member Firm Tax Practice should take appropriate actions to determine that the Client understands the separate roles and responsibilities of the Member Firm and the third party. 

13. If a third party is to act as a subcontractor to the Member Firm Tax Practice, the Member Firm Tax Practice should have a binding legal agreement with the third party to govern its work and its responsibility for any liability. The subcontractor should be liable for its work and for executing its responsibilities under the contractual arrangement. 

14. Each Member Firm Tax Practice should observe all Local Laws regarding sharing Client and Engagement information with a third party. Information should ordinary not be shared unless advance informed consent is obtained from the Client. 

15. If the Member Firm Tax Practice is unable, after a reasonable effort, to refer to another Member Firm's Tax Practice, Client work that is to be performed in the other Member Firm's jurisdiction or for tax services in countries where there is no Member Firm, confirmation of such referral should be given to the DTTL Regional Tax Director, DTTL Regional Tax Clients

Director, or Regional International Tax Service Line Director. 

Referrals From Third Parties 

16. Each Member Firm Tax Practice should perform its own Client and Engagement acceptance with respect to Tax referrals from third parties. This should include consideration of independence issues and conflict checks. 

17. Each Member Firm Tax Practice should develop and observe its own local policies for determining when it will act as a subcontractor to a third party and when it will require its own direct Engagement with the Client. In most cases, a Member Firm Tax Practice Engagement directly with the Client will be required. 

18. If a Member Firm Tax Practice is to act as a subcontractor to a third party, the Member Firm Tax Practice should have a binding legal agreement with the third party to govern its work and responsibility for any errors. This agreement is in addition to the terms agreed between the third party and the Client, and may reflect some of the terms agreed between the third party and the Client.

5009. Tax Issue Consultation/EscalationIntroduction

This Section of the Manual provides policies and guidance for addressing differences of opinion within and between or among Member Firm Tax Practices.

Policies and GuidanceDifferences of Opinion within a Member Firm Tax Practice 

1. Each Member Firm Tax Practice should establish and implement policies and procedures for resolving differences of opinion (including but not limited to differences related to professional practice, legal, or Client relationship matters) within the Member Firm Tax Practice among its Partners and Professional Staff who are involved in such a matter (collectively referred to as the "relevant parties"), including discussion and consultation with Member Firm Tax Practice designated individuals or individuals authorized by the Member Firm Tax Practice to resolve the matter and, as appropriate, with Member Firm Tax Practice specialists.If a resolution cannot be made between the parties, the following professionals should be consulted (in order of escalation):

Tax Risk Leader Tax Practice Leader

 

Differences of Opinion Among Member Firm Tax Practices 

2. The primary contact relating to an issue between tax practices of Member Firms or resolution of differences of opinion on tax matters between Member Firms should be the Member Firm Tax Practice Leader.

a. The Member Firm Tax Practice Leader may delegate such responsibility along with the requisite authority to one or more designees. Any such designee should be a senior business leader within the Tax function of the Member Firm. 

b. For the purposes of this policy, the role of the Member Firm Tax Practice Leader or designee(s) is work with the appropriate persons within his or her Member Firm to resolve promptly any issues or differences of opinion on tax matters among Member Firms and to communicate with other Member Firms on behalf of his or her Member Firm. 

c. A list of all Member Firm Tax Practice Leaders (and designee(s) for the purpose of this policy) should be published on Deloitte Resources. Also, a list of Tax Issue/Escalation Contacts is located in the Cross-Border Tax Work site.

3. If an issue cannot be resolved between Member Firms by the respective Member Firm Tax Practice Leaders or designee(s), the issue should be escalated in the following order, if required:

a. To the respective DTTL Regional Tax Director

b. To the DTTL Managing Director—Global Tax Quality, Risk and Regulatory

c. To the DTTL Global Managing Director—Tax 

d. Member Firm Facilitator (pursuant to DPM 1515, Facilitating Cross-Border Engagements)  

e. Member Firm Leaders 

f. DTTL Executive 

Refer to DPM 1515, Facilitating Cross-Border Engagements   and 1650, Addressing of Differences of Opinion for further policies and guidance.  

4. At each level the person to whom the matter has been escalated may consult with other senior leaders and subject matter experts, as deemed appropriate in the circumstances, in seeking resolution of the matter.

Documentation of conclusion

Once a difference in opinion has been resolved, the Member Firm performing the professional service should prepare a memorandum and furnish such memorandum to all relevant parties involved indicating the significant conclusions reached. Memoranda and any documentation concerning consultation regarding differences of opinion are for internal use and should not be furnished to other parties outside the Member Firm involved.

5010. Document Retention and AccessIntroductionThis Section of the Manual provides policies and guidance on document retention and access to documents prepared or gathered in performing engagements. For purposes of this Section "documents and documentation" include Files, Working Papers, records, Client information, emails, correspondence, research, and similar or related items.

Policies and GuidanceDocument Retention 

1. Each Member Firm Tax Practice should establish and document policies and procedures on the retention of documents (paper and electronic formats) for Engagements consistent with applicable Local Laws and subject to the requirements set forth in this Section.All documents relating to the risk profile of a client should be filed in a paper permanent risk file. The permanent file should contain the following documents:

Copy of the signed [acknowledged] engagement letter; and any extension to the agreed engagement letter

Acceptance documentation: (i) Correspondence with the LCSP and/or the audit partner and their approval of the relevant services and fees (ii) In case of a Restricted Entity, a copy of the client audit committee pre-approval (iii) Correspondence with the Tax Practice Leader and/or RRL (iv) DRMS System documenting the client acceptance, engagement acceptance procedure(v) Engagement Budget Documentation sent to DT Financial Area responsible for providing the SA number.(vi) DTTL Inter-firm Referral Forms together with relevant responses

Engagement Financial controls – (i) billings orders to clients /inter-firm billings(ii) Hours allocated to the engagement(iii) other relevant correspondence related to billing matters

Correspondence with regard to issues with the client service team or engagement claims and related correspondence.

Any other document deemed necessary to be kept at the Client Permanent File

The engagement manager and partner are responsible for setting up and maintaining the permanent file. Tasks can be delegated but the manager and partner remain responsible.

 

2. Each Member Firm Tax Practice should follow applicable Local Laws and requirements in this Section regarding the period of time that documents should be retained. Such documents should include, as applicable, tax returns, information returns, Working Papers, correspondence, memoranda, and other documentation of services performed. In the absence of Local Laws regarding document retention, such documents should be retained for the period of time sufficient to comply with applicable statute of limitations for claims that can be brought against the Member Firm Tax Practice and to ensure quality Client service. Our standard retention policy for tax document is to keep them for the legally required time

frame, that corresponds to the statute of limitation – 5 (five) years plus an additional 5 (five) year term, thus totalizing a 10 (ten) year retention period.

Each client should have a specific folder where the correspondences exchanged with client would be filed.

When an engagement includes electronic correspondence or documentation (e.g., e-mail or documents uploaded into an e-room), the engagement team must ensure that:

1. All key documents are printed when the project ends or at intervals during the project. This should include:

Copies of contracts and agreementsTechnical advice givenInformation on issues discussed with the client and others.

It should not include:“Administrative” e-mail messages (e.g., arranging meetings)Copies of e-mail messages already included within an e-mail that has been filed.

2. The file copy of an e-mail is the version that has the signed (electronic) approval of the engagement partner. Additionally, the engagement manager and other staff should initial and date the file copy.

3. Key electronic attachments should be saved in the appropriate client file on the office’s shared network. This should involve renaming the document to assist with easy identification and version control.

Outlook should not be relied on as the storage mechanism for client files. Files maintained on Outlook are vulnerable to deletion by information technology personnel as part of regular server maintenance.

 

3. Retention of such documents beyond the applicable retention period may be required or appropriate due to such matters as support for future tax calculations, existing or reasonably anticipated litigation, subpoenas, or other special circumstances identified by the Lead Tax Partner, Lead Client Service Partner, Member Firm Legal Counsel, Member Firm Tax Risk Leader, and Member Firm Reputation and Risk Leader. Member Firm Tax Practices should also refer to and comply with paragraphs 5, 6 and 7 of Section 1700, Retention of Engagement Documentation. 

For those specific cases where the Brazilian firm was involved in litigation or claims, the files will be kept beyond the 10 (ten) years mentioned in item 2 above, until the conclusion of the litigation or claim. 

4. For referrals from another Member Firm, Participating Member Firm Tax Practices should comply with the document retention requirements (e.g., retention period) specified by the Referring Member Firm Tax Practice, to the extent permissible by the Participating Member Firms' Local Laws. The Referring Member Firm Tax Practice should issue specific instructions regarding the retention of documents for each International Engagement; otherwise, the Participating Member Firms should assume that their local retention policies apply. 

Assistance and Production of Materials 

5. Member Firm Tax Practices should assist other Member Firms in complying with their legal or regulatory obligations. This may include production of relevant Engagement documents to such Member Firm. Where this assistance might violate applicable Local Laws (e.g.,

confidentiality or privacy laws), then the matters should be referred to Member Firm Legal Counsel, Member Firm Reputation and Risk Leader or Member Firm Tax Risk Leader, and as appropriate, DTTL General Counsel. Member Firm Tax Practices should also refer to and comply with Section 5011, Confidentiality of Client and Firm Information.  

Access to Client Information 

6. A Member Firm Tax Practice should not provide access to Client and Engagement information to third parties (e.g., successor tax advisors, successor accountants, law firms, or potential investors) unless permissible under applicable Local Laws. Before providing Client and Engagement information, confirmation should be obtained from the Client and the Client's agreement should be documented. Care should be taken not to establish a legal relationship or obligation between the Member Firm and the third party. Access to tax files should not be granted prior to the Member Firm Tax Practice's receipt of (1) the appropriate signed consent form from the Client and (2) an appropriate signed agreement from the third party regarding confidentiality, privacy, and legal protection of the Member Firm Tax Practice.Before you can determine whether to respond to a request for disclosure or transfer of materials or information to another party, it is important to understand what rights you have over the materials you are asked to disclose.

Much as our organization retains ownership of the underlying intellectual property in relation to our materials, clients retain ownership of the information they provide to us.

In addition to not breaching a client’s copyright or other intellectual property rights, we owe them a contractual and a professional duty of confidentiality. As a result, information provided to us should be treated as confidential and not be disclosed to third parties unless either of the following applies:

We have a right or obligation to disclose.We have received the informed consent of the client to disclose to a third party.

We should assume that all unpublished information about a client’s affairs, however gained, is confidential. Some clients regard the fact of their relationship with our organization as confidential.

The requirement for confidentiality continues after the completion of an engagement, after partners and staff leave our organization, and even after the end of our relationship with the client.

Our organization may be at risk (litigation, reputation, or otherwise) if we are not clear and careful about who owns and who may see information included in our working papers and files. Our engagement letters address some of those issues.

Other legal concepts may also be relevant to distinguish between documents that are produced for a client versus merely relied on during the course of an engagement. This section outlines several legal ownership considerations with respect to documents and intellectual property used to provide tax services.

Disclosure

In general, we should never make our own work-papers available to a third party either in copy or original form. With the client’s written permission we may share (or allow the client to share) our deliverables with a third party subject to strict terms and conditions.

Document retention

We will always retain our papers for the minimum period of 10 (ten) years. In our standard business terms, we reserve the right to dispose of papers once there is no legal reason to keep them, including papers that may belong to the client.

Copyright

Copyright protects our organization’s materials such as slide presentations, materials prepared for clients, and other technical literature. We should always include the appropriate legal entity copyright statement on

presentations and publications. The year should be the year the materials are first created. If you then update and reuse, insert all relevant years (e.g., 2005, 2008, or 2003 – 2008). 

Production of Client Information 

7. Each Member Firm Tax Practice should develop policies and procedures that address when tax files should be provided due to: (a) a summons from a governmental authority, (b) a subpoena, or similar process in a civil litigation, (c) a request from a third party, and (d) Local Laws or judicial process. 

8. In all cases involving the release of Client and Engagement information or tax files to governmental authorities, courts, or third parties, notification to the Member Firm Tax Practice Leader, the Member Firm Tax Risk Leader, and the Member Firm Reputation and Risk Leader, or their designees should be required.

Backing up data

Our organization’s information technology personnel should back-up all electronic data stored on the office’s shared network daily. We should save work in progress to the shared networks as regularly as possible to avoid loss of client work.

Information stored on a tax professional’s computer should be backed-up on the office network on a regular basis

Departing personnel

Before a member of your team leaves, you should make sure that all client-related e-mail messages are printed and filed as needed. Where you know a member of your client team is leaving, you should ensure that material relating to your client that is on the departing personnel’s laptop is saved to the office’s shared network or otherwise backed-up and secured before they hand in their laptop. Partners and human resources should remind departing staff to do this as part of the departure procedures.

Seek client consent

We must not provide confidential information prepared about or for a client to another party without their specific written consent.

Issue “hold harmless” letters

In all other cases, we must obtain acknowledgement from the recipient that we have no responsibility to them (i.e., we are released from responsibility or the recipient holds us harmless for the consequences of them seeing our work).

Use disclaimers and caveats

You must always include appropriate disclaimers and reminders within particular deliverables. These should generally be included within the body of the deliverable. They should not be hidden in the document in small text or in footnotes.

DRAFTS FOR DISCUSSION

When releasing drafts to third parties, the following should be used:

[Insert Country-specific requirements – below is a suggestion. Note that the clauses below can NOT be used in relation to advice provided to SEC restricted entities, or tax advice that rolls up into U.S. tax advice.]

