The external auditor is appointed by the AGM on proposal of the Supervisory Board. The current appointment of KPMG is reviewed every four years by the Audit Committee. The Audit Committee advises the Supervisory Board, which communicates the results of this assessment to the AGM. The Audit Committee and the Board of Management report their dealings with the external auditor to the Supervisory Board annually and discuss the auditor’s independence. During 2014, in addition to these discussions and the annual report on dealings with the external auditor, the Audit Committee received updates on national and international legislative and policy developments on auditor independence.
The 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.
Auditor independence and mandatory succession of audit firm
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. Van Leeuwen, took over in April 2014 from Mr. Weusten, who had held this position since July 2007.
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, at the latest in 2016. Pursuant to this Act, the mandate of KPMG will end following the reporting on the financial year 2015.
The appointment of the current auditor (KPMG) expires upon finalization of the audit of the 2015 financial statements. The AGM (held on April 29, 2014) appointed PwC in respect of the audits of the financial statements as of 2016.
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 Guidelines on Auditor Independence. All these documents are available on the company’s website.