Philips 2006 Annual Report Download - page 108

Philips Annual Report 2006108
audit scope and its coverage in relation to the scope of
the external audit, as well as the staffi ng, independence
and organizational structure of the internal audit function.
With regard to the external audit, the Audit Committee
reviewed the proposed audit scope, approach and
fees, the independence of the external auditors, their
performance, non-audit services provided by the external
auditors in conformity with the Philips Policy on Auditor
Independence, as well as any changes to this policy. The
Audit Committee also considered the report of the
external auditors with respect to the annual fi nancial
statements and advised on the Supervisory Board’s
statement to shareholders in the annual accounts.
The aggregate fees billed by KPMG for professional
services rendered for the fi scal years 2004, 2005 and
2006 were as follows:
Aggregate fees KPMG
in millions of euros
2004 2005 2006
Audit fees 14.1 14.4 20.6
Audit-related fees 2.8 5.0 9.8
Tax fees 1.0 1.3 0.9
Other fees 3.4 2.9 2.4
21.3 23.6 33.7
Audit fees consist of fees for the examination of both
the consolidated fi nancial statements (EUR 7.0 million)
and statutory fi nancial statements (EUR 5.0 million),
as well as the audit of internal controls over fi nancial
reporting (EUR 8.6 million). Audit-related fees consist
of fees in connection with audits of acquisitions and
divestments (EUR 4.4 million), other audit-related fees
(EUR 4.6 million) and attest services not required by
statutes or regulations (EUR 0.8 million). Tax fees
(EUR 0.9 million) mainly relate to tax compliance and
expatriate tax services. Other fees comprise royalty
audit fees (EUR 1.9 million) and sustainability and other
services (EUR 0.5 million).
In 2006 the Audit Committee further periodically
discussed the Company’s policy on business controls,
the GBP including the deployment thereof, and the
Company’s major areas of risk, including the internal
auditor’s reporting thereon. The Audit Committee
was informed on, discussed and monitored closely
the progress of the Company in preparing for new
internal control certifi cation requirements, in particular
the implementation of section 404 of the US Sarbanes-
Oxley Act and its requirements regarding assessment,
review and monitoring of internal controls that are
effective as of the fi nancial year 2006. It also discussed
tax issues, IT, litigation (including asbestos) and related
provisions, environmental exposures and fi nancial
exposures in the area of treasury, real estate policy
and pensions (e.g. the funding of the UK pension fund),
accounting treatment of acquisitions, fi nancial holdings
and MedQuist, as well as a fi nancial evaluation of the
investments made in 2003.
Financial statements 2006
The fi nancial statements of Koninklijke Philips
Electronics N.V. for 2006, as presented by the Board of
Management, have been audited by KPMG Accountants
N.V., independent auditors. Their reports have been
included in the chapters IFRS information and Company
fi nancial statements of this Annual Report. We have
approved these fi nancial statements, and all individual
members of the Supervisory Board (together with the
members of the Board of Management) have signed
these documents.
We recommend to shareholders that they adopt the
2006 fi nancial statements. We likewise recommend
to shareholders that they adopt the proposal of the
Board of Management to pay a dividend of EUR 0.60
per common share.
Finally, we would like to express our thanks to the
members of the Board of Management, the Group
Management Committee and all other employees
for their continued contribution during the year.
February 19, 2007
The Supervisory Board
6 Financial highlights 8 Message from the President 14 Our leadership 20 The Philips Group