This draft report is prepared for [full name of the client] for the purpose set out in Section [ ] of this report. It is not to be used for any other purpose or to be distributed to any other parties. There are matters outstanding which are necessary for the completion of our work and, therefore, we have not yet completed our report. Accordingly we are unable to give, and do not express at this time, any advice, opinion, or comments on our work. Further, we have no responsibility to inform you or any other parties of any changes that may be made to the draft report during the course of completing our report. You will rely on the contents of the draft report at your own risk. All duties and liabilities (including, without limitation, those arising from negligence or otherwise) to all parties, including [full name of the client and/or name of intended recipient of the draft report] are specifically disclaimed. This report and any information or any part thereof shall not be released to any other parties without our prior written consent, which consent may be given on such terms as we deem appropriate including a term of confidentiality and nonreliance.

[Note that the clauses below include an example of the text to be used in relation to advice provided to SEC restricted entities, or tax advice that rolls up into U.S. tax advice.]

This draft report is prepared for [full name of the client] (“Client”) for the purpose set out in Section [ ] of this report. There are matters outstanding which are necessary for the completion of our work and, therefore, we have not yet completed our report. Accordingly we are unable to give, and do not express at this time, any advice, opinion, or comments on our work. Further, we have no responsibility to inform Client or any other parties of any changes that may be made to the draft report during the course of completing our report. [Name of specific Deloitte legal entity] acknowledges that [Name of specific Deloitte legal entity] has not placed any limitations on the Client’s disclosure of the tax treatment or tax structure associated with the tax services or transactions described in this draft report.

This draft report is prepared and provided solely for the Client’s informational purposes and internal use, and this report does not create privity between [name of specific Deloitte legal entity] and any person or party (“third party”) other than Client. This draft report is not intended for the express or implied benefit of any third party. Unless otherwise agreed to in writing by [name of specific Deloitte legal entity], no third party is entitled to rely, in any manner or for any purpose, on the advice, opinions, reports, or other services of [name of specific Deloitte legal entity]. In the event of any unauthorized reliance, the Client agrees to indemnify and hold harmless [Name of specific Deloitte legal entity] and its personnel from all third-party claims, liabilities, costs, and expenses.

All duties and liabilities (including, without limitation, those arising from negligence or otherwise) to all parties, including [full name of the client and/or name of intended recipient of the draft report] are specifically disclaimed.

Releasing the final reportWhen releasing a copy of the final report to third parties, the following should be used:

[Insert Country-specific requirements – below is a suggestion.]

This report is prepared for [full name of the client] for the purpose set out in Section [ ] of this report. It is not to be used for any other purpose. All duties and liabilities (including, without limitation, those arising from negligence or otherwise) to any other parties are specifically disclaimed. This report and any information or any part thereof shall not be released to any other parties without our prior written consent, which consent may be given on such terms as we deem appropriate including a term of confidentiality and nonreliance.

[Note that the clauses below include an example of the text to be used in relation to advice provided to SEC restricted entities, or tax advice that rolls up into U.S. tax advice.]

This report is prepared for [full name of the client] (“Client”) for the purpose set out in Section [ ] of this report. [Name of specific Deloitte legal entity] acknowledges that

[Name of specific Deloitte legal entity] has not placed any limitations on the Client’s disclosure of the tax treatment or tax structure associated with the tax services or transactions described in this draft report.

This report is prepared and provided solely for the Client’s informational purposes and internal use, and this report does not create privity between [name of specific Deloitte legal entity] and any person or party (“third party”) other than Client. This report is not intended for the express or implied benefit of any third party. Unless otherwise agreed to in writing by [name of specific Deloitte legal entity], no third party is entitled to rely, in any manner or for any purpose, on the advice, opinions, reports, or other services of [name of specific Deloitte legal entity]. In the event of any unauthorized reliance, the Client agrees to indemnify and hold harmless [Name of specific Deloitte legal entity] and its personnel from all third-party claims, liabilities, costs, and expenses.

Deloitte papersWe should only be prepared to release final client deliverables and not our own work-papers or files to the third party, either in copy or original form.

Client consentsJust as we expect our clients not to release our documents without our permission, we then owe clients a contractual and professional duty of confidentiality.

We must not provide confidential information prepared about or for a client to another party without their specific written consent. An assertion by the proposed recipient that the client has consented, or an instruction from the client’s other advisors, is not sufficient. We must receive direct instruction from the client.

Getting consent

Consent may be obtained by:Adding a disclaimer to our engagement letter (if we know in advance)Requesting the client to sign an authorization letter.

DISCLAIMER

[Insert Country-specific requirements – below is a suggestion. Note that the clauses below can NOT be used in relation to advice provided to SEC restricted entities, or tax advice that rolls up into U.S. tax advice.]

“Our work is undertaken on your behalf and our report is prepared solely for the purpose as set out in Section [ ] under this engagement letter. It is not to be used for any other purposes. Our report and any part thereof shall not be disclosed, produced, or made available to any third party without our prior written consent. We consent to a copy of our report being made available to [name of client’s subsidiary or advisor] who [has/have] a need to know subject to the condition that [name of client’s subsidiary or advisor] shall not disclose, produce, reproduce, or make available our report or any part thereof to any third party without our prior written consent and you shall secure such undertaking from [name of client’s subsidiary or advisor] prior to the relevant disclosure hereunder. For the avoidance of doubt, all duties and liabilities (including without limitation those arising from negligence) to any third party including [name of specific party] will be specifically disclaimed.”

[Note that the clauses below include an example of the text to be used in relation to advice provided to SEC restricted entities, or tax advice that rolls up into U.S. tax advice.]

“Our work is undertaken for [full name of client] (“Client”) and our report is prepared solely for the purpose as set out in Section [ ] under this engagement letter. [Name of specific Deloitte legal entity] acknowledges that [Name of specific Deloitte legal entity] has not placed any limitations on the Client’s disclosure of the tax treatment or tax structure associated with the tax services or transactions described in this report.

This report is prepared and provided solely for Client’s informational purposes and internal use, and this report does not create privity between [name of specific Deloitte legal entity] and any person or party (“third party”) other than Client. This report is not intended for the express or implied benefit of any third party. Unless otherwise agreed to in writing by [name of specific Deloitte legal entity], no third party is entitled to rely, in any manner or for any purpose, on the advice, opinions, reports, or other services of [name of specific Deloitte legal entity]. In the event of any unauthorized reliance, the Client agrees to indemnify and hold harmless [Name of specific Deloitte legal entity] and its personnel from all third-party claims, liabilities, costs, and expenses.”

   

5011. Confidentiality of Client and Member Firm Information

IntroductionThis Section of the Manual provides policies and guidance for the Member Firm Tax Practice to maintain Client confidential information and a Member Firm Tax Practice's information.

Policies and GuidanceConfidential Information 

1. Confidential information includes but may not be limited to information that has any of the following characteristics:

a. Is not known by or available to the general public

b. Is not useless or trivial but is capable of harming the Clients or third parties' interests, if used or disclosed

c. Has been communicated in circumstances establishing an obligation of confidence. This will ordinarily apply to any information obtained from a Client in the course of discussing or performing Professional Services

d. Otherwise cannot be disclosed because of Local Laws

2. There are two different types of confidential information: Client information and Member Firm Tax Practice information, which includes intellectual property (e.g., methodologies, knowledge, and ideas).

You have personal responsibility to keep confidential the affairs of Deloitte and its clients. This responsibility continues after the completion of an engagement, after cessation of employment, and even after the end of the relationship between Deloitte and the client.

Confidentiality applies to both external and internal relationships.

Appropriate protection of a client’s confidential information obtained in performing professional services is essential; otherwise, we may be subject to legal, regulatory, ethical, and reputation risks. These risks escalate if one client’s interests are in opposition or compete with another client’s interests.

Confidential information acquired by us in the course of performing tax services for a client must not be used for any purposes other than the proper performance of those tax services for that client. We must not disclose any confidential information to third parties without proper and specific authority unless there is a legal or professional right or duty to disclose.

We must have due regard for any confidentiality requirements in our agreement with the client, relevant privacy laws, and professional standards.

Actions to take when work-papers are lost or stolenYou should immediately report lost work-papers to the tax engagement partner or manager. If the papers include price-sensitive information, you must confer with the Tax Risk Management Team.

When we discover we have lost a client’s information, we must give them the opportunity to take whatever steps they feel necessary. We must inform them, even if it is potentially embarrassing, as this can be especially critical if the papers contain price-sensitive information on public entities.

If papers are accidentally sent to the wrong recipient, you should recall them, if possible. If you cannot recall them, call the recipient immediately to apologize and arrange to retrieve the documents. Immediately inform the tax engagement partner or manager of all the relevant facts.

In the course of dealing with a complaint, we often cannot locate the file. Without the file we are much more vulnerable to a successful claim against us because the file is likely to contain some or all of the evidence with which we could defend ourselves. Therefore, it is essential for you to follow proper filing procedures and store files in a safe place at all times. The same applies to loose papers that should be placed in a file (e.g., the engagement letter). Do not keep client information of any kind in private or personal files.

Electronically stored work-papers should be backed up on a regular basis using [insert back-up method (e.g., Connected Data Protector backup)]. Save the electronic files and folders, including Outlook folders, either by copying them to a CD or to the network.Actions to take when computers and handheld devices are lost or stolen

Please contact the IT department and follow the guidance provided by them.

 

Maintaining Confidentiality 

3. All Partners, Professional Staff and Support Staff should respect obligations, duties, and responsibilities as required under Local Laws. Each Member Firm Tax Practice, its Partners, Professionals, and Support Staff should respect and maintain the confidentiality of Client and Member Firm Tax Practice information and should not use or disclose to other Clients or third parties any such confidential information unless any of the following applies: 

a. Disclosure is required by law or regulation  b. A professional duty or a right to disclose exists  c. Consent has been obtained from the Client and/or the Member Firm, and there are no

restrictions or prohibitions under Local Laws or other contractual arrangements.

4. Client and Member Firm Tax Practice information may include but is not limited to the following:

a. Client lists and particulars of Client Engagements

b. Internal telephone directories and/or contact lists for Member Firm personnel c. Management decisions reached or under consideration

d. Similar proprietary Member Firm or Client information, including intellectual property

5. In order to maintain confidentiality of information there is a duty of care that the professionals of the Member Firm Tax Practice owe the firm and the Client. The duty of care is a duty to safeguard the disclosure of confidential information whether the disclosure is accidental or willful. Member Firm Tax Practices should establish policies and guidance to maintain the confidentiality of Client and Member Firm Tax Practice confidential information. Adequate security should be maintained over work-papers (in paper or electronic form) and all client records. Access to particular client files and information should be provided on a “needs to know basis” (i.e., to those providing services to the client).

Client legal documents in our files (e.g., partnership agreements, wills, trust instruments, and plans of reorganization) are confidential and are the proprietary property of the client.

We should not use or make such documents available to anyone, including when the client name and other identifying information have been deleted.

You are to protect laptop security, privacy, and confidential information. Key to this effort is the protection and security of laptop computers, mobile communication devices (wireless telephones, Blackberrys, Treos, etc.), and other electronic media (floppy disks, CDs, memory sticks, and other

files) that may be used to store or process the confidential information.

Discussions in relation to confidential information should be limited to persons involved in the engagement or matter. You should hold these discussions in such a manner as to continue to preserve the confidentiality of the information.

The basic rule is that sharing of client and Deloitte information should be on a “need to know” basis.

The requirement of confidentiality extends to dealings with the client’s employees. You should take all reasonable steps to ensure that confidential client information acquired in the course of performing professional services is disclosed only to those employees who are authorized by client management to have access to it.

Required Disclosure 

6. Disclosure of Client and Member Firm Tax Practice information may be required by law or regulation, for example:

a. It is evidence relevant to legal proceedings and is obtained by appropriate judicial means (e.g., subpoena, judicial seizure, court order).

b. It is evidence relevant to a regulatory proceeding and is obtained by appropriate means (e.g., subpoena, judicial seizure) or a legal obligation to disclose already exists.

7. A professional duty or a right to disclose may arise, for example, in the course of:

a. Complying with professional standards and ethical requirements

b. Protecting the interests of the Member Firm Tax Practice in professional or legal proceedings.

Consultation on Disclosure 

8. If there is doubt as to the duty or a right to disclose Client or Member Firm Tax Practice confidential information, consultation should occur with the Member Firm Tax Risk Leader (or his or her designee), and, as appropriate, considering the serious nature, the Member Firm Reputation and Risk Leader and Member Firm Legal Counsel, DTTL Risk Management Group, DTTL Tax Quality, Risk and Regulatory Leader, and/or DTTL General Counsel.

 

Disclosure Within the Member Firm Tax Practice 

9. Confidential information with respect to any Engagement or Client should only be discussed with those who need to know such information for reasons of providing Professional Services, including risk management and technical consultations. Determining who needs to know Client confidential information may vary by jurisdiction and/or by the terms of any contractual arrangements with the Client or provider of the confidential information.

 

Prohibition of Use for Personal Advantage 

10. Each Member Firm Tax Practice including its Partners, Professional Staff, and Support Staff should not use or appear to use for personal advantage or for the advantage of a third party, Client confidential information acquired or received in the course of providing Professional Services or Member Firm information. Infractions of this nature should carry very severe

penalties in accordance with the Member Firm's policies. 

Implementation of Confidentiality Policies 

11. Each Member Firm Tax Practice should have policies on what constitutes confidential information within its own jurisdiction, taking into account Local Laws. In addition, each Member Firm Tax Practice should establish policies and procedures that will safeguard the confidentiality of all relevant Client and Member Firm Tax Practice information (in paper or electronic form) relating to all Professional Services provided by the Member Firm Tax Practice. Member Firm Tax Practices should communicate to all personnel, including Support Staff, their responsibility to maintain the confidentiality of Client and Member Firm Tax Practice information.

