Audit Committee

Mr. Grote has been the chairman of the Audit Committee since his appointment in 2015. The other members of the Audit Committee in 2016 were Mrs. Bruzelius, Mr. Hughes and Mr. Sluimers. All members of the Audit Committee have extensive accounting and financial management expertise. The Audit Committee held six meetings during 2016. The attendance record of the members can be seen in the Supervisory Board attendance chart. Issues discussed in Audit Committee meetings were reported back to the full Supervisory Board in subsequent meetings.

External audit

At the 2014 , PricewaterhouseCoopers Accountants N.V. were mandated as external audit firm to audit our annual financial statements, effective January 1, 2016. During the year, they started their work in succession of KPMG Accountants N.V. The transition has been a focus for the Audit Committee during recent years and it has monitored the work of the external auditors closely during this first audit. The Audit Committee held independent meetings with the external auditors and critically reviewed and constructively challenged their audit approach, engagement letter, fees, risk assessment and audit plan for the year ahead. The new external auditors reported in-depth to the Audit Committee on the scope and outcome of the annual audit of the financial statements, including the consolidated financial statements and report. Other topics discussed included:

  • Follow-ups on the management letter of the departing auditors KPMG Accountants N.V. including progress on the company’s cyber security roadmap
  • The hard close, which was discussed with the intention of improving efficiency of the year-end process and to highlight important issues for the annual financial statements. AkzoNobel performed a hard close as of October 31, 2016
  • The quality of the external audit
  • Impact of new accounting standards

The Audit Committee performed the annual review of the services of the external auditor, and at each meeting it considered and assessed the status of the auditor’s independence. Further details on the external auditors can be found in the Governance and compliance section.

Risk management and internal control systems

The Audit Committee reviewed AkzoNobel’s overall approach to governance, risk management and internal control framework, its processes, outcomes, financial reporting and disclosures. Regular updates were received from the Board of Management, the Executive Committee, the Auditors and functions in this regard. The Audit Committee was also provided with comprehensive risk and internal control reporting during the year.

During its discussions, the Audit Committee reflected on external risk factors such as the global economic climate and market conditions. In 2016, the Audit Committee was particularly conscious of the company’s sustainability reporting and controls in light of the UN COP21 Paris Agreement, which will emphasize the importance of cradle-to-grave analysis, and resource efficiency. These and other factors are taken into consideration by the Audit Committee when assessing the adequacy of the company’s governance, risk management and internal control framework.

Business Area and function reviews

In fulfilling its oversight responsibilities in relation to risk management and internal control systems, the Audit Committee also received updates from functions throughout the year. These updates also inform the Audit Committee’s review of the annual operational plan, including budget. During the year, updates were provided from Accounting and Control, Treasury, Investor Relations, Information Management and Tax. The General Counsel reported regularly to the Audit Committee on compliance and legal matters and activities, including major litigation and liability exposure. The Audit Committee continued to monitor functional initiatives, such as progress on the company’s cyber security road map as an aspect of updates received from Information Management. The Audit Committee also met regularly with other senior executives. The Internal Auditor attended Audit Committee meetings and reported on the assessment of the system of risk management and internal controls.

A feature of the Audit Committee’s work in 2016 has also been its attention to Business Area specific financial updates. Updates were received from Business Area financial directors regarding, particular, financial performance and the structuring of internal control processes. This approach to Business Area analysis will be maintained by the Audit Committee in 2017.

Internal audit plan

In 2016, the Audit Committee reviewed and welcomed the appointment of a new Corporate Director of Internal Audit. This Director reports to the Board of Management, but also directly to the Audit Committee and presents all main audit findings. The Audit Committee was therefore closely consulted on the appointment and oversaw the transition and process of handover to the new Director.

During the year, the Audit Committee approved the internal audit plan and strategy based on assessments of risk and control processes, and agreed on the budget and resource requirements for the department. The Audit Committee also met independently with the Corporate Director of Internal Audit during the year and discussed the results of the audits performed. In 2016, the Audit Committee was satisfied with the effectiveness of the Internal Audit function.

Results and financial statements

Before each publication of the quarterly results and annual financial statements, the Audit Committee reviewed the financial results. The Audit Committee also reviewed the interim and final dividend proposals and reports and press releases to be published. These were reviewed in addition to the work undertaken by the company’s Disclosure Committee in reviewing the company’s disclosures of potentially price sensitive information. Based on these discussions, advice was provided by the Audit Committee to the Supervisory Board in regard to the publications and disclosures, and to the interim and final dividends. All quarterly and annual releases of financial results and any potentially price sensitive public disclosures are approved by the full Supervisory Board prior to publication and release.

In order to ensure its effectiveness and expertise, the Audit Committee is provided with regular updates on IFRS developments and the anticipated impact of these developments on the financial statements. In addition, the Audit Committee reviewed and assessed management assertions made in regard to relevant accounting treatments.

Audit Committee evaluation

Every year, the Audit Committee undergoes an evaluation of its effectiveness and performance. In general, this process involves the Audit Committee undertaking a self-evaluation of its performance in conjunction with the Supervisory Board. Once every three years (unless it is decided to do so more frequently), the Audit Committee instead undergoes an independent external assessment of its effectiveness and performance facilitated by a specialist consultant.

In 2016, it was decided that the Audit Committee would undergo an external evaluation of its effectiveness and performance with regard to the year 2015. This is the second year in a row in which the evaluation was undertaken externally. The external assessment provided a follow-up to the findings of the external assessment undertaken during 2015 with regard to the year 2014. As with the process adopted for the Supervisory Board as a whole, the evaluation consisted of a questionnaire completed by Audit Committee members, with a subsequent personal interview between each member and an external consultant. Results of the evaluation were subsequently reviewed by the Audit Committee and the Supervisory Board.

The Audit Committee is pleased to confirm that the results of the evaluation were such that the Audit Committee was found to be operating effectively. The evaluation emphasized the importance of the Audit Committee’s role with regard to cyber security; a matter which the Audit Committee has incorporated into its ongoing agenda. The evaluation also determined that inter-committee communications and the communication between the Audit Committee and the Executive Committee had improved.


Annual General Meeting of shareholders.

Carbon footprint

The carbon footprint of a product is the total amount of greenhouse gas (GHG) emissions caused during a defined period, of the product lifecycle. It is expressed in terms of the amount of carbon dioxide equivalents CO2(e) emitted.


Eco-efficiency means doing more with less; creating goods and services while using fewer resources and creating less waste and pollution.


Health, safety and environment.