Audit Committee

Audit Committee activities 2020

Q1 activities 2020

  • Review Q4 2019 financial statements and annual results Review 2019 annual report and accounts
  • External audit report
  • Review risk management and internal control
  • Final dividend 2019
  • HSE audit findings
  • Review full-year compliance report
  • Treasury update
  • Pension funds update
  • Finance transformation update
  • Valuation post-retirement benefits
  • Valuation of deferred tax assets and uncertain tax positions
  • Transformation to deliver towards the 15 by 20 ambition
  • Valuation post-retirement benefits

Q2 activities 2020

  • Review Q1 2020 financial statements
  • Review year-to-date audit findings Compliance and integrity update
  • Review evaluation external auditor
  • Review and approval PwC audit plan
  • Internal controls framework update
  • IT security update

Q3 activities 2020

  • Review Q2 2020 financial statements
  • Audit fee 2020

Q4 activities 2020

  • Review Q3 2020 financial statements
  • Treasury update
  • Recommendation on interim dividend 2020
  • Share buyback program
  • Compliance and integrity update
  • Tax strategy review
  • Review budget 2021 and outlook
  • Review audit findings year-to-date
  • Hard close audit report
  • Internal Audit plan 2021
  • Review of legal liability exposure report
  • Internal Control framework update
  • Update to the PwC audit plan
  • Transformation to deliver towards the 15 by 20 ambition
  • Valuation of deferred tax assets and uncertain tax positions

All members of the Audit Committee have extensive accounting and financial management expertise. Issues discussed in Audit Committee meetings were reported back to the full Supervisory Board in subsequent meetings.

External audit

PwC, AkzoNobel’s 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 the company financial statements and report. The Audit Committee held independent meetings with the external auditors and critically reviewed and constructively challenged their audit approach, fees, risk assessment and audit plan for the year ahead.

The Audit Committee performed an 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 Corporate governance statement.

Risk management and internal control systems

The Audit Committee reviewed AkzoNobel’s overall approach to governance, risk management and internal controls, its processes, outcomes, financial reporting and disclosures. It received regular updates from auditors and functions in this regard, and was provided with comprehensive risk and internal control reports during the year. In addition, the Audit Committee reviewed the annual operating plan (including budget) and AkzoNobel’s dividend proposals, as well as specifically reviewing cybersecurity in light of external COVID-19 related trends. During 2020, the Audit Committee received and reviewed several updates on AkzoNobel’s Internal Control Framework. The Audit Committee also met regularly with senior executives.

The Executive Committee is responsible for ensuring an effective compliance control framework and has delegated part of the responsibilities to the Integrity and Compliance Committee. The Supervisory Board’s Audit Committee oversees this responsibility.

Business 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 such as Finance, Treasury, Information Management and Tax throughout the year. These updates also inform the Audit Committee’s review of the annual operational plan, including budget.

Internal Audit

The former Corporate Director of Internal Audit left AkzoNobel as of January 1, 2020, and was replaced by a new Corporate Director of Internal Audit, who started on March 1, 2020. The Internal Auditor presented all main audit findings to the Audit Committee and discussed the progress of the audit plan. During the year, the Audit Committee approved Internal Audit’s plan and strategy, and also agreed on the budget and resource requirements for the function. The Audit Committee also met separately with the Internal Auditor during the year to discuss the results of the audits performed and the status of the follow-up on action plans identified. In 2020, 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 the financial statements, the Audit Committee reviewed the financial results. In addition, the Audit Committee reviewed and commented on the interim and final dividend proposals and on reports and press releases to be published. This was in addition to the work undertaken by the company’s Disclosure Committee in reviewing the company’s disclosure of potentially price sensitive information. Based on these discussions, the Audit Committee advised the Supervisory Board on the publications and disclosures, and on the interim and final dividends. All quarterly or annual releases of financial results were approved by the full Supervisory Board prior to publication and release. To ensure its effectiveness and expertise, the Audit Committee was 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.