Philips 2011 Annual Report Download - page 105

10 Supervisory Board report 10.3 - 10.3
Annual Report 2011 105
10.3 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 five times in 2011 and
reported its findings to the plenary Supervisory Board.
The President/CEO, 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/CEO, 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 2011 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 2011 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
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. The
Audit Committee has assessed the performance of the
external auditor. For information on the fees of KPMG
Accountants N.V., please refer to the table ‘Fees KPMG’
in note 1, Income from operations.
In 2011, 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 risk
management, tax issues, IT strategy, legal proceedings
including antitrust investigations and related provisions,
environmental exposures and financing and liquidity of the
company, dividend, pensions, valuation and performance
of financial holdings and recent acquisitions,
developments in regulatory investigations, as well as a
financial evaluation of the investments made in 2008.
Financial statements 2011
The financial statements of Koninklijke Philips Electronics
N.V. for 2011, as presented by the Board of Management,
have been audited by KPMG Accountants N.V.,
independent auditors. Their reports have been included
in the section Group financial statements; section 12.12,
Independent auditor’s report - Group, of this Annual
Report and the section Company financial statement;
section 13.5, Independent auditor’s report - Company, of
this Annual Report. We have approved these financial
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 2011
financial statements. We likewise recommend to
shareholders that they adopt the proposal of the Board
of Management to make a distribution of EUR 0.75 per
common share (up to EUR 695 million), in cash or in
shares at the option of the shareholder, against the
reserve retained earnings.