Personal independence at PwC

Overview

What is personal independence?
Why do we maintain personal independence?
Who has to maintain personal independence?
Who is an immediate family member?

What is personal independence?

As a public accounting firm, PwC and its partners, employees, third-party contractors and their immediate family members must be independent of PwC’s audit clients, including their affiliates, to comply with applicable independence regulations. This includes being personally financially independent of PwC’s audit clients, including their affiliates.

To be financially independent means the financial arrangements of PwC partners, employees, third-party contractors and their immediate family members need to be permissible according to independence regulations and PwC policy.

Why do we maintain personal independence?

At PwC, we’re guided by our purpose to build trust in society and solve important problems. As a public accounting firm, PwC is expected by our clients and required by our regulators to maintain our independence and objectivity, in fact and appearance. It’s a critical characteristic of our profession and how PwC builds trust with our clients, society and in the capital markets.

Who is an immediate family member?

A spouse/spouse equivalent - a spouse (either by marriage or under common law), or someone a PwC partner, employee or third-party contractor lives with and shares an ongoing intimate relationship, regardless if their finances are handled separately.

A dependent - anyone, whether related or not, who receives more than half of their financial support from a PwC partner, employee or third-party contractor.

What is a financial arrangement and when is it permissible?

A financial arrangement is any of the arrangements described below. Permissible financial arrangements are those that are permitted by independence regulations and PwC policy.

Click on the financial arrangements below to learn more:

Investments

Examples of investment relationships include stocks, bonds, mutual funds, money market funds (MMFs), investment contracts, options such as puts and calls, funds held and/or managed through variable insurance, other investments in a company and certain crypto assets.

In certain circumstances, there are also restrictions on owning investments in a company that is an audit client of PwC.

You can search for securities in Checkpoint*¹ to assess whether a particular investment relationship is permissible. You can also contact the Independence Group for a detailed check of any possible restrictions on your investment relationships*³. Once you have confirmed that an investment relationship is permissible and have actually initiated the purchase process, you will have 14 calendar days to register the purchased securities in Checkpoint.

Credit cards

It is important to be aware of the issuing company of the credit cards that you use. Credit cards have brand names such as Visa, Mastercard and JCB or store names associated with them., but the company that actually issues the credit card is important from an independence standpoint. The name of the issuing company is usually found on the back of the card.

Credit cards issued by certain companies, such as PwC audit clients and their affiliates, may be subject to restrictions, such as the requirement to keep the unpaid balance below a certain amount.

PwC partners and staff can check independence requirements and restrictions on credit cards by searching CES^*2. If necessary, this information can also be found by consulting with the Independence Group.

Insurance policies

Examples of insurance include automobile, fire, life and accident insurance.

In certain circumstances, there are restrictions on entering into a new or making changes to an existing insurance policy with a PwC audit client or other restricted entity.

PwC partners and staff can check independence requirements and restrictions on insurance policies by searching CES*².

Bank accounts

Examples of bank accounts include checking and savings accounts.

In certain circumstances, deposits and securities held in bank accounts offered by a PwC audit client or other restricted entity may be subject to restrictions, including prohibitions on balances not covered by the deposit protection system.

PwC partners and staff can check independence requirements and restrictions on insurance policies by searching CES*².

Online payment tools

Online (cashless) payments include PayPal, LINE Pay, Rakuten Pay, PayPay, D Payment and Square.

In certain circumstances, online payment tools provided by PwC audit clients and other restricted entities may be subject to restrictions on holding a given balance.

PwC partners and staff can check independence requirements and restrictions on insurance policies by searching CES*².

Mortgages and other loans

Examples include mortgages, auto loans, and overdrafts.

In certain circumstances, there are restrictions on entering into new or making changes to an existing loan or mortgage with a PwC audit client or other restricted entity. The repayment of outstanding loan balances may be required in some circumstances.

PwC partners and staff can check independence requirements and restrictions on insurance policies by searching CES*².

Material leases

A material lease agreement is one in which the total annual lease payments are at least 5% of the household's annual income (excluding automobile leases and leases from individuals). Generally, this applies to leases of condominiums and apartments.

In certain circumstances, there are restrictions on entering into or making changes to an existing material lease with a PwC audit client or other restricted entity.

PwC partners and staff can check independence requirements and restrictions on insurance policies by searching CES*².

Brokerage accounts

A brokerage account is an investment account that allows you to buy and sell stocks, mutual funds, other securities and various other investment issues.

