Philips 2014 Annual Report Download - page 89

Supervisory Board report 10.3
Annual Report 2014 89
developments in regulatory investigations as well as
legal proceedings including antitrust investigations
and related provisions, environmental exposures, the
Company’s outsourcing of certain services, specic
nance topics including non-manufacturing costs,
the Company’s currency hedging practices and the
impact of certain potential acquisitions.
• With regard to the internal audit, the 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 Committee
reviewed the proposed audit scope, approach and
fees, the independence of the external auditor, non-
audit services provided by the external auditor in
conformity with the Philips Auditor Policy, as well as
any changes to this policy. The Committee also
reviewed the independence as well as its
professional fitness and good standing of the
external auditor and its engagement partners. For
information on the fees of KPMG Accountants N.V.,
please refer to the table ‘Fees KPMG’ in note 6,
Income from operations.
• The Company’s policy on business controls, the
General Business Principles including the
deployment thereof and amendments thereto. The
Committee was informed on, and it 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 on a
regular basis the developments in and ndings
resulting from investigations into alleged violations of
the Philips GBP and, if required, any measures taken.
Under Dutch legislation on mandatory auditor rotation,
which has also been reflected in the Auditor Policy
(please refer to chapter 11, Corporate governance, of
this Annual Report for more information), Philips must
engage a new audit firm for its statutory audit for the
nancial year starting January 1, 2016. The Committee,
jointly with management, conducted a comprehensive
tender and selection process for a new external auditor
(incorporating an interim period of one year with the
current external auditor) and resolved to recommend to
the Supervisory Board the appointment of a new
auditor. This resulted in the Supervisory Board
proposing and recommending the appointment of
Ernst & Young Accountants LLP as the company’s new
auditor at the upcoming 2015 Annual General Meeting
of Shareholders. Please refer to the agenda and
explanatory notes thereto for such meetings for more
information.
During each Audit Committee meeting, the Committee
reviewed the report from the external auditor in which
the auditor set forth its findings and attention points
during the relevant period. The Committee also
assessed the overall performance of the external
auditor, as required by the Auditor Policy. Please refer
to the agenda and explanatory notes thereto for the
upcoming 2015 Annual General Meeting of
Shareholders for more information on the proposed
appointment of the external auditor.
Finally, the Audit Committee also participated in an
education session during 2014 on the quality and
regulatory aspects of the industries in which the
company is active.