 

International Engagements 

12. Subject to normal professional and legal considerations (including the contractual arrangements with the Client and any applicable Local Laws), Participating Member Firm Tax Practices should make available to Referring Member Firm Tax Practices reports and other supporting documents produced with respect to International Engagements, as reasonably requested by the Referring Member Firm Tax Practice. A Participating Member Firm Tax Practice should ordinarily discuss with the Referring Member Firm Tax Practice any prohibitions or restrictions on disclosing certain information with respect to an International Engagement with such Referring Member Firm Tax Practice prior to Engagement acceptance. Subject to Local Laws, Member Firm Tax Practices would ordinarily avoid inclusion of any such prohibitions or restrictions in Client contractual arrangements. See Section 5010, Document Retention and Access,relating to requests by third parties. 

 

Continuance of Confidentiality Obligation 

13. Subject to Local Laws or Client contractual arrangements, the requirement for confidentiality should continue: after completion of an Engagement; after Partners, Professional Staff, and Support Staff leave the Member Firm Tax Practice; and after the end of the relationship between the Member Firm Tax Practice and the Client.

 

Confidentiality Agreements 

14. Each Member Firm Tax Practice should establish policies and procedures for the review and approval of signing confidentiality agreements as requested by Clients, prospective Clients, and third parties or as otherwise required by Local Laws. This may include review and/or approval by the Member Firm Tax Risk Leader and/or Member Firm Legal Counsel of the confidentiality agreements.

It is acceptable for us to agree to sign a confidentiality agreement to protect the information which is provided to us, provided we first review the agreement to make sure it is appropriate and we understand and can observe the obligations imposed on us.

Confidentiality agreements may impose significant obligations on our organization, so you should ensure that you:

Review the confidentiality agreement. Consult with [the Tax Quality. Risk and Reputation Leader or the DT Legal counsel] if you

are not sure on any aspect of the confidentiality agreement (after reviewing the agreement yourself).

The most important key provisions to include are the following:

Definition of purpose — The agreement should relate only to information provided for the purpose of the proposal.Deloitte parties — The correct legal entity should be named rather than the generic “Deloitte” or “Deloitte Touche Tohmatsu.”Length of term — The agreement should last only for the duration of the proposal process, although information we keep at the end of the proposal can be subject to ongoing confidentiality provisions.Engagement letter override — If we are successful, the terms of the engagement letter should supersede any confidentiality undertaking.Permitted disclosures — These are allowed on a “need to know” basis but should include all Deloitte personnel (and other DTTL firms on global proposals). We should also be allowed to disclose information under any legal, regulatory, or professional obligation such as money laundering regulations for suspicion reporting.Governing law — For a [Country]-led proposal which may lead to a [Country] engagement letter, this should be [Country] law. If we are participating in a proposal led by another DTTL Member Firm and may ultimately work under their engagement letter, then that law may be acceptable.

We should seek to exclude the following:

Return or destruction of documents — Any obligation to return or destroy documents should allow us to keep a copy for our professional records. Also, computer and network back-ups make it impractical to destroy all electronic copies of documents.Indemnities — We will not give specific indemnities for breach of a nondisclosure agreement.

Remember that:

Any agreement we sign will be legally binding on us so we must be prepared to observe the obligations imposed on us by the agreement, and we must be capable of doing so.

A signed copy of the agreement should be retained in the file.

All of the engagement team members should be made aware of the obligations imposed on us under the agreement.

We must observe the obligations we have agreed to.

A confidentiality agreement does not ordinarily limit our liability to third parties (if they are not a party to the confidentiality agreement).

If the client wants the third party to be subject to a confidentiality agreement, the client must enter into the confidentiality agreement directly with the third party, so that we are not viewed as acting as an agent of the client with the third party.

Any confidentiality agreement should be signed in the name of the appropriate Deloitte entity, and not the individual partners or staff who make up the engagement team.

We should seek to be entitled to retain one copy of any confidential information that we rely on to perform our services.

 

Provision of Information to Third Parties 

15. For policy and guidance on the provision of information to third parties see Section 5010, Document

Retention and Access.

5012. Termination of Engagement or Client Relationship

IntroductionThis Section of the Manual provides policies and guidance on the termination of a Tax Engagement or Tax Client relationship.

Policies and Guidance

Decision to Terminate a Tax Engagement or Tax Client Relationship and Related Communication 

1. A decision to terminate a Tax Client relationship or discontinue a Tax Engagement should be made considering all the relevant facts and circumstances and in consultation with all interested parties in the Member Firm, as noted below, along with other Member Firm Tax Practices, where appropriate. 

2. Prior to reaching any decision, there should be consultation with the Global LTP or LCSP, as appropriate. 

3. Partners and Professional Staff on the Member Firm Tax Practice Engagement team should be notified immediately by the Tax Engagement Partner upon the discontinuance of a Tax Engagement or termination of a Client relationship. 

4. Consideration may be given to determine which personnel or groups need to be notified of the decision to terminate a Tax Client relationship or discontinue an Engagement. These may include:

a. Other tax service lines working on separate or related Engagements for the Client.

b. The group or service line leader. c. DTTL Managing Director—Global Tax Clients. d. Tax risk management (e.g., if there are contentious outstanding

issues or other factors that may mean the cessation of the Client relationship is not amicable or could cause adverse publicity or legal action).

Termination of Client or Engagement 

5. When a Member Firm Tax Practice discontinues an engagement or terminates a relationship with a Client (as opposed to a Client-initiated termination), a written

communication to the Client should be issued confirming the resignation of the Member Firm Tax Practice, including the effective date of the resignation, and advising the Client as to the status of any work in progress or pending tax matters that require the Client's attention.

 

Termination Arrangements 

6. If a Member Firm Tax Practice or a Tax Client terminates the relationship or an engagement, a termination arrangement should be agreed to with the Client. It may be a simple agreement to cease work immediately or to complete work in progress. The general terms of the termination arrangement should be (a) confirmed with the Tax Client in writing or (b) documented in the Client file, including the substance and date of any oral communications. 

7. The Member Firm Tax Practice should also establish that any additional work requested by the Client in effecting the disengagement will be covered by a valid Engagement letter. Any original source documents belonging to the Client should be returned to the Tax Client, and copies should be retained in the working paper file. 

8. Termination arrangements would ordinarily include the following:

a. A clearly defined cut-off date of the Member Firm Tax Practice's responsibilities. b. Any additional transitional work to be completed, specifying tax return periods and,

if appropriate, closure dates, if known. c. The status of any issues for which the Member Firm Tax Practice is ceding

responsibility, if known. d. Details of outstanding issues that the Member Firm Tax Practice will not be

responsible for completing, such as uncompleted computations or claims and elections.

e. Confirmation of any final fees that may be due to the Member Firm Tax Practice. f. Arrangements for receipt of subsequent correspondence.

If the entire Tax Client relationship is terminated, terms similar to those above would ordinarily be included in the disengagement letter.

 

Confidentiality 

9. The duty of confidentiality with respect to a Member Firm Tax Practice's Engagement should survive its termination. In particular, this means that a Member Firm Tax Practice should not provide a Client's or former Client's information to another party, including a successor advisor or a new owner, without the Client's express written permission, unless required by Local Law. Refer to Section 5011, Confidentiality of Client and member firm Information, for further discussion. 

 

Ownership of Documents 

10. A Member Firm Tax Practice continues to be the owner of its Files/Working Papers after a Client relationship is terminated except as specified by Local Laws. Refer to Section 5010, Document Retention and Access, and Section 1700 Retention of Engagement Documentation for policies and guidance on providing copies of the Files/Working Papers to third parties. 

 

Handling Subsequent Correspondence 

11. The Member Firm Tax Practice should establish policies and procedures regarding the receipt of Client correspondence after termination of the Client relationship. Correspondence to the Client that is received from third parties, including taxing authorities, after the Client relationship has terminated, should be forwarded immediately to the former Client in accordance with the termination arrangement and receipt by the former Client documented, unless otherwise impermissible under Local Law or due to the nature of the correspondence. Also, consistent with applicable Local Laws, the sender should be notified that the Member Firm Tax Practice is no longer acting for the former Client and that all future correspondence should be directed to the former Client. If no forwarding address is available, the correspondence should be returned to sender.

 

Discussions With Successor Advisor 

12. The Member Firm Tax Practice should establish policies and procedures regarding discussions with successor advisors. Any Member Firm Tax Practice discussions should be authorized by the Client in writing and conform to all Local Laws, including privacy laws. 

13. Member Firm Tax Practices should ordinarily require a written request in order to discharge a duty to disclose to a new advisor any substantive issues, which may affect their decision to accept the Client or the Engagement. In most cases the Member Firm Tax Practice should not ordinarily consider undertaking discussions with a new advisor or disclosing working papers unless it has received a signed release from the new advisor providing appropriate legal protection to the Member Firm Tax Practice. The Member Firm Tax Practice should not ordinarily engage in informal or "off the record" discussions with the new adviser.

 

Notifying Tax Authorities 

14. To the extent required by applicable Local Laws, the Member Firm Tax Practice should notify the tax authorities and any other relevant authorities that the Member Firm Tax Practice is no longer acting for the Client and the date that this takes effect. The Member Firm Tax Practice should not include any reference to the reasons for terminating the Client relationship or discontinuing a Tax Engagement

5013. Learning and DevelopmentIntroduction

This Section of the Manual provides policies and guidance regarding the continuing professional development of Partners and Professional Staff in the Member Firm Tax Practices. For additional

information see Section 2050, Talent Management and Human Resources. 

Policies and GuidanceGlobal Tax Learning Standards

1. The Global Tax Learning Standards describe the approach to professional development for Member Firm Tax Practices. Each Member Firm Tax Practice should comply with the Global Tax Learning Standards set by the Global Tax Learning Council as it relates to both annual hour ranges and suggested subject matter. Member Firm Tax Practices should incorporate the Global Tax Learning Standards into their tax learning programs. The Global Tax Learning Standards may be used as the guiding principles in designing and implementing a tax learning program in each Member Firm Tax Practice. E-learning may be integrated into the local tax curriculum and utilized, as appropriate, in an overall learning and professional development strategy.

 

Credentials 

2. Each Member Firm Tax Practice Partner and Professional Staff, as applicable, should obtain and maintain the necessary credentials required by his or her respective service line (e.g., CPA or bar admission in the U.S., CA or bar admission in Canada, ACA or CTA in the U.K) and be in compliance with applicable licensing, certification, and continuing professional education requirements.

 

DTTL-Sponsored Events 

3. Each Member Firm Tax Practice should encourage appropriate attendance by its Partners and Professional Staff at DTTL Tax sponsored learning programs to foster a cohesive network of Member Firms and the development of new ideas of national and global significance.

 

Culture of Learning 

4. In addition to providing high-quality learning programs as specified in paragraph 3, Member Firm Tax Practices should also provide appropriate on-the-Engagement learning opportunities.

 

Individual Learning Plan 

5. For professionals at all levels, an individual learning plan should be discussed at

least annually and may be included in the performance review process.

The learning program is defined by the HR Management and the tax partner in charge of the Learning is Maurício Prado.

A learning path establishes a pre-defined curriculum that you should take at specific times during your career and is aligned with the competencies necessary to be a successful professional and business advisor.

The competencies comprising knowledge, skills, and behaviors in selected areas include:

1. Tax technical 2. Industry (in early stages of development);3. Service Excellence4. Management Effectiveness5. Leadership Effectiveness6. Marketing, Sales, and Communications.

Deloitte provides formal learning, which is a combination of classroom and e-learning. It has developed learning paths for formal learning that support your development throughout your career.

In addition, you are encouraged to attend appropriate DTT-sponsored learning events (regional or global). These serve to foster both a cohesive network of professionals amongst the Member Firms and the development of new ideas of national and global significance.

5014. Reputation, Quality, and Risk Management

IntroductionThis Section of the Manual provides policies and guidance on designing a Tax reputation and risk office structure in each Member Firm Tax Practice. For more information see Section 2100, Reputation Protection and Risk Management and Section 2105, Roles and Responsibilities of a Member Firm

Functional Risk Leader.   Policies and Guidance

Responsibility for Risk Management

1. Risk management and reputation protection are the personal responsibility of all Tax Partners and Professional Staff of the Member Firm Tax Practice. The Member Firm Tax Risk Leader should determine that such responsibilities are appropriately communicated to and complied with by Member Firm Tax personnel.Risk management and reputation protection are the personal responsibility of each tax partner and professional staff

Effective risk management is a cornerstone of delivering world-class client service.

a) Risk is not only about exposure to litigation but it aims to protect the resources and reputation of the Firm.

b) Risk management does not mean not taking risks since risk cannot be entirely avoided or eliminated.

c) Risk management is not only for partners and the executive group. Everyone in the organization is responsible for effective risk management.

You are required to comply with obligations under Deloitte’s terms of employment, as well as with various statutory provisions and professional requirements. Any breach of these obligations damages not only your own reputation but that of the Member Firm and potentially DTTL as well.

A key aspect of our risk management is our absolute and total commitment to quality. To achieve this, you have a duty to our organization and its clients to develop and keep updated the knowledge, skills, and competence (known collectively as “professional competence”) required to perform outstanding client service.

Confidential information

For the protection of our organization, its business, and clients, you should treat any confidential information as such and make every effort to maintain its integrity. If you are not sure whether information is confidential, treat it as confidential until advised by a responsible party otherwise.

You are also required to comply with the requirements of our organization’s confidentiality policy, any DTTL policies in this area, and any specific confidentiality agreements with clients.

Intellectual property

Any intellectual rights (including but not limited to copyright, trademarks, and trade secrets) attached to any material created in the course of your employment belong to our organization. You agree, both during and after your employment, to waive irrevocably any moral or legal rights that you might have in relation to such intellectual property, including all notes, memoranda, and other records made by you during your employment. When your employment ends, you should leave behind all notes, memoranda, and other records without keeping copies or having downloaded information stored on any medium.

