Philips 2009 Annual Report Download - page 141

9.4 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). Moreover, the Audit Committee
evaluates the performance of the external auditor every 3
years, in accordance with the Philips Policy on Auditor
Independence.
The Audit Committee met four times in 2009 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 2009 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 2009 meetings, the Audit Committee periodically
reviewed matters relating to accounting policies, financial
risks 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 discussed the
succession of the Internal Auditor. It 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.
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.
Fees KPMG
in millions of euros
2007 2008 2009
Audit fees 17.6 17.3 16.3
- consolidated financial statements 7.2 7.6 7.1
- statutory financial statements 4.7 4.8 5.2
- internal controls over financial reporting 5.7 4.9 4.0
Audit-related fees 3.9 4.4 1.2
- acquisitions and divestments 2.3 2.3 0.2
- other 1.6 2.1 1.0
Tax fees 1.2 1.2 0.9
- tax compliance services 1.2 1.2 0.9
Other fees 2.3 2.5 1.3
- royalty investigation 1.9 1.8 0.6
- sustainability and other services 0.4 0.7 0.7
Total 25.0 25.4 19.7
In 2009, the Audit Committee periodically discussed the
company’s policy on business controls, the GBP including
the deployment thereof and amendments thereto, and
Philips’ 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 processes, 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 and financial position of
the other major pension funds), valuation and
performance of financial holdings and recent acquisitions
(and related impairments), the investigations into possible
anticompetitive activities in the CRT industry, Optical
Disc Drive and LG Display, as well as a financial evaluation
of the investments made in 2006.
Financial statements 2009
The financial statements of Koninklijke Philips Electronics
N.V. for 2009, as presented by the Board of Management,
have been audited by KPMG Accountants N.V.,
9 Supervisory Board report 9.4 - 9.4
Philips Annual Report 2009 141