Philips 2014 Annual Report Download - page 183

Company nancial statements 13.5
Annual Report 2014 183
13.5 Independent auditor’s report
To: The Annual General Meeting of Shareholders of
Koninklijke Philips N.V.
Report on the audit of the nancial statements
2014
Our opinion
We have audited the nancial statements 2014 of
Koninklijke Philips N.V. (the Company), Eindhoven, the
Netherlands. The nancial statements include the
consolidated and company nancial statements.
In our opinion:
•the consolidated nancial statements give a true and
fair view of the nancial position of Koninklijke Philips
N.V. as at December 31, 2014 and of its result and its
cash ows for 2014 in accordance with International
Financial Reporting Standards as adopted by the
European Union (EU-IFRS) and with Part 9 of Book 2
of the Dutch Civil Code.
•
The company financial statements give a true and fair view
of the financial position of Koninklijke Philips N.V. as at
December 31, 2014 and of its result for 2014 in accordance
with Part 9 of Book 2 of the Dutch Civil Code.
The consolidated nancial statements comprise:
1. the consolidated balance sheet as at December 31,
2014;
2. the following statements for 2014: consolidated
statements of income, comprehensive income,
cash ows and changes in equity for the year then
ended; and
3. the notes comprising a summary of the signicant
accounting policies and other explanatory
information.
The company nancial statements comprise:
1. the company balance sheet as at December 31,
2014;
2. the company statement of income for 2014; and
3.
the notes comprising a summary of the significant
accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law,
including the Dutch Standards on Auditing. Our
responsibilities under those standards are further
described in the “Our responsibilities for the audit of the
nancial statements” section of our report.
We are independent of Koninklijke Philips N.V. in
accordance with the “Verordening inzake de
onafhankelijkheid van accountants bij assurance-
opdrachten” (ViO) and other relevant independence
regulations in the Netherlands. Furthermore, we have
complied with the “Verordening gedrags- en
beroepsregels accountants” (VGBA).
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our
opinion.
Materiality
Misstatements can arise from fraud or errors and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements. The materiality affects the nature,
timing and extent of our audit procedures and the
evaluation of the effect of identified misstatements on our
opinion.
Based on our professional judgment we determined the
materiality for the nancial statements as a whole at
EUR 80 million. Materiality is based on sales, as we
consider this benchmark to be the most relevant given
the nature of the business and size of the Company and
approximates 0.4% of sales. We have also taken into
account misstatements and/or possible misstatements
that in our opinion are material for qualitative reasons
for the users of the nancial statements.
We agreed with the Supervisory Board that
misstatements in excess of EUR 4 million, which are
identied during the audit, would be reported to them,
as well as smaller misstatements that in our view must
be reported on qualitative grounds.
Scope of our group audit
Koninklijke Philips N.V. is the parent company of the
Philips Group (the Group). The nancial information of
the Group is included in the nancial statements of
Koninklijke Philips N.V
Considering our ultimate responsibility for the opinion,
we are responsible for directing, supervising and
performing the group audit. In this context, we have
determined the nature and extent of the audit
procedures to be performed for group entities
(components). Decisive factors were the signicance
and / or the risk prole of the components. On this basis,
we selected the components for which an audit of
account balance or specied procedures had to be
performed. Furthermore, we have determined the audit
procedures that we perform at group level, sector level
and in the Finance Operations centers.
We scope components to be involved with the audits of
account balances into the group audit where account
balances are of signicant size, have signicant risks of
material misstatement to the Group associated with
them or are considered signicant for other reasons.
Where this does not give adequate coverage we use our
judgment to scope-in additional procedures on
account balances or request the component auditors to
perform specied procedures. As a result of our scoping
of account balances and the performance of audit
procedures at dierent levels in the organization, our