Philips 2008 Annual Report Download - page 120

Report of the Audit Committee
The Audit Committee, currently consisting of four
members, assists the Supervisory Board in fulfilling
its supervisory responsibilities for the integrity of the
Company’s financial statements, the financial reporting
process, the system of internal business controls and
risk management, the internal and external audit
process, the internal and external auditor’s findings
and recommendations, independence and performance,
as well as the Company’s process for monitoring
compliance with laws and regulations and the General
Business Principles (GBP).
The Audit Committee met 9 times in 2008 and reported
its findings periodically to the plenary Supervisory
Board. The President, the Chief Financial Officer,
the Internal Auditor, the Group Controller and the
External Auditor attended all regular meetings.
Furthermore, the Audit Committee met each quarter
separately with each of the President, the Chief Financial
Officer, the Internal Auditor and the External Auditor.
In accordance with its charter, which is part of the
Rules of Procedure of the Supervisory Board, the
Audit Committee in 2008 reviewed the Company’s
annual and interim financial statements, including
non-financial information, prior to publication thereof.
It also assessed in its quarterly meetings the adequacy
and appropriateness of internal control policies and
internal audit programs and their findings.
In its 2008 meetings, the Audit Committee periodically
reviewed matters relating to accounting policies and
compliance with accounting standards. Compliance
with statutory and legal requirements and regulations,
particularly in the financial domain, was also reviewed.
Important findings identified risks and follow-up actions
were examined thoroughly in order to allow appropriate
measures to be taken. With regard to the internal
audit, the Audit Committee reviewed, and if required
approved, the internal audit charter, audit plan, audit
scope and its coverage in relation to the scope of the
external audit, as well as the staffing, independence
and organizational structure of the internal audit
function. An assessment by an independent auditor
of the effectiveness of the Internal Audit Function,
including various recommendations, was discussed.
With regard to the external audit, the Audit Committee
reviewed the proposed audit scope, approach and fees,
the independence of the external auditors, 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. Within the framework
of the Philips policy on auditor independence, the
evaluation of the performance of the external auditor
takes place every three years. On the basis thereof,
the Supervisory Board has recommended to reappoint
KPMG as auditor of the Company (which was resolved
by the 2008 General Meeting of Shareholders).
Fees KPMG
in millions of euros
2006 2007 2008
Audit fees
consolidated financial statements -
statutory financial statements -
internal controls over financial reporting -
20.6
7.0
5.0
8.6
17.6
7.2
4.7
5.7
17.3
7.6
4.8
4.9
Audit-related fees
acquisitions and divestments -
other -
9.8
4.4
5.4
3.9
2.3
1.6
4.4
2.3
2.1
Tax fees
tax compliance services -
0.9
0.9
1.2
1.2
1.2
1.2
Other fees
royalty investigation -
sustainability and other services -
2.4
1.9
0.5
2.3
1.9
0.4
2.5
1.8
0.7
33.7 25.0 25.4
In 2008, the Audit Committee periodically discussed
the company’s policy on business controls, the GBP
including the deployment thereof and amendments
thereto, 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 company's internal control certification
processess, in particular compliance with section 404
of the US Sarbanes-Oxley Act and its requirements
regarding assessment, review and monitoring of internal
controls. It also discussed tax issues, IT strategy,
litigation (including asbestos) and related provisions,
environmental exposures and financing and liquidity
of the company, dividend, pensions (including the
situation at Philips Pension Fund in the Netherlands
and the governance of the other major pension funds),
valuation of financial holdings (and related impairments),
the investigations into possible anticompetitive
activities in the CRT industry, as well as a financial
evaluation of the investments made in 2005.
Philips Annual Report 2008120
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Our group performance
18
We care about...
8
Message from
the President
6
Performance highlights
14
Who we are