Audit Committee

Audit Committee activities 2021

Q1

  • Review Q4 2020 financial statements and annual results
  • Review 2020 annual report and accounts
  • External audit report
  • Assurance report sustainability statements 2020
  • Review risk management and internal control
  • Final dividend 2020
  • Share buyback program
  • HSE audit findings
  • Integrity and Compliance report 2020
  • Exposure report
  • IT/cybersecurity update

Q2

  • Review Q1 2021 financial statements
  • Investor Relations update
  • Integrity and Compliance mid-year report
  • Exposure report
  • Review evaluation external auditor
  • Audit fee 2021
  • Review and approval PwC audit plan
  • Internal Audit Q1 2021 report
  • Internal Audit strategy update
  • IT/cybersecurity update
  • Treasury update
  • Review limited assurance sustainability selected indicators
  • Sustainability reporting update

Q3

  • Review Q2 2021 financial statements
  • Internal Audit Q2 2021 report
  • Investor Relations update

Q4

  • Review Q3 2021 financial statements
  • Interim dividend 2021
  • Share buyback program
  • Internal Audit Q3 2021 report
  • Tax strategy update
  • IT/cybersecurity update
  • Integrity and Compliance Q3 2021 report
  • Internal Control framework update
  • Finance transformation update
  • Review budget 2022 and outlook
  • Hard close audit report
  • Internal Audit plan 2022

All Audit Committee members 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 auditor, 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, as well as on the scope and outcome of the review on the selected non-financial indicators, as included in the Sustainability statements, to provide limited assurance. The Audit Committee held independent meetings with the external auditor 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 considered and assessed the status of the auditor’s independence. Further details on the external auditor can be found in the Corporate governance statement.

Risk management and internal control systems

The Audit Committee reviewed the company’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 and was provided with comprehensive risk and internal control reports during the year. In its review, the Audit Committee considered the impact of changes to systems and processes, such as the IT landscape rationalization and the implementation of regional accounting centers on the internal controls. In addition, the Audit Committee reviewed the annual operating plan (including budget) and AkzoNobel’s dividend proposals, as well as multiple IT security and control updates. During 2021, 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. During 2021, the Audit Committee reviewed and advised on the company’s roadmap on sustainability reporting.

Internal Audit

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 2021, 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. The external auditor, as required by auditing standards, also considers the risk of management override of controls. Nothing has come the attention of either the Audit Committee or the external auditor to suggest any material misstatement related to suspected or actual fraud involving management override of controls.