Computer software

You should observe all IT and systems policies established by the Member Firm and DTT. In particular, you may copy programs only with the specific approval of Information Technology and you may use only authorized software (including personal software technology packages) on any Deloitte computer.

Duty to act with due care and requisite skill

We must act with care and skill in all our dealings with our clients. This often requires us to advise our clients of their obligations under the relevant tax legislation and the consequences of noncompliance. If the client does not comply, as tax professionals we should ensure that we do not take steps that would assist with noncompliance as this would be unlawful.

Personal connections and annual independence representations

All partners, principals, directors, and managers should identify all personal connections in the form of relationships they and those closely connected to them hold with Deloitte clients in order to identify client independence issues and comply with regulatory requirements.

Recording personal connections: To help track potential independence-impairing investments, all client-serving managers and above should record their (and their “closely connected persons’”) interests in securities and collective investment vehicles in the Global Independence Monitoring System (GIMS). You should keep this up-to-date. When you register a financial interest, GIMS will indicate any potential breach of the independence rules. On being advised of a potential breach, you should follow the instructions provided by GIMS as a matter of urgency. In some cases you may have to restructure your personal financial arrangements, including your personal investments and loans.

Annual Representation: The annual representation process is a requirement of our regulators and of DTTL to comply with the regulations and laws and to protect our reputation. Everyone in our organization should complete a representation through the GIMS.

Continuing Professional Development (CPD)

A key aspect of our risk management is our absolute and total commitment to quality. To achieve this, you have a duty to our organization and its clients to develop and keep up-to-date the knowledge, skills, and competence (known collectively as “professional competence”) required to perform outstanding client service.

 

Establish Reputation and Risk Infrastructure 

2 Each Member Firm Tax Practice should design a reputation and risk office structure (Tax structure) appropriate to its size and complexity to achieve high standards of quality, reputation protection, and risk management.

The tax risk leader provides a support framework for and specific support to tax

professionals and employees to help them identify and manage risk appropriately. He is responsible for:

Dealing with tax service-line-specific risk issues Drafting and updating the Brazil Tax Practice Manual (TPM) Publishing updates on matters of current concern communicating policies and

best practice to the tax practice Implementing and monitoring compliance with tax policies Conducting and assisting with the various internal and DTTL tax practice

reviews.

 

Appointment of Tax Risk Leader 

3. The Member Firm Tax leadership should appoint an experienced, skilled, and respected Partner as its Tax Risk Leader, which is concurred with by the Member Firm Reputation and Risk Leader ("RRL"). The DTTL Managing Director—Global Tax Quality, Risk and Regulatory should be notified of the appointment of the Member Firm Tax Risk Leader. At his or her discretion, the DTTL Managing Director-Global Tax Quality, Risk and Regulatory may provide input in the performance evaluation of the Member Firm Tax Risk Leader.

Our tax practice has a dedicated partner – Mario Nascimento Souza Neto (marionascimento@deloitte.com) who is the Function Risk Leader with whom you should consult in relation to risk-related questions.

 

Responsibility of Member Firm Tax Risk Leader 

4. The Member Firm Tax Risk Leader should be an integral member of the Member Firm Tax Practice's leadership team reporting directly to both the Member Firm Tax Practice Leader and the Member Firm Reputation and Risk Leader. Additionally, the Member Firm Tax Risk Leader should have the following responsibilities: 

a. Provide objective views.  b. Consult regularly with the Member Firm RRL and other Functional Risk

Leaders.  c. Have access to the DTTL Managing Director—Global Tax Quality, Risk and

Regulatory. d. In consultation with the Member Firm RRL, should communicate to the DTTL

Managing Director—Global Tax Quality, Risk and Regulatory reputation and risk matters that could significantly impact other Member Firms.

Member Firm Tax Risk Leader Profile 

5. The Member Firm Tax Risk Leader is a leadership position in the Member Firm Tax Practice. Therefore, it is recommended that the Partner appointed to the position possess qualifications, which would ordinarily include the following:

a. Recognized eminence and reputation. b. Demonstrated competence, objectivity, and proficiency in Tax risk management

matters. c. Respect of peers and others for having integrity and adhering to high ethical

standards. d. Excellent judgment, technical knowledge, and business insight. e. Team building skills. f. Substantial Client service experience. g. Understanding of the Member Firm Tax Practice's Clients and markets and its

external and internal risk environment. h. Knowledge and skill in identifying issues and mediating or resolving them. i. History of consultation with others and reputation as source for consultation. j. Time, interest, and energy to commit to the Tax Risk Leader role.

Role of Member Firm Tax Risk Leader 

6. The Member Firm Tax Risk Leader should monitor and approve reputation and risk processes and activities that cover all tax service lines and groups within the Member Firm Tax Practice. The Member Firm Tax Risk Leader's responsibilities should include the identification and resolution of Tax risk issues, quality of service, and matters relating to reputation and regulatory issues. Also, the Member Firm Tax Risk Leader, along with other Member Firm Functional Risk Leaders, Legal Counsel and Clients & Markets should monitor brand protection. Furthermore, the Member Firm Tax Risk Leader should have an awareness of significant litigation matters, including all those relating to tax, through working with the Member Firm's Legal Counsel. The Member Firm Tax Risk Leader responsibilities may include but are not limited to the following:.

a. Developing and implementing quality, reputation, and risk management policiesb. Participating in the development and implementation of DTTL reputation and risk

management policies and procedures related to the Tax function, as requested by the DTTL Managing Director-Global Tax Quality, Risk and Regulatory and similar policies and procedures specific to the Member Firm Tax Practice.

c. Participating in the review process of proposed DTTL policies related to the Tax Practice.

d. Participating in the establishment of policies and procedures for acceptance and continuance of Clients and Engagements for the Tax function and within the Member Firm.

e. Acting as a concurring review Partner in the approval and acceptance of Tax Clients and Engagements classified in the highest level of risk.

f. Establishing procedures and guidance to monitor and manage Tax Clients and Engagements classified in the highest level of risk.

g. Establishing procedures to determine that mitigation plans for higher-risk Tax Engagements are implemented, followed, and reviewed on a periodic basis.

h. Developing and maintaining standard Tax Engagement letter terms and conditions, based on service line-specific needs.

i. Developing methodologies to implement and administer Tax policies and procedures regarding all Tax risk and reputation issues as provided in the DTTL Tax

Practice Manual and Member Firm Tax Practice Manual. j. Establishing and fostering the development of a Member Firm Tax Quality Risk and

Regulatory network comprised of regional-or office-level tax risk professionals, as appropriate.

k. Understanding and applying the relevant Global Tax Advisories in the Member Firm Tax Practice.

l. Monitoring and compliance of reputation and risk management policies for the Tax function within the Member Firm.

m. Assisting the Member Firm RRL in determining compliance with DTTL and Member Firm cross-functional and function-specific policies for the Tax function.

n. Monitoring and assessing the effectiveness of quality assurance and risk management programs within the Tax function.

o. Developing a monitoring review process to determine that reputation and risk management policies and procedures, along with any additional Member Firm specific policies, are being followed by the Tax function.

p. Participating in the annual Client portfolio review process and programs for higher risk Clients, and assisting in the implementation of any remedial actions for higher-risk Clients identified through this process within the Tax function.

q. Administering and monitoring practice reviews for the Member Firm Tax Practice. r. Monitoring, in consultation with Member Firm Legal Counsel, any pending or

threatening litigation, claims, and/or events within the Tax function. s. Participating in the review and approval process of new service-line offerings within

the Member Firm Tax Practice and consulting, as appropriate, with the Member Firm RRL, other Member Firm risk leaders and DTTL Managing Director-Global Tax Quality, Risk and Regulatory.

t. Assist in developing and implementing Member Firm policies regarding external communications, including websites, articles, speeches, and tax eminence building activities.

u. Assist in developing and implementing reputation and risk management learning within the Member Firm and the Tax Practice including programs to identify and implement new policies, procedures, and regulations for Partners and Professional Staff within the Tax function.

v. Participating in recruitment and advancement policies for Partners and Professional Staff to determine adequate consideration of reputation and risk factors for the Member Firm and the Tax Practice.

w. Providing input in the Tax Partner admission and evaluation process with regard to quality and risk management competencies.

x. Communicating on reputation and risk management matters. y. Identifying emerging risks and bringing them to attention of appropriate parties

within the Member Firm and DTTL Global Tax leadership for possible remedial actions.

z. Providing periodic updates to Tax Partners and Professional Staff on reputation and risk management matters related to the Member Firm and to the Tax Practice.

aa. Determining that communications to Tax Partners and Professional Staff on new regulatory and statutory pronouncements are provided on a timely basis. 

ab. Representing the Tax Practice in the Member Firm reputation and risk

committee(s), if any.

ac. Consulting on a regular basis with the Member Firm RRL on significant risk matters arising within the Tax Practice and as relevant, other functions of the Member Firm.

ad. Consulting with the DTTL Managing Director-Global Tax Quality, Risk and Regulatory  regarding quality, risk and regulatory matters.

ae. Communicating relevant information to the DTTL Managing Director-Global Tax Quality, Risk and Regulatory as appropriate.

5015 - Tax Practice Review ProgramsIntroductionThis Section of the Manual provides policies and guidance for the conduct of Member Firm Tax Practice Reviews. For detailed information, refer to the DTTL Tax Practice Review Manual.Brazilian Tax practice specific comments and procedures are inserted in red type.

Policies and GuidancePurpose of Tax Practice Review Program

1. A Tax Practice Review is intended to ascertain whether the professional standards of DTTL are applied consistently across Member Firm Tax Practices and to obtain a reasonable certainty that there is compliance with DTTL policies and other applicable Member Firm policies, methodologies, and Local Laws. A Tax Practice Review examines and assesses, to the extent possible, the operational effectiveness of a Member Firm Tax Practice's quality control and risk management processes. Such review is intended to be constructive in nature and to assist the Member Firm Tax Practice in providing consistent high-quality tax services while minimizing risks. The focus of the Tax Practice Review may include a more detailed review of the technical content of Tax services as determined appropriate by the Member Firm, DTTL Global Tax Quality and Risk, and/or the DTTL Global Tax Executive. Best practices within a Member Firm Tax Practice will be reviewed and may be selected as an example for other Member Firm Tax Practices.

The main purpose of Brazilian Internal Tax Practice Review is to obtain reasonable assurance that the professionals of Deloitte Tax in Brazil comply with these standards. The Internal Tax Practice Review is an inspection, but also adds value by identifying best practices and areas for improvement.

 

Responsibility for Tax Practice Reviews2 Each Member Firm Tax Practice should be responsible for having its tax practice

reviewed at intervals not to exceed three years under the guidance and oversight of the DTTL Managing Director-Global Tax Quality, Risk and Regulatory. Also, see Section 2030, Member Firm Practice Review.

The ultimate responsibility for the conduction of the Internal Tax Practice Review in Brazil, as well as reporting the results of this review, lies on Brazilian Tax Function Risk Leader (FRL). He/she will be responsible to evaluate the necessary involvement of other resources – the Internal Tax Practice Review Team – TPRT (local partners appointed by FRL after consultation and agreement with Tax Practice Leader) to assist him/her in the execution and completion of the procedures.

 

Organization and Oversight of Tax Practice Reviews3. Tax Practice Reviews should be conducted in one of the following forms: 

a. DTTL review of the Member Firms Tax Practice Review Program ("Internal

Review"). 

b. A review coordinated by DTTL involving a team outside of the Member Firm Tax Practice ("DTTL Review").

Frequency of Tax Practice Reviews4. Each Member Firm that has a Tax Practice or has Partners and/or Professional Staff

who provide Tax services to Clients should be subject to a Tax Practice Review at intervals not to exceed three years. The DTTL Managing Director-Global Tax Quality, Risk and Regulatory may decide to review a Member Firm Tax Practice more frequently than once every three years, as conditions warrant, after consultation with the appropriate DTTL Regional Tax Director for that Member Firm Tax Practice and the Member Firm Tax Practice Leader.

 The Internal Tax Practice Review will be structured aiming to assure that all tax partners in Brazil will be reviewed within a 2-years cycle. In this regard, for the FY2011(10), FY2012(11), FY2013(12) and FY2014(13), the following suggested review cycle was defined:

Depending on the results of the inspections the suggested cycle can be amended, in order to evaluate specific situations applicable to a partner.

Moreover, the Internal Tax Practice Review structure also takes into consideration the fact that some portion of the inspections regarding Client Acceptance, Engagement Acceptance and tests regarding aspects related to Independence, risk classification and risk evaluation are already being conducted by the RRL and the Independence Director. In this regard, the Internal Tax Practice Review will leverage on the procedures already done in these areas as a starting point for the analysis to be performed; being the Tax Function Risk Leader (FRL) responsible to adequately select the engagements of the tax partners to be appointed for the inspections mentioned above. After the conclusion of the inspection by the RRL/Independence team, the FRL will perform the specific exams and analysis described below.

The FRL in Brazil may, at his/her discretion, decide that one or more partners and/or directors will be reviewed on a more regular basis. Tax Professionals who are likely to be promoted to Partner or director within the next twelve months may also be reviewed.

For each Tax Professional who is selected for the Internal Tax Practice Review (“Tax Professional under Review”):

- FRL might ask the Tax Professional to complete a questionnaire (file attached in Attachment 03 – Partner Questionnaire);

FRL might request an interview to be conducted personally by FRL or one member of the Internal Tax Practice Review Team – TPRT.Scope and Staffing of Tax Practice Reviews5.As part of the Tax Practice Review, Member Firm Tax Partners and other select Tax

professionals with engagement responsibilities should have a sample of their engagement files reviewed at intervals not to exceed three years. The Tax Practice Review should be performed in accordance with the Member Firm Tax Practice and the

DTTL Tax Practice Review Manual which may be revised periodically to reflect changes in the quality, risk, and regulatory environments. 

