Philips 2014 Annual Report Download - page 101

Corporate governance 11.4
Annual Report 2014 101
has been advised by the Audit Committee and the
Board of Management. Under this Auditor Policy, as
updated in 2013, the Supervisory Board and the Audit
Committee assesses the functioning of the external
auditor. The main conclusions of this assessment shall
be communicated to the General Meeting of
Shareholders for the purposes of assessing the
nomination for the appointment of the external auditor.
The current auditor of the Company, KPMG
Accountants N.V., was appointed by the 1995 General
Meeting of Shareholders. In 2002, when the Auditor
Policy was adopted, the appointment of KPMG
Accountants N.V. was confirmed by the Supervisory
Board for an additional three years. The 2008, 2011 and
2014 General Meetings of Shareholders resolved to re-
appoint KPMG Accountants N.V. as auditor, at the latest
meeting up to and including the nancial year 2015.
Mr E.H.W. Weusten is the current partner of KPMG
Accountants N.V. in charge of the audit duties for
Philips. The external auditor shall attend the Annual
General Meeting of Shareholders. Questions may be
put to him at the meeting about his report. The Board
of Management and the Audit Committee of the
Supervisory Board shall report on their dealings with
the external auditor to the Supervisory Board on an
annual basis, particularly with regard to the auditor’s
independence. The Supervisory Board shall take this
into account when deciding upon its nomination for the
appointment of an external auditor. Dutch legislation
on mandatory auditor rotation will become eective
January 1, 2016, meaning the Company must engage a
new audit firm for its statutory audit starting per January
1, 2016.
The agenda of the 2015 Annual General Meeting of
Shareholders will include a proposal to appoint Ernst &
Young Accountants LLP as the Company’s new auditor
as of January 1, 2016.
The external auditor attends, in principle, all meetings
of the Audit Committee. The findings of the external
auditor, the audit approach and the risk analysis are
also discussed at these meetings. The external auditor
attends the meeting of the Supervisory Board at which
the report of the external auditor with respect to the
audit of the annual accounts is discussed, and at which
the annual accounts are approved. In its audit report on
the annual accounts to the Board of Management and
the Supervisory Board, the external auditor refers to the
financial reporting risks and issues that were identified
during the audit, internal control matters, and any other
matters, as appropriate, requiring communication
under the auditing and other standards generally
accepted in the Netherlands and the US.
Auditor policy
Dutch law requires the separation of audit and non-
audit services, meaning the Company’s external auditor
is no longer allowed to provide non-audit services, with
an exception (until 2015) for non-audit service
arrangements already in place on December 31, 2012.
In light of this legislation, the Auditor Policy was
updated in 2013. The policy is published on the
Company’s website. The policy is also in line with US
Securities and Exchange Commission rules under which
the appointed external auditor must be independent of
the Company both in fact and appearance.
The Auditor Policy includes rules for the pre-approval
by the Audit Committee of all services to be provided
by the external auditor. Proposed services may be pre-
approved at the beginning of the year by the Audit
Committee (annual pre-approval) or may be pre-
approved during the year by the Audit Committee in
respect of a particular engagement (specific pre-
approval). The annual pre-approval is based on a
detailed, itemized list of services to be provided,
designed to ensure that there is no management
discretion in determining whether a service has been
approved and to ensure the Audit Committee is
informed of each services it is pre-approving. Unless
pre-approval with respect to a specific service has been
given at the beginning of the year, each proposed
service requires specific pre-approval during the year.
Any annually pre-approved services where the fee for
the engagement is expected to exceed pre-approved
cost levels or budgeted amounts will also require
specific pre-approval. The term of any annual pre-
approval is 12 months from the date of the pre-approval
unless the Audit Committee states otherwise. During
2014, there were no services provided to the Company
by the external auditor which were not pre-approved
by the Audit Committee.
11.5 Investor Relations
Introduction
The Company is continually striving to improve
relations with its shareholders. In addition to
communication with its shareholders at the Annual
General Meeting of Shareholders, Philips elaborates its
financial results during (public) conference calls, which
are broadly accessible. It publishes informative annual,
semi-annual and quarterly reports and press releases,
and informs investors via its extensive website. The
Company is strict in its compliance with applicable rules
and regulations on fair and non-selective disclosure
and equal treatment of shareholders.
Each year the Company organizes Philips Capital
Market Days and participates in several broker
conferences, announced in advance on the Company’s
website and by means of press releases. Shareholders
can follow in real time, by means of webcasting or
telephone lines, the meetings and presentations
organized by the Company. Thus the Company applies
recommendation IV.3.1 of the Dutch Corporate
Governance Code, which in its perception and in view
of market practice does not extend to less important
analyst meetings and presentations. It is Philips’ policy
to post presentations to analysts and shareholders on
the Company’s website. These meetings and