Audit Committee

External audit

PwC, AkzoNobel’s independent 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 related notes, as well as on the scope and outcome of the limited assurance engagement 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, including an annual in-depth update on the Internal Control Framework. In its review, the Audit Committee considered the impact of changes to systems and processes, such as the centralization of the Accounting Operations processes in the GBS centers and the localization of the residual business in Russia. The Audit Committee also met regularly with senior executives.

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. In addition, the Audit Committee reviewed the annual operating plan (including budget) and AkzoNobel’s dividend proposals. During 2022, the Audit Committee received several updates on the IT security framework, including the corporate security program and the security program for the manufacturing sites. The Audit Committee received an update on sustainability reporting and advised on the company’s roadmap and internal governance in anticipation of the upcoming sustainability reporting frameworks.

Integrity and compliance

The Executive Committee is responsible for maintaining a culture of integrity and ensuring an effective integrity and compliance program and control framework. Part of these responsibilities are delegated to specific committees and the Integrity and Compliance team. The Supervisory Board’s Audit Committee oversees this responsibility and reviews the regular integrity and compliance reports.

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 2022, 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 share price sensitive information. Based on these discussions, the Audit Committee advised the Supervisory Board on the publications and disclosures, as well as on proposals regarding the share buyback program and the interim and final dividends. All quarterly and 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 to the attention of the Audit Committee to suggest any material misstatement related to suspected or actual fraud involving management override of controls.

Audit Committee activities 2022

Q1

  • Review Q4 2021 financial statements and annual results
  • Review 2021 annual report and accounts
  • External audit report
  • Assurance report sustainability statements 2021
  • Final dividend 2021
  • Share buyback program
  • Review risk management and internal control, including 2021 report
  • HSE audit findings
  • Integrity and compliance report 2021
  • Exposure report
  • IT/cybersecurity update
  • Pension update
  • Sustainability reporting update
  • Internal Audit Q4 2021 report

Q2

  • Review Q1 2022 financial statements
  • Investor Relations update
  • Integrity and compliance mid-year report
  • Review evaluation external auditor
  • Audit fee 2022
  • Review year-to-date audit findings
  • Review and approval PwC audit plan
  • Internal Audit Q1 2022 report
  • Internal Audit strategy update
  • IT/cybersecurity update
  • Treasury update
  • Share buyback program

Q3

  • Review Q2 2022 financial statements
  • Internal Audit Q2 2022 report
  • Investor Relations update
  • Review year-to-date audit findings

Q4

  • Review Q3 2022 financial statements
  • Interim dividend 2022
  • Dividend Policy
  • Internal Audit Q3 2022 report
  • Tax strategy update
  • Integrity and compliance Q3 2022 report
  • Internal Control framework update
  • Finance transformation update
  • Review budget 2023 and outlook
  • Hard close audit report
  • Internal Audit plan 2023
  • Sustainability reporting update
  • Review capital allocation priorities

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.