6.The Tax Practice Review team should consist of experienced Tax professionals. Member Firm Tax Practices should make available all requested reports, Engagement files and Working Papers, electronic sites, and all other information requested by the Tax Practice Review team, both before and during the review, to the extent permissible by applicable Local Laws. The Member Firm Tax Practice Leader will be responsible along with the Member Firm Tax Risk Leader for determining that applicable Local Laws are complied with, including notification to the DTTL Managing Director-Global Tax Quality, Risk and Regulatory and the Team Leader of any issues prior to the commencement of a review which will involve DTTL. The Tax Practice Review team should execute all relevant documentation relating to confidentiality and privacy, if required, before the Tax Practice Review begins. 

7.The DTTL Tax Practice Review Manual contains the operative processes, methodologies, work plans, attachments, and steps to be taken in the performance of a DTTL Review and should be followed by the Tax Practice Review Teams. For Internal Reviews and DTTL Reviews, the Tax Practice Review Manual of the Member Firm under review, may be used in lieu of the DTTL Tax Practice Review Manual with the concurrence of the DTTL Managing Director-Global Tax Quality, Risk and Regulatory

Action Steps and Timetable of the Internal Tax Practice Review

The action steps and recommended timetable for the Internal Tax Practice Review can be summarized in the following main steps:

a. The FRL will select the Tax Professionals who will be reviewed during the FY, taking into consideration the 2-year cycle planning. Based on this selection, FRL will also request a list of relevant engagements under the supervision of the Tax Professional under review, to proceed with the selection of the engagements for testing (reviews can take place at any time during the FY).

b. The FRL will notify the RRL/Independence Director (and supporting team) about the selection made, in order to include these engagements within the sample selected for regular Inspections conducted by DTTL Brazil as part of Client Acceptance, Engagement Acceptance and tests regarding aspects related to Independence, risk classification and risk evaluation. The Tax Professional under Review will be contacted by the RRL/Independence Director (and supporting team), which will request, as part of the regular inspections procedures, the information as pert detailed in Attachment B below. Moreover, the results will be informed to the FRL, as well as to the Tax Partner under Review.

i. It is expected that most significant portion of the review at this stage would be made directly by the Independence/RRL team with minimal contact or interaction with the Tax Partner under Review.

ii. The reason lies on the fact that most of the Client Acceptance, Engagement Acceptance, Conflict Checks and Independence verifications are documented within the DRMS system. Moreover, proposals sent, client confirmation of acceptance of proposals and related documentation, together with DRMS, are currently stored/filed electronically within the SmartNet system. All this information can be directly accessed by the professionals involved in the review.

c. After receiving the results of the inspections made by DTTL Brazil upon the engagements select (which have basically tested compliance with policies and

procedures), the FRL will perform additional analysis aimed to cover the quality of the technical advice provided.

d. As resulting from the analysis made, FRL might, at his discretion and in consultation with Tax Practice Leader and RRL, perform additional review, which would basically comprise the following:

i. The Tax Professional under Review will be contacted by the FRL or one of the Tax Practice Review Team (TPRT) members, which will provide a number of possible dates and a suggested location for the review. Once the date and location have been agreed, the Tax Professional under Review must arrange that he/she and his/her team members are all available that day.

ii. It is expected that a review of a Tax Professional will take 4 to 6 hours, but some reviews will take longer so all Tax Professionals under Review are requested to be available for the whole day.

iii. After the date and location have been agreed, the Tax Professional under Review will receive a confirmation by e-mail of the date and location of the review from FRL or one of the TPRT members. The Tax Professional under Review will also receive a Tax Questionnaire (Attachment 03). He/she will be requested to complete that questionnaire and to return it to the FRL. The FRL and/or the TPRT may use this questionnaire to select other engagement files of the Tax Professional under Review that the Review Team will look at during this extended review.

iv. The FRL and/or TPRT will inform the Tax Professional under Review shortly before the review, which engagement files he has selected for the review. In addition, the TPRT may also (randomly) select one or more files on site (if the review takes place at the office of the Tax Professional under Review).

e. When the FRL and TPRT have concluded theirs review, it will recommend a color rating (green, yellow or red, as per Attachment 11 below). It will draft its findings and recommendations within the Attachment 07 – File Review Guidance. The recommended color rating and the draft findings and recommendations will be discussed with the Tax Professional under Review before it is sent to the FRL. The Tax Professional under Review will also have the possibility to include his/her comments and explanations in Attachment 07. Once the FRL has received Attachment 07, a meeting or telephone call with the Tax Professional under Review may be arranged to discuss the findings and recommendations of the TPRT. After this (possible) discussion, the FRL will issue a final report and overall color rating (Attachment 11) to the Tax Professional under Review. If appropriate, the FRL will also discuss and agree upon an Action & Implementation Plan (Attachment A) with the Tax Professional under Review, which Action Plan will become part of the final report. The final report will be then discussed with the Tax Practice Leader and then sent to Brazilian RRL.

f. As part of Internal Tax Practice Review process, the FRL will also conduct (together with the RRL/Independence areas) a testing aimed to check the Risk Classification attributed to the Clients and Engagements , taking into consideration the cases included within the DRMS systems as “Normal Risk”. The objective of this test is to verify if the engagements were adequately classified observing the guidance provided in DPM 5003 – Engagement Acceptance and Continuance. Moreover, Clients and Engagements classified as “Greater than Normal” and “Much Greater than Normal” will also be reviewed in order to check if the appropriate approvers were indicated, according to in DPM 5003 – Engagement Acceptance and Continuance. See Attachment C for an example of the testing made and results reported.

Assessment by the Function Risk Leader and the Tax Practice Review Team

The assessment to be performed by FRL and TPRT comprises two parts:

A. Compliance with Policies and Procedures andB. Quality of Advice (mainly technical content)

A - Compliance with Policies and Procedures

As said above, the purpose of the Internal Tax Practice Review is to obtain reasonable assurance that the professionals of Deloitte Tax in Brazil comply with the Deloitte Tax Standards. In more concrete terms, it is expected that these topics shall be covered by the Client/Engagement Acceptance inspections conducted by Independence/RRL area, which will look at the following:

a. Have Client Acceptance and Client Continuance Procedures been followed and documented within the DRMS (the Risk Assessment Tool utilized by DTTL Brazil) and has the outcome been documented in the file?

b. Has the independence status of the Client (through DESC) been determined and has this been documented in the file?

c. With regard to restricted entities, have the appropriate action steps (e.g. written approval from Audit Committee and LCSP) been taken out and documented in the file?

d. Have the Engagement Acceptance Procedures been followed and documented within the DRMS and has the outcome been documented in the file?

e. Has a firm approved engagement letter with the required reference to Deloitte Brazil Standard Terms and Conditions been used and has this engagement letter been signed by the Client (or formally accepted by electronic communication) and documented in the file?

f. In case of a SEC restricted entity, has it been checked and confirmed that no clause of confidentiality has been imposed on the Client and has this been documented? And if such a confidentiality clause has been imposed in the past, has the required action been taken?

g. Have other important procedures such as the procedures regarding signing authority, the “two pairs of eyes” principle, among others, been followed? Is there at least one signing partner effective empowered to sign the proposal?

h. Are the DTTL Tax Fundamental Quality Assurance Standards and DTTL Client Service Standards followed?

The scope of the compliance part of the review is not limited to the examples above, but these will give a good indication of what the FRL/TPRT will look for (and, if applicable, discuss with the Tax Professional under Review).

B - Quality of Advice (mainly technical content)

The FRL and TPRT will also look at the technical content of the selected engagement files. In that respect, they will look at many different things, including:

a. Is the advice provided by the appropriate professional with the required technical background, training and experience?

b. Are experts from other service lines consulted when appropriate?c. Was the advice provided in accordance with applicable laws and jurisprudence?d. Does the advice include a summary of all relevant facts?e. Does the advice contain an analysis of all relevant laws and jurisprudence?f. Does the advice include our interpretation or view on the matter?g. Does the advice include appropriate language and caveats?h. Is the advice clear (will the client understand?) and not ambivalent?i. Is the language and tone of our advice and communication with the client

professional and business like? j. Do we respond to requests from the client in a timely fashion and do we meet

deadlines and due dates?

The scope of the technical part of the review is not limited to the examples above, but these will give a good indication of what the review team will look for. For more information, please refer to Attachment 03 and Attachment 07.

Assessment Color Rating

The final report issued by the FRL about the Internal Tax Practice Review will contain an overall assessment about the Tax Professionals under Review. The assessment will comprise of a green, yellow or red assessment rating. Generally, a “green” means that the expectations of the Review Team have been met and that the Tax Professional under Review complies with the standards of Deloitte Tax and DTT. A “yellow” means that the majority of expectations (including all the ones with a ‘heavy weight’) of the Review Team have been met, but there is still some room for improvement. A “red” means that there is lack of compliance with one or more standards which need urgent attention. For example, if no approval has been obtained from an Audit Committee/LCSP for tax work for a SEC restricted client. For more information, please refer to Attachment 11.

Roles and Responsibilities

The complete list of roles and responsibilities of all parties involved in the Internal Tax Practice Review program is listed in Attachment 13.

Attachment Tools

The following tools can be used by the FRL/TPRT when conducting the Internal Tax Practice Review:

AttachmentDescription

Attachment 03: Partner Questionnaire Questionnaire to be completed by the Tax Professionals under Review to understand their knowledge and awareness of certain aspects of the Tax Practice

Attachment 07: Engagement File Checklist & Assessment

Checklist to be completed by the TPRT members while reviewing Tax engagement files. The TPRT Members will include their findings and recommendations and an overall assessment rating.

Attachment 10: Tax Practice Review Report

Report sent by the FRL to the Tax Practice Leader summarizing the findings and recommendations of the Internal Tax Practice Review.

Attachment 11 : Tax Practice Review Rating criteria

A tool used by the FRL to assign an overall assessment rating for the Tax Professional under Review, based on the findings and recommendations by the TPRT.

Attachment 13: Tax Practice Review Roles and Responsibility List

A list of the responsibilities of the TPRT, the Tax Professional under Review and FRL

Attachment A : Action & Implementation Plan; and Best Practices Report

The Action & Implementation Plan is completed by the FRL based on all results of the Tax Professional under Review describing the planned actions to be taken to implement the recommendations of the FRL and TPRT. Moreover, listing of Best Practices uncovered by the FRL and TPRT during a Tax Practice Review.

Attachment B: Client Acceptance and Engagement Testing; and Sample Report

Sample of analysis already performed by Independence and RRL areas, which will be used as part of the Internal Tax Practice Review process.

Attachment C: Risk Classification Testing; and Sample Report

To document testing of the Risk Classification attributed to the Clients/Engagements considering DRMS cases given “Normal Risk”. Moreover, Clients/Engagements classified as “Greater than Normal” and “Much Greater than Normal” will also be reviewed in order to check if the appropriate approvers were included.

 

8.Member Firm Tax Practices are encouraged to provide Partners and Professional Staff for the review of other Member Firm Tax Practices, on an equitable basis, as determined by the DTTL Global Tax Executive. It is recommended that the Member Firm Tax Risk Leader periodically take part in another Member Firm's Tax Practice Review.

 

Coordination with Legal Practice Review9. The Tax Practice Review for a Member Firm Tax Practice may be performed concurrently

with a review of the Legal Practice of a Member Firm. However, a separate review manual may be used and a separate report may be issued.

Legal practice is reviewed as part of Tax Practice Review. 

Practice Review Reporting10. To the extent permissible by Local Laws, the Team Leader should report on the

results of the practice review, which should include a summary of the findings and required actions. The report should include the findings of the review team after discussion with the Member Firm leadership. 

11. Member Firm Tax Practice leadership should be responsible for the development and implementation of an action plan (i.e., an agreed-upon Member Firm Tax Practice "Action Plan"), together with a mechanism for monitoring the resolution of the findings. Such Action Plan should be concurred with by the appropriate DTTL Managing Director-Global Tax Quality, Risk and Regulatory. The Action Plan should be included as a component of the practice review report.

 

Retention of Documentation

12. The DTTL Managing Director-Global Tax Quality, Risk and Regulatory should maintain a central repository for documentation from each Tax Practice Review (DTTL Review) that is conducted under the policies and procedures of the DTTL Tax Practice Review Manual. Subject to applicable Local Laws, such documentation is limited to the final report and action plan and action plan follow-up documentation until the implementation of the action plan is completed to the satisfaction of the DTTL Managing Director-Global Tax Quality, Risk and Regulatory and the DTTL Regional Tax Director. All other materials relating to the conduct of a specific Tax Practice Review should be destroyed upon issuance of the final report (which includes documents in electronic format), unless otherwise restricted by applicable Local Laws. Internal Reviews conducted under the Tax Practice Review Manual of the Member Firm under review should follow the documentation policies of the manual under which the review is conducted. Copies of the final reports of all such reviews should be provided to the DTTL Managing Director-Global Tax Quality, Risk and Regulatory.

5016. Tax Portfolio Risk ReviewIntroductionThis Section of the Manual provides policy and guidance regarding the periodic review of the Member Firm Tax Practice's business portfolio from a risk and reputation perspective in conjunction with the

overall assessment of the Member Firm's business portfolio; see Section 2040, Portfolio Risk Review.Policies and GuidancePurpose of Review 

1. Each Member Firm Tax Practice should be responsible for implementing and documenting a Tax Portfolio Risk Review. The Tax Portfolio Risk Review is an annual assessment of Client relationships that should consider the services performed for a Client and the potential market, brand, reputation and other economic effects that might result from a change in the Client's circumstances. The Tax Portfolio Risk Review should provide an overview of the Member Firm Tax Practice's overall business risks and exposures with reference to the Member Firm's Tax service lines and Clients, including consideration of staffing, technical, and industry skills. 

