The external auditor is appointed by the AGM on proposal of the Supervisory Board. The current appointment is for an indefinite period of time and is reviewed every four years by the Audit Committee. The same committee advises the Supervisory Board, which communicates the results of this assessment to the AGM. The Audit Committee and the Board of Management annually report their dealings with the external auditor to the Supervisory Board and discuss the auditor’s independence. During 2013, in addition to the annual internal quality review on services provided by the external auditor, the Audit Committee kept a close eye on national and international discussions on auditor independence. As a result, the Audit Committee has recommended to the Supervisory Board not to propose a change in the external auditor’s appointment until 2016. In that year, pursuant to the Dutch Audit Profession Act (Wet op het accountantsberoep), the audit firm of a so-called public interest entity (such as a listed company) will have to be replaced if the audit firm performed the statutory audits of the company for a period of eight consecutive years. For AkzoNobel, this means that it has to change its auditor starting no later than January 1, 2016, it being noted that the company’s current audit firm can finalize its audit in respect of the financial year 2015 after the January 1, 2016, date. The tender process and selection of a new firm was concluded in 2013. The selected auditors will be proposed by the Supervisory Board to the AGM in April 2014. This new appointment will be for a defined period as required by law.
Based on auditor independence requirements, the lead auditor in charge of the AkzoNobel account is changed every seven years. KPMG’s current lead partner, Mr. Weusten, has held this position since July 2007. He will be succeeded by Mr. Van Leeuwen, who will take over in April 2014. The current lead auditor is present at the AGM and may be questioned with regard to his statement on the fairness of the financial statements. The external auditor attends all meetings of the Audit Committee, as well as the meeting of the Supervisory Board at which the financial statements are approved. He receives the financial information and underlying reports of the quarterly figures and is given the opportunity to comment and respond to this information.
One area of particular focus in corporate governance is the independence of the auditors. The Audit Committee has been delegated direct responsibility for the compensation and monitoring of the auditors and the services they provide to the company. Pursuant to the Audit Profession Act, the auditors are prohibited from providing the company with services in the Netherlands other than “audit services aimed to provide reliability concerning the information supplied by the audited client for the benefit of external users of this information and also for the benefit of the Supervisory Board, as referred to in the reports mentioned.” The company has taken the position that no additional services may be provided by the external auditor and its global network that do not meet these requirements, unless local statutory requirements so dictate. In order to anchor this in our procedures, the Supervisory Board adopted the AkzoNobel Rules on External Auditor Independence and Selection and the related AkzoNobel Audit Committee Pre-approval Guidelines. All these documents have been revised and are available on the company’s corporate website.