In certain circumstances, deposits and securities held in brokerage accounts provided by PwC audit clients and other restricted entities may be subject to restrictions, including prohibitions on the use of accounts not subject to the Investor Protection Program.

Even if the holding of a given brokerage account is permissible, there may be limitations on using the account features and services offered by your brokerage firm. For example, brokerage accounts with sweep features that automatically purchase funds such as money reserve funds (MRFs), automated investments by robo-advisors, and discretionary investment agreements, and all eligible securities must be registered with Checkpoint. Failure to register these assets will result in the prohibition of the use of the service itself.

PwC partners and staff can check independence requirements and restrictions on insurance policies by searching CES*².

Employee stock ownership plans and other employee benefits

All securities held by PwC partners and staff and their immediate family members under employee stock ownership plans, equity compensation plans and other employee benefits based on current employment relationships must be permissible from an independence standpoint.

Securities held or granted under benefit plans based on past employment must be registered with Checkpoint. Securities held or granted under benefit plans based on current employment must be registered with Checkpoint, and those securities with independence restrictions must be approved through Checkpoint.

You can check the independence restrictions for a given security by searching Checkpoint. For securities held through an employee stock ownership plan, the existence of independence restrictions must be verified prior to acquiring or being granted such securities, and the securities must be registered in Checkpoint within 14 calendar days of acquisition or grant. When registering securities, select an ownership type that indicates that the securities were acquired or granted under an employee stock ownership plan.

Trusts, estates and powers of attorney

Trusts, estates, and powers of attorney are types of legal agreements where an individual may exercise control over the financial assets of others.

If you or your immediate family members have been granted powers of attorney, are a trustee or co-trustee of any trust, or are an executor or administrator of any estate, any assets or transactions held by the person over whom you or your immediate family members have the power of attorney, trust or estate must be treated as your assets or transactions.

If such assets include securities, Checkpoint can be used to assess any independence restrictions for those securities.

Other businesses under your control

Control of a business generally exists when an individual or entity owns more than 50% of (has a controlling interest in) another entity.

Personal independence requirements extend to any financial or economic business relationship related to a business in which you or your immediate family have a controlling interest.

PwC partners and staff can check independence requirements and restrictions on insurance policies by searching CES*².

*1 Checkpoint is PwC's proprietary securities management system that helps us to maintain individual independence and prevent insider trading. This system, which is accessible to all PwC partners and staff, contains data on securities and other assets circulating in Japan and around the world, and is linked to PwC's audit client information.
Family members of can also register to access Checkpoint to search for, register and delete securities.

*2 CES stands for Central Entity Service, the master database in which audit clients of PwC network firms and other restricted entities are registered. All PwC partners and staff can access this database to determine whether the financial assets they hold are issued by PwC’s audit clients or other restricted entities.

*3 Contact the Independence Group
The Independence Group is the department that manages and supports PwC's independence practices, including personal independence; ensures that PwC's partners, staff, and family members have acceptable financial and economic business relationships; and supports personal independence compliance.
Family members may also contact the Independence Group via email. Please be sure to include the PwC email addresses of any family members who work for PwC in the CC field. The PwC partner or staff member in question may also, of course, contact the Independence Group directly.

Contact (e-mail):
jp_personal-independence-mbx@pwc.com

Are your financial arrangements permissible from an independence standpoint?

It’s critical to confirm that financial arrangements are permitted by independence-related laws and regulations and the PwC Independence Policy. Permissibility must be determined before entering into a new financial arrangement or making changes to an existing financial arrangement.

To ensure that financial arrangements are not at arm's length, the following methods can be used

PwC partners and staff can use Checkpoint or CES to pre-screen business relationships.

① Checkpoint (PwC's investment management system)

PwC partners and staff can search and register Checkpoint to ensure that their securities holdings do not constitute an arms-length violation, and Checkpoint will automatically send alerts to those who have registered securities that are prohibited due to an increased likelihood of an arms-length violation. Checkpoint automatically sends alerts (notifications) to those who have securities on file that are prohibited.

② CES (database of audit clients, etc.)

PwC partners and staff can search the CES to identify independence requirements and restrictions for all business relationships, including securities holdings.

Contact the Independence Group

The Independence Group is the department that manages and supports PwC's independence practices, including personal independence; ensures that PwC's partners, staff, and family members have acceptable financial and economic business relationships; and supports personal independence compliance.

Family members may also contact the Independence Group via email. Please be sure to include the PwC email addresses of any family members who work for PwC in the CC field. The PwC partner or staff member in question may also, of course, contact the Independence Group directly.

Contact (e-mail):
jp_personal-independence-mbx@pwc.com