2. The Tax Portfolio Risk Review is distinct from the Client or Engagement acceptance process. Member Firm Tax Practices may consider performing the Tax Portfolio Risk Review in conjunction with the Engagement continuance process (depending upon the nature and timing of such Member Firm Tax Practice process). For more details on the Portfolio Risk Review see Section 2040, Portfolio Risk Review.  

Review Criteria 

3. The Member Firm Tax Risk Leader, in consultation with the Member Firm Tax Practice Leader, Member Firm Reputation and Risk Leader ("RRL") and as appropriate, other Member Firm Risk Leaders, should develop and apply criteria for the identification of service lines, industries, Clients, and Engagements that require special scrutiny, considering the current business environment in which the Member Firm Tax Practice operates, including global and local, economic, regulatory, and other considerations. 

4. The Tax Portfolio Risk Review should include criteria indicative of potential risks to public perception of the quality and integrity of the Deloitte brand as a result of Professional Services provided by the Member Firm Tax Practice. The following are some of the criteria that, individually or collectively, may indicate a potentially significant risk exposure for the Member Firm Tax Practice or the Deloitte brand:

a. Significance of revenue from the service line, industry, or Client.

b. Nature of Professional Services provided to a Client.

c. Consideration of the public interest in services provided to a Client by persons who consider

themselves stakeholders in the Client's affairs.

d. Occurrences of events or economic trends leading to potential or known financial instability of an Industry or Client.

e. Regulatory risks and actions affecting a Client.

f. Integrity of Client's top management and board of directors.

g. Major devaluation of the currency in the Client's principal economic environment.

h. Potential negative publicity arising from association with a service line, industry, or Client.

i. Litigation or claims filed against a Client.

j. The magnitude of Professional Services performed for a Client.

k. Assessment of Partner and Client Service Team's skills, expertise, experience, and qualifications  relative to the exposures posed.

In addition to the criteria listed above, Member Firm Tax Practices may also consider applicable tax, industry, and service-line criteria provided by the DTTL Global Risk Group and the DTTL Managing Director-Global Tax Quality, Risk and Regulatory.  

Collaborations With Member Firm Reputation and Risk Leader 

5. The Tax Portfolio Risk Review should be a collaborative process between the Member Firm Tax Practice and the Member Firm RRL. Responsibility for the Tax Portfolio Risk Review remains with the Member Firm Tax Practice Leader and the Member Firm Tax Risk Leader, in consultation with the Member Firm Managing Partner and Member Firm RRL. Management of the Tax Portfolio Risk Review process may be delegated, as appropriate. 

6. The Tax Portfolio Risk Review would ordinarily include, at a minimum, the following procedures for selected Clients or Engagements:

a. Meetings of the Member Firm RRL, Tax Leaders, and Tax Risk Leaders (or their designees) with Tax Lead Client Service Partners and, as appropriate, Tax Lead Engagement Partners to discuss their respective Clients or Engagements.

b. Review of actions taken by regulators against Clients.

c. Understanding and assessment of fees on relevant Clients or Engagements and consideration of potential risk versus reward.

d. Understanding of the full scope of services provided, including those provided by other Member Firm Tax Practices.

e. Assessment of the Tax Partner's and the Tax Client Service Team's skills, experience, and qualifications relative to the potential risk exposures posed by the Client or Engagement.

7. The Member Firm Tax Practice should develop an action plan and strategy to address risks identified in the Tax Portfolio Risk Review. This may include evaluation of:

a. The need for additional risk management resources.

b. The need for further actions beyond those identified as part of the Client and Engagement acceptance or continuance processes.

c. Client and Engagement retention decisions.Timing 

8. Each Member Firm's Tax Practice Leader and Tax Risk Leader should provide a signed confirmation to the Member Firm Managing Partner and RRL that a Tax Portfolio Risk Review has been performed during the preceding year and that appropriate actions have been taken to protect the Deloitte brand. The Member Firm Managing Partner and RRL are to report the results of the Member Firm Portfolio Risk Review to the DTTL Global Managing Director - Regulatory and Risk by October 31 of each year.

Master DPM Glossary (as of June 2014)Note: Definitions contained in DPM 1420 “Independence” have been defined within DPM 1420, and are not included as part of the Master DPM Glossary.

A          

Advisory Partner

A Member Firm Partner who has been assigned responsibility for monitoring and helping to assess the quality of the overall Client relationship with the LCSP.

Affiliate (of a client)

Refer to Independence glossary within Section 1420.

Affiliate (of a Member Firm)

Refer to the definition of “Member Firm”.

Articles of DTTL

Establishes the purpose of DTTL and the general obligations of members of DTTL as well as a general description of the governance and management bodies of DTTL.

Assigned Consulting Partner

The individual assigned to lead an opportunity or Client Engagement in the Consulting function.

Assurance Engagement         

An engagement with the purpose to express a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria.

Audit Approach Manual

Manual to be used by Member Firms in planning and performing Audit Engagements.

Audit Engagement

An Engagement where the objective is to express an opinion as to whether the financial statements give a true and fair view (or are presented fairly, in all material respects), in accordance with the identified financial reporting framework.

Audit Engagement Partner

The Partner or other person in the Member Firm who is responsible for the Audit Engagement and its performance, and for the Auditor’s report that is issued on behalf of the Member Firm, and who, where required, has the appropriate authority from a

professional, legal or regulatory body. In the Audit Approach Manual the Audit Engagement Partner is referred to as the Engagement Partner.

Audit Engagement Team

All Partners and Professional Staff performing the Audit Engagement, and any individuals engaged by the Member Firm or participating Member Firm who perform audit procedures on the Engagement. In the Audit Approach Manual the Audit Engagement Team is referred to as the Engagement Team.

Audit Function

Function in which objective is to enable Member Firm to provide assurance Professional Services.

Audit Functional Leader

The leader of the Audit Function within a Member Firm

Audit Risk Leader (ARL)       

The risk leader of the Audit Function within a Member Firm.

Auditor

Auditor is the person or persons conducting an audit, usually the Engagement Partner or other members of the Engagement Team or, as applicable, the Member Firm.

B

Background Check

A process of gathering information on an individual or entity for the purposes of determining whether personal and business reputations are such that a DTTL Member Firm is willing to become associated with him or it.

C

Centers of Excellence

Knowledge centers within the Deloitte Network specializing in addressing technical questions in relation to auditing and accounting services.

Client

An individual or an entity with which a Member Firm has an agreement, whether or not formalized in an Engagement letter, to provide Professional Services.

Client Risk

The risk that a Member Firm (or DTTL or any other Member Firm) will be exposed to adverse consequences as a result of a Member Firm association with a Client (e.g., negative publicity or litigation).

Client Service Partner

A Partner of the Member Firm designated by the Member Firm to coordinate the delivery of Professional Services for a specific Engagement or portion of an Engagement.

Client Service Plan

A document that establishes the overall strategic direction for serving a Client, including actions and responsibilities of various Member Firm individuals in the short to medium term.

Client Service Team

Comprises the Client Service Partners and all other Professional Staff who provide Professional Services to the Client.

Clients & Markets Leader (C&M Leader)

A Member Firm Partner who has been assigned responsibility by the Member Firm to drive organizational focus and Client service excellence for domestic and inbound Clients.

Close Family Member

Refer to Independence glossary within Section 1420.

Component

An entity or business activity for which Group or Component management prepares financial information that should be included in the Group Financial Statements.

Component Auditor

An Auditor who, at the request of the Group Engagement Team, performs work on financial information related to a Component for the Group Audit.

Consulting Risk Leader

The risk leader of the Consulting function within a Member Firm.

Consulting Risk Management

The functional group responsible for monitoring the application of the risk management procedures, standards and tools throughout the Consulting function of the DTTL Member Firms.

Correspondent Firms/Independent Correspondent Firms

Independent, third party accounting firms that have entered into an agreement with DTTL for correspondent firm status.  These firms are not members of DTTL and do not have the membership rights and obligations of a DTTL Member Firm.  They are not subject to the oversight processes relevant to DTTL Member Firms.

D

Date of Report

The date selected by the Partner to date the report

Deloitte Global Services Limited (DGSL)

A UK private company limited by guarantee that provides services to the Deloitte Network and owns centrally created intellectual property, which it in turn licenses to Member Firms.

Deloitte Network

An association of professional service firms that are members of DTTL.

Deloitte Touche Tohmatsu Limited (DTTL)

A UK private company limited by guarantee where major management, governance and strategy decisions are made.

Deloitte Touche Tohmatsu Limited Audit Practice Review Manual

A Manual established to assist Member Firms to achieve the objectives of the Audit practice review.

Deloitte Touche Tohmatsu Services, Inc (DTTS)

A wholly-owned subsidiary of Deloitte Global Services Limited (DGSL).

Designated Global Clients

All Clients in each of the two DTTL global Client programs (G-OCEO, and MFSC) are regarded as members of the DTTL global Client portfolio and as such are recognized as Designated Global Clients (DGCs) throughout the network of Member Firms. Designated Global Clients are Clients that Member Firms, functions, and industries have all agreed to prioritize globally, without exception.

DTTL Board of Directors

The senior governing body of DTTL.

DTTL CEO

Chief executive officer of Deloitte Touche Tohmatsu Limited.

DTTL Chief Corporate Development Officer

The DTTL representative who has responsibility to support and facilitate Member Firm acquisitions.

DTTL Documents

The Articles and Supplemental Regulations of DTTL.  

DTTL Executive

The DTTL senior management that leads and manages the global network’s affairs and oversees areas core to the well-being of the global network.

DTTL General Counsel

Individual appointed by DTTL CEO who is the chief legal advisor to DTTL.

DTTL Global Client Portfolio

Comprises the two DTTL global Client programs – the Global OCEO and Member Firm Selected Clients (MFSC).

DTTL Global Clients & Industries

The DTTL group which has the primary responsibility to promote DTTL strategies for Member Firm relationships with Member Firm Clients and targets.

DTTL Global Industry

DTTL-designated global industries and associated networks of Member Firm practitioners:  consumer business and transportation; energy and resources; financial services; life sciences and healthcare; manufacturing; public sector; and technology, media, and telecommunications. Each DTTL global industry is further divided into various sectors and sub-sectors.

DTTL Global Leader—Conflict Resolution

The DTTL representative who has responsibility to assist and facilitate the resolution of Client relationship differences of opinion among respective Member Firms.

DTTL Global Leader—Industries

The DTTL representative who has the primary responsibility for setting the global strategy and providing support and coordination to the respective DTTL Global Industry and Member Firms.  

DTTL Global Managing Director—ERS

The DTTL representative who has the primary responsibility for providing support and coordination to each Member Firm ERS function which includes aiding and facilitating the Member Firm implementation of the policies set out in the DTTL Policies Manual (including the ERS functional manual).

DTTL Global Managing Directors—Functions

The DTTL representatives who have the primary responsibility for providing support and coordination to Member Firm functions (i.e., Audit, Consulting, Enterprise Risk Services, Financial Advisory, and Tax), which includes aiding and facilitating the Member Firm implementation of the policies set out in the DTTL Policies Manual (including their respective DTTL functional manuals). Refer to the new DTTL organization structure and leadership team for names of the new DTTL functional leaders for Audit, Consulting, ERS, FA and Tax -- included under the “Global Managing Director—Client, Services & Talent” column.

DTTL Global Managing Director—IFRS Technical

The individual designated by the DTTL Global Managing Director—Global Audit & ERS as the technical leader for GILT.

DTTL Global Managing Director—Regions

A senior DTTL leader that assists Member Firms in complying with DTTL strategies and obligations.  Also, coordinates regional initiatives and reports to DTTL management on Member Firm progress and issues in his/her region.

DTTL Global Risk Group

A group of DTTL representatives with responsibility to aid and facilitate in recommending solutions for DTTL and its Member Firms on reputation and risk matters.

DTTL Global Tax Executive

The team of (i) DTTL Tax senior and  regional leaders with primary responsibility to assist Member Firms in their oversight of Tax operations and execution of Tax strategy, and (ii) relevant Member Firm leaders.

DTTL Global Tax Quality, Risk and Regulation

The DTTL group who work in the Tax quality and risk function.

DTTL Managing Director—Global Audit Risk

The DTTL representative appointed by the DTTL Global Managing Director—Audit who is responsible for assisting Member Firms in the areas of risk management and quality assurance for the Audit Function.  Other responsibilities include: (1) developing the policies set out in the DTTL Policies Manual (including the Audit functional manual), (2) aiding and facilitating the Member Firm implementation of such policies, and (3) providing guidance and oversight in connection with the practice review process.

DTTL Managing Director—Global Audit Services

The DTTL representative who has responsibility for establishment of DTTL Audit methodology and policies on technical accounting, auditing and financial reporting matters including the application and interpretation of standards, the performance of

procedures, and resolutions of technical issues or any other matter pertaining to Assurance Engagements.

DTTL Managing Director—Global Clients & Industries

The DTTL representative who has the primary responsibility to promote DTTL strategies for Member Firm relationships with Member Firm Clients and targets.

DTTL Managing Director—Global Consulting Risk

The DTTL representative appointed by the DTTL Global Managing Director—Consulting who is responsible for assisting Member Firms in the areas of risk management and quality assurance for the Consulting function.  Other responsibilities include: (1) developing the policies set out in the DTTL Policies Manual (including the Consulting functional manual), (2) aiding and facilitating the Member Firm implementation of such policies and, (3) providing guidance and oversight in connection with the practice review process.

DTTL Managing Director—Global ERS Risk

The DTTL representative appointed by the DTTL Global Managing Director—ERS is responsible for assisting Member Firms in the areas of risk management and quality assurance for the ERS function. Other responsibilities include: (1) developing the policies set out in the DTTL Policies Manual (including the ERS functional manual), (2) aiding and facilitating the Member Firm implementation of such policies, and (3) providing guidance and oversight in connection with the practice review process.

DTTL Managing Director—Global Ethics

The DTTL representative who has responsibility for aiding and facilitating the Member Firm implementation of the DTTL Member Firm Ethical Principles.

DTTL Managing Directors—Global Functional Risk

DTTL representatives appointed by the DTTL Global Managing Directors – Functions who are responsible for assisting Member Firms in the areas of risk management and quality assurance for the applicable functions.  Other responsibilities include: (1) developing the policies set out in the DTTL Policies Manual (including their respective DTTL functional manuals), (2) aiding and facilitating the Member Firm implementation of such policies, and (3) providing guidance and oversight in connection with the practice review process.  See Exhibit 1.

DTTL Managing Directors—Global Subject Matter

Individuals specialized in such areas as Human Resources, Independence, Ethics, Information Technology, Security, Legal, which for purpose of the Manual, have the responsibility of developing, maintaining, and updating the DTTL Policies Manual Level 1 policies and guidance on Practice Management and Other Matters in the respective fields of responsibility.  Refer to the new DTTL organization structure and leadership team for names of the new DTTL Managing Directors—Global Subject Matter (e.g., ethics leader, independence leader).

DTTL Managing Director—Global Tax Quality, Risk and Regulatory

The DTTL representative appointed by the DTTL Global Managing Director—Tax who is responsible for assisting Member Firms in the areas of risk management and quality assurance for the Tax function.  Other responsibilities include: (1) developing the policies set out in the DTTL Policies Manual (including the Tax functional manual and the Legal Practice manual), (2) aiding and facilitating the Member Firm implementation of such policies, (3) providing guidance and oversight in connection with the practice review process, and (4) assisting Member Firms in the area of Tax regulatory matters.

DTTL Managing Director—Regulatory and Public Policy

The DTTL representative who has responsibility for global engagement with those who regulate Deloitte’s businesses; consults with Member Firms regarding regulatory developments and situations; and provides support to the Member Firm CEO and Regulatory Contact Partner to help carry out the regulatory and policy priorities of the DTTL CEO.

DTTL Managing Director—Risk and Reputation

The DTTL representative who has responsibility to aid and facilitate in recommending solutions for DTTL and its Member Firms on reputation and risk matters, and to coordinate initiatives and report to DTTL senior leaders.

DTTL Membership Affairs Committee

 A committee of the DTTL Board of Directors that reviews and reports to the DTTL Board of Directors on various issues related to the implementation and compliance with the rights and obligations of Member Firms.  It oversees, on behalf of the DTTL Board of Directors, DTTL management responsibility to establish and enforce appropriate rights and obligations of Member Firms.

DTTL Policies Manual (the "Manual")

Contains all material DTTL professional, business and other policies and guidance.

DTTL Regional Director of Audit Services

The DTTL representative within the Audit Function who have regional responsibility for establishment of DTTL methodology and policies on technical accounting and auditing matters regarding the application and interpretation of applicable standards and reporting issues or any other matter pertaining to assurance Engagements.

DTTL Regional Director—ERS Risk

The DTTL representative who has regional responsibility to assist Member Firms in complying with risk management matters. Also, coordinates regional initiatives and reports to DTTL Managing Director—Global ERS Risk on regional progress and issues.

DTTL Regional Reputation and Risk Director

A DTTL representative with responsibility to aid and facilitate in recommending solutions for reputation and risk matters in their respective region. Also, coordinates regional initiatives and reports to DTTL leaders on reputation and risk matter.

DTTL Risk Committee

A committee of the DTTL Board of Directors that reviews and reports to the DTTL Board of Directors on risk management issues and initiatives. It oversees, on behalf of the DTTL Board of Directors, DTTL management responsibility to establish and maintain effective risk management policies and initiatives for the network.

E

Engagement

An agreement, whether or not formalized in an Engagement letter, for a Member Firm to provide Professional Services to a Client.

Engagement Documentation

The record of work performed, results obtained, and conclusions the practitioner reached.

Engagement Partner

The Partner or other person in the Member Firm who is responsible for the Engagement and its performance, and for the report that is issued on behalf of the Member Firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body.

Engagement Quality Control Review (EQCR)

A process designed to provide an objective evaluation, on or before the date of the Report, of the significant judgments the Engagement Team made and the conclusions it reached in formulating the report. The Engagement Quality Control Review process is only for audits of financial statements of Listed Entities and those other Engagements, if any, for which an Engagement Quality Control Review is required by this Manual or the Member Firm has determined an Engagement Quality Control Review is required.

Engagement Quality Control Reviewer

A Partner, other person in the Member Firm, or a team made up of such individuals, none of whom is part of the Engagement Team, with sufficient and appropriate experience and authority to objectively evaluate the significant judgments the Engagement Team made and the conclusions it reached in formulating the report.

Engagement Team

All Member Firm Partners and Professional Staff performing the Engagement, and any individuals engaged by the Member Firm or another Member Firm who perform procedures on the Engagement. This excludes external experts engaged by the Member Firm or another Member Firm.

ERS

Enterprise Risk Services.

ERS Engagement Partner

A Partner of the Member Firm designated by the Member Firm to coordinate the delivery of ERS Professional Services for a specific Engagement or portion of an Engagement.  In some Member Firms, an ERS Engagement Partner may be a Principal or a Director or Associate Partner.

ERS Functional Leader

The leader of the ERS function within a Member Firm.

ERS Functional Risk Leader

The risk leader of the ERS function within a Member Firm.

ERS Practice Review Program

The ERS practice review program inspects Member Firm’s risk management and quality assurance procedures on an at least three yearly basis.  The inspection applies to Member Firm’s ERS practice and Partners as well as individual ERS Engagements. Practice reviews are performed by Partners and Managers independent of the Member Firm office under review.

ERS Risk Management and Quality Control

The internal ERS function, in each Member Firm ERS practice, which is the responsibility of the Member Firm’s ERS Functional Risk Leader.

Ethics Officer

Individual primarily responsible for implementing an ethics program within a Member Firm, including consultations on ethical issues and compliance.

F

FA

Financial Advisory.

Field Senior

A Member Firm professional staff member with responsibility to the audit Engagement Partner and Manager for the audit engagement.

Files/Working Papers

The documents produced when providing Professional Services; they may be electronic or hard copy.

Financial Interest

Refer to Independence glossary within Section 1420.

Foundation Learning

Activity which provides the learner with knowledge of the principles and application of the auditing, accounting and other relevant standards.  Typically foundation learning will be achieved through participation in structured learning activities (such as e-learning or facilitator led learning). Global guidance is provided on the expected content of a Foundation Learning curriculum.

Functional Leader

Individuals who represent the heads of the functions of Audit, Tax, Consulting, ERS, and FA for their respective Member Firms.

G

General Business Terms and Conditions

The language setting out the terms and conditions under which the Member Firm letters of Engagement are contracted.  General Business Terms and Conditions will reflect Member Firm local jurisdiction and should address, in a consistent manner, matters of general business and professional interest in Engagements as well as legal matters.  

GILT

The Global IFRS Leadership Team, which facilitates consultation among Member Firms and provides general guidance to Member Firms on IFRS-related matters.

GILT Centre

A physical location or virtual group staffed by IFRS specialists which has been recognized by GILT as a GILT Centre.

Global IFRS and Offering Services

Group that provide consultations or reviews of significant auditing, accounting, and financial reporting matters on reports relating to US SEC registrants and IFRS reporting entities.

Global IFRS View

A matter defined as a Global IFRS View and documented in the International Accounting Manual and other communications issued by the DTTL Global Managing Director – IFRS Technical.

Global Lead Tax Partner (Global LTP)

A Member Firm Partner who has been assigned overall responsibility for the coordination of delivery of all Tax Professional Services to a Client.

Global OCEO

A portfolio of Member Firm Clients that are among the largest multinational organizations in their markets and sectors and represent Deloitte’s most globally significant accounts and emerging companies.

Global Public Policy Committee (GPPC)

An ad hoc group of representatives from six of the largest international professional services networks that discusses relevant regulatory and public policy developments.

Global Strategic Relationship (GSR) Engagements

An Engagement for a Global Strategic Relationship Client, as designated by DTTL or a Member Firm from time to time.

Global Tax Advisories (GTAs)

Advisories issued periodically by the DTTL Managing Director—Global Tax Quality, Risk and Regulatory regarding regulatory or other matters affecting the Tax function.

Greater than Normal

Engagement Risk level where there are Client Environment, Engagement or Staffing factors that require enhanced risk management actions to mitigate Engagement risk to an acceptable level including a concurring review of proposal, Engagement letter and Engagement deliverables.

Group Audit

The audit of group financial statements.

Group Audit Partner

The Partner or other person in the firm who is responsible for the Group Audit and its performance, and for the Auditor’s report on the Group Financial Statements that is issued on behalf of the firm. Where joint Auditors conduct the Group Audit, the joint Engagement Partners and their Engagement Teams collectively constitute the Group Audit Partner and the Group Engagement Team.

I

IFAC

International Federation of Accountants. Refer to Independence glossary within Section 1420.

Immediate Family Member

Refer to Independence glossary within Section 1420.

Independence

Refer to Independence glossary within Section 1420.

Industry

The aggregate or grouping of a general business activity or commercial enterprise.

Inspection

In relation to completed Engagements, procedures designed to provide evidence of compliance by Engagement teams with the Member Firm’s quality control policies and procedures.

Integrated Market Offerings

A portfolio of services that combines a Member Firm’s diverse multi-functional capabilities into focused solutions for its Clients’ complex business needs. This is referred to as “Integrated Service Offerings” in some Member Firms.

International Audit Approach Manual

Manual to be used by Member Firms in planning and performing Audit Engagements.

International Client

A client that has a Parent Company, subsidiaries, or affiliates for which Professional Services are rendered in more than one country.  This may also include any client that has a cross-border relationship with shareholders (or lenders) from outside the Member Firm’s country.

International Engagement

Any Engagement where the Client has a parent company, subsidiaries, or affiliates for which Professional Services are rendered in more than one country.  This may also include any Client that has a cross-border relationship with shareholders (or lenders) from outside the Member Firm’s country.

International Name

Shall mean the name Deloitte Touche Tohmatsu, or any other name designated by the Verein, including any logos designated by the Verein for use in connection therewith.

International Practice Name

Means each of “Deloitte”, “Deloitte & Touche” and “Deloitte Touche Tohmatsu”.

K

Key Audit Partner

The Audit Engagement Partner, the individual responsible for the Engagement Quality Control review, and other audit Partners, if any, on the Engagement Team who make key decisions or judgments on significant matters with respect to the Audit of the

financial statements on which the Member Firm will express an opinion. Depending upon the circumstances and the role of the individuals on the audit, “other audit Partners” may include, for example, Audit Engagement Partners responsible for significant subsidiaries or divisions.

L

Lead Client Service Partner (LCSP)

A Member Firm Partner who has been assigned overall responsibility for the coordination of delivery of all Professional Services to a Client.  

 Lead Engagement Partner

The Partner who has been assigned overall responsibility for the conduct of an Engagement, across all functions.

Lead Member Firm Legal Practice Partner

The Partner who has been assigned overall responsibility for the conduct of a Legal Service Engagement.

Lead Tax Partner

The Partner who has been assigned overall responsibility for the conduct of an Engagement.

 Legal Counsel

One or a group of lawyers, internal or external to a Member Firm, that provide legal advice to such Member Firm.    

Legal Service

A service that, under the circumstances in which the service is provided, could only be provided by someone licensed, admitted, or otherwise qualified to practice law in the jurisdiction in which the service is provided; and any service that is: (1) held out by the firm providing that service as being a legal service; (2) held out as being performed by a lawyer or under a lawyer’s supervision or (3) a service provided by a practice that describes itself as a legal practice.

Listed Entity

An entity whose shares, stock or debt are quoted or listed on a recognized stock exchange, or are marketed under the regulations of a recognized stock exchange or other equivalent body.

Loaned Staff

‘Loaned Staff’ Engagements where Member Firms provide staff, below the grade of Manager, to work under the supervision of the client where there is no Member Firm responsibility for the scope or nature of services provided by such staff, nor for the

direction or control of work.  Loaned Staff Engagement letters state the Member Firm is not responsible for the results of the work provided by its personnel.

Local Laws

The laws, regulations, professional rules of conduct, codes of ethics, and similar codes applicable to Professional Services in a jurisdiction.

M

Manager

A Professional Staff member with day-to-day responsibility for all significant aspects of providing Professional Services to Clients.

Managing Partner

Refers to the most senior executive leader of a Member Firm (whether such title is Managing Partner, CEO or other similar title) and appointed to oversee the overall management and operating infrastructure of a Member Firm.  

Member Firm

Means (i) firms which are admitted from time to time to membership of DTTL pursuant to the Articles and the Supplemental Regulations of DTTL and which have not ceased to be members of DTTL and (ii) such firms’ Affiliates;

“Affiliate”, in relation to a Member Firm, means any of the following:

(i) any Person Controlling, Controlled by or under common Control with the Member Firm;

(ii) any Person that has a material contractual, personal, management or other relationship with the Member Firm such that the business of such person is managed on a coordinated basis with the Member Firm; and

(iii) any other Person designated by the Member Firm and accepted by DTTL as an affiliate of the Member Firm.

For clarification, DTTL, DTT, DGSL, DGSHL or any legal Person that any of them directly or indirectly Controls, shall not be an Affiliate of a Member Firm.

“Person” means any natural person, corporation, partnership, trust or other entity or organization of any nature, however and wherever organized or constituted or any governmental authority.

“Control” means the power by a Person to direct or cause the direction of the management or policies of another Person, whether through the ownership of voting securities, by contract or otherwise (but not merely by reason of holding a management position within that other Person), and “Controlling”, “Controlled by”, “under common Control with” and similar forms shall be construed accordingly.

Member Firm Legal Practice

The legal practice or an affiliated law firm of a Member Firm.

Member Firm Legal Practice Engagement Partner

The Partner who has been assigned responsibility for the conduct of a Legal Service Engagement.

Member Firm Legal Practice Leader

The Partner or equivalent designated by the Member Firm to have the overall responsibility for managing the Member Firm Legal Practice.

Member Firm Legal Practice Partner

A person who is a Partner of a Member Firm Legal Practice or who otherwise has the authority to represent such a Member Firm Legal Practice in a similar manner (e.g., a shareholder, principal or person with a similar title that serves the function of “Partner” as commonly understood in the DTTL organization).

Member Firm Legal Practice Risk Leader

The risk leader of the Member Firm Legal Practice.

Member Firm Professional Practice Director (NPPD)

A Partner appointed by the Audit Functional Leader in consultation with the Risk and Reputation Leader to coordinate and act as focal point for all consultations relating to interpretation of accounting and auditing matters within a Member Firm.

Member Firm Selected Clients (MFSC)

Represents Clients recognized as strategic by an individual Member Firm that have an international presence, and therefore need sustained focus and support from both the local Member Firm, and other Member Firms in territories where the Clients have operations.  The Member Firm Selected Clients (MFSC) portfolio includes significant middle market and private companies.

Member Firm Tax Practice

The Tax function within a Member Firm.

Middle Market Clients

Member Firms apply a definition that reflects their national economy centered on clearly defined attributes, which can include: ownership, management structure, company size, company growth trajectory; position in industry/market, account size, level of international presence.

Monitoring (as used for purposes of the Audit Approach Manual)

A process comprising an ongoing consideration and evaluation of the Member Firm’s implementation of the DTTL system of quality control, including a periodic inspection of a selection of completed Engagements (through the practice review program), designed to enable the Member Firm to obtain reasonable assurance that its system of quality control is operating effectively.

Much Greater than Normal

Engagement Risk level where there are significant Client Environment, Engagement or Staffing factors that require even more enhanced risk management actions to mitigate Engagement risk to an acceptable level to include a concurring review of proposal, Engagement letter and Engagement deliverables and assignment of a Special Risk Review Partner to the Engagement.

N

National Industry

Member Firm designated priority industries and associated networks of practitioners within the Member Firm.  These groups will generally align with the DTTL Global Industry groupings but may combine certain sectors or divide into slightly different sub-sectors to reflect Member Firm priorities.

National Industry Leader

The Member Firm representative who has the primary responsibility for providing support and coordination to the National Industry.

Nautilus

A captive insurer owned by Member Firms of DTTL that provides a professional indemnity insurance program to all Member Firms.

New Client

An individual or entity with which a Member Firm has not provided Professional Services to in the most recent 18 months or where there has been a significant change in business (i.e., a change in ownership or in senior management since the Member Firms last service to such Client was provided).

Normal

Engagement Risk where Client environment, Engagement or staffing factors indicate a normal level of Engagement risk.

P

Parent Company

The controlling entity for which a Referring Member Firm provides Professional Services and to which the Audit Engagement Partner is assigned.

Participating Member Firm

A Member Firm performing Professional Services that relate to a Client (or a Client’s subsidiary or otherwise related organization) of another Member Firm or that is serving at the latter Member Firm’s request.

Participating Member Firm Legal Practice

A Member Firm Legal Practice performing Professional Services that relate to a Client (or a Client’s subsidiary or otherwise related organization) of another Member Firm that is serving at the latter Member Firm’s request.

Partner

A person who is a Partner of a Member Firm or who otherwise has the authority to represent such firm in a similar manner (e.g., a shareholder, principal or person with a similar title that serves the function of “Partner” as commonly understood in the DTTL organization).

Personal Information

Any information relating to an individual, who can be identified, directly or indirectly, by that information and in particular by reference to an identification number or to one or more factors specific to his or her physical, physiological, mental, economic, cultural or social identity. Examples include: name, address, date of birth, background check results, photographs, performance records, and time and expense data.  Depending on the jurisdiction and definitions adopted by specific national laws, personal information may be known as personal data or personally identifiable information (PII).

Planning Memo

The memorandum describing the expected scope and conduct of an Engagement. It evidences the appropriate planning of the Engagement and Member Firm’s response to identified Engagement risks or other matters that may affect an Engagement.

Practice Management

Policies and protocol within the DTTL Policies Manual that cover practice management issues.

Processing

Processing of Personal Information refers to any operation or set of operations which is performed upon Personal Information, whether by automatic or manual means. This can includes the collection, recording, organization, storage, updating or modification, retrieval, consultation, use, disclosure by transmission, dissemination or making available in any other form, linking, alignment or combination, blocking, erasure or destruction of Personal Information.

Professional Indemnity Insurance Manual

Nautilus publication providing information regarding the Deloitte Touche Tohmatsu Limited professional indemnity insurance program.  

Professional Practice Director (PPD)

A Partner appointed by the Member Firm Professional Practice Director to coordinate or act as focal point for all consultations relating to accounting and auditing for a part of a Member Firm (e.g., office, country, region in a country, or topic).

Professional Services

Audit, Enterprise Risk Services, Financial Advisory, Consulting, Tax, and any other services ordinarily performed by Member Firms and their related entities and Affiliates.

Professional Service Risk

The risk associated with performing certain types of Professional Services.

Professional Staff

Employees of Member Firms who participate in providing Professional Services to Member Firm Clients.

Professional Standards

Rules, guidelines, principles, and procedures a professional service provider is to follow when providing Professional Services.  For Audit this includes IAASB Engagement Standards, as defined in the IAASB’s “Preface to the International Standards on Quality Control, Auditing, Assurance and Related Services”; any other applicable Engagement standards; all relevant ethical requirements, which ordinarily comprise Parts A and B of the IFAC Code; and relevant national ethical requirements.

Public Interest Entity

Refer to Independence glossary within Section 1420.

Q

Qualified Negotiator

A Member Firm Partner who is authorized to oversee all cross-border client contracting activities in his/her Member Firm, to act as the single point of contact for cross-border Client contracting requests from other Member Firms, and to take charge of the negotiations of global Master Service Agreements (MSAs) for global Clients headquartered in the respective Member Firm's territory.

R

Recommending Partner

The Partner who makes the preliminary assessment of Engagement risk for a prospective Engagement.  This Partner would ordinarily be the Client Service Partner or Lead Client Service Partner if the Engagement is accepted.

Referring Member Firm

A Member Firm that requests another Member Firm to provide specific Professional Services that relate to a Client or a Client’s subsidiary or otherwise related organization of such Member Firm.

Referring Member Firm Legal Practice

A Member Firm Legal Practice that requests another Member Firm to provide specific Professional Services that relate to a Client or a Client’s subsidiary or otherwise related organization of such Member Firm Legal Practice.

Regional Board

Committees made up of regional leaders to consider and advise on regional initiatives and suggested application of DTTL strategies to Member Firms in that region.

 Regional Tax Director

A DTTL representative who has regional responsibility to assist Member Firms in complying with DTTL strategies and obligations.  Also coordinated regional initiatives and reports to DTTL Tax leaders on regional progress and issues. The Regional Tax Director may help Member Firms in the region identify other issues and aid and facilitate in recommending solutions.

Regulatory Contact Partner (RCP)

The Partner of a Member Firm designated by the Member Firm to proactively engage on regulatory and public policy matters for his/her Member Firm.

Regulatory Working Group (RWG)

A working group of the Global Public Policy Committee (GPPC) that assists Member Firm Regulatory Contact Partners (RCPs) on regulatory and public policy developments.

Reputation and Risk Leader (RRL)

The Partner of a Member Firm designated by the Member Firm to have the overall responsibility for managing reputation and risk matters for that Member Firm.

Restricted Entity

Refer to Independence glossary within Section 1420.

Retired Partner

A former Partner who is retired from a Member Firm and as such does not provide Professional Services to Clients and does not have the authority to represent a Member Firm in a similar matter.

S

Secondment

Personnel on temporary assignment to DGSL or other Member Firm by a Member Firm.

Senior DTTL Corporate Responsibility Body

The most senior council, committee or other body consisting of representatives from DTTL and member firms which is tasked with providing global oversight to DTTL and Deloitte Member Firms on broad corporate responsibility matters, including consultation on such matters.  As well as development of strategy and policy at the global level. Current information on the makeup of this body can be found on the DTTL Corporate Responsibility web site.

Sensitive Personal Information

Sensitive Personal Information is Personal Information that requires an extra level of protection and a higher duty of care.  Example include: information on medical or health conditions, racial or ethnic origin, political opinions, religious, or philosophical beliefs, trade union membership, sexual preferences, information related to offenses or criminal convictions, government identifiers, financial account numbers and passwords or personal identification numbers (PINs) for financial accounts.

Service Charter

The two-part Deloitte Service Charter outlines key expectations for global LCSPs (LCSP’s Charter) and for Member Firms (Deloitte Member Firms’ Charter). The LCSP’s Charter describes the LCSP’s responsibilities in key areas of client service delivery. The Deloitte Member Firms’ Charter describes the corresponding support that LCSPs can expect from Member Firms.

Significant Influence

Refer to Independence glossary within Section 1420.

Special Review Partner

A Partner of a Member Firm assigned to a Client or an Engagement as part of the Member Firm’s procedures to monitor and manage risk cases with the purpose of providing an additional level of objectivity by continually challenging the key elements of the Engagement. The Special Review Partner is not part of the Engagement team, needs to be independent of the Engagement, and ordinarily possesses the appropriate specialized industry and technical skills.

Strategic Relationship (SR) Engagement

An Engagement for Strategic Relationship client, as designated by DTTL or a Member Firm from time to time.

Subsidiary

An entity that is controlled by the Parent Company.

Supplemental Regulations of DTTL

Supplements the Articles of DTTL and specifies in more detail the organizational structure of DTTL, the responsibilities of its governance and management bodies and the respective rights and duties of membership.

Support Staff

Group of Member Firm employees other than Professional Staff.

T

Tax Practice Leader

The Partner of a Member Firm designated by the Member Firm to have the overall responsibility for managing a Member Firm’s Tax practice.

Team Leader

The Member Firm partner who has the responsibility to lead the DTTL review of another Member Firm’s ERS or Tax practice.

Transnational Audit Engagement

Audit engagements where:

• the financial statements being audited are or may be relied upon outside the audited entity’s home jurisdiction for purposes of significant lending, investment or regulatory decisions; this will include audits of all financial statements of entities with listed equity or debt and other Public Interest Entities which attract particular public attention because of their size, products or services provided, or

• the Audit Engagement Partner issuing the audit opinion on financial statements of an entity relies upon work performed in another Member Firm to support the opinion being issued, or

• where the report or clearance memorandum or other report is relied upon by a Member Firm other than the Member Firm who issues the report, clearance memorandum or other report for the purpose of a Group Audit

• work performed in one Member Firm that is relied upon by another Member Firm for the purpose of forming an opinion and issuing an audit report.

 

Exhibits

EXHIBIT 1 — DTTL MANAGING DIRECTORS—GLOBAL FUNCTIONAL RISKFunction Name Work Phone NumberAudit Cal Buss +1 (416) 874 3969Consulting Paul Held +1 (416) 775 7418ERS Ron Skwarek +1 (312) 486 5490FA Peter Holmes +44 20 7007 0856

Tax & Legal Nancy Schuddinck + 32 2 600 66 40

 

EXHIBIT 2 — RISK DIRECTORATE

Name Work Phone Number

Cal Buss +1 (416) 874 3969

Keith Byer +1 (775) 309 3560

Gianmario Crescentino +39 02 83322135

Daniel Del Barrio +52 555 080 6056

William Duncumb +44 20 7303 6385

Alan Glen +852 2852 1673

Wally Gregory +1 (203) 761 3190

Paul Held +1 (416) 775 7418

Peter Holmes +44 20 7007 0856

Kerry Miller +1 (312) 486 4576

Denise Pacofsky +1 (212) 492 2841

Jeff Potts +352 45145 2148

Marc Schiller +1 (212) 492 4133

Erika Schmidt +1 (212) 492 4994

Nancy Schuddinck +32 2 600 6640

Murrell Shields +1 (703) 885 6056

Jens Simonsen +45 36 103781

Ronald Skwarek +1 (312) 486 5490

Cindy Sobieski +1 (212) 492 3646

Otmar Thoemmes +49 (0) 89 29036 8804

Kevin Woertz +1 (212) 436 3813

 

EXHIBIT 3 — COMPARISON OF DTTL TITLES USED IN DPM TO THE DTTL ORGANIZATION STRUCTURE AND LEADERSHIP TEAM

The following table provides a comparison of existing DTTL leadership titles used in the DPM to the new DTTL titles in the “DTTL organization structure and leadership team” chart (effective August, 2013). Title used in DPM DTTL organization structure & leadership teamDTTL Global Managing Director—Brand DTTL Global Leader—Brand and CommunicationsDTTL Global Managing Director—Function DTTL Managing Director—Global FunctionDTTL Global Managing Director—Region DTTL Regional Managing Director—RegionDTTL Managing Director—Global Ethics DTTL Chief Ethics OfficerDTTL Managing Director—Global Independence DTTL Chief Independence OfficerDTTL Managing Director—Global Security DTTL Chief Security Officer

Note:  The chart above only depicts titles reflected in the “DTTL organization structure and leadership team" chart that are used in the DPM.  DTTL leadership titles which have not changed (i.e., General Counsel and DTTL CEO) are not reflected in the table above.

Other DTTL leadership titles that are not reflected in the new “DTTL organization structure and leadership team”  have not been provided there is no comparison to be made (i.e., DTTL Managing Directors—Global Functional Risk and DTTL Managing Directors—Global Subject Matter).