Chrysler 2005 Annual Report Download - page 266

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Reports of the Board of Statutory Auditors
After studying in detail the allegations put forth by the complainant
and reviewing the complaints both individually and as a whole, we
concluded that the portions of the complaints that contain general
criticisms of the Company’s management practices do not identify
improper acts, such as those specifically referred to in Article 2408 of
the Italian Civil Code. Earlier in this report, we already discussed the
soundness of the Company’s management decisions, insofar as they
apply to those areas that fall under our jurisdiction pursuant to
Article 149, Section 1, of Legislative Decree No. 58 of February 24,
1998.
These matters are not reprehensible but instead involve requests
for information. In response, we can affirm that:
in regard to point a) hereinabove, the northwest area of the
Mirafiori plant was sold by the indirect subsidiary Fiat Auto S.p.A.
to Torino Nuova Economia S.p.A., pursuant to an agreement under
the hand and seal of the notary public Ganelli on December 23,
2005, Notary’s Register no. 5462, at a price of 60,000,000 euros
for a total area of 300,393 square meters. The value of the sold
lots was appraised by Prof. Riccardo Ruscelli (Turin Polytechnic
University), who was retained by the Public Entities, and by REAG
S.p.A., a company belonging to the American Appraisal Group,
which was retained by Fiat Auto S.p.A.;
in regard to point b), the complainant does not identify improper
acts, but asks the Board of Statutory Auditors to seek such acts
by auditing the allocation of restructuring costs affecting the entire
group, and thus the consolidated financial statements, which are
subject to audit by the external auditors pursuant to Article 41
no. 3 of Legislative Decree no. 127 of April 9, 1991. To complete
our investigation, we contacted Deloitte & Touche S.p.A., which had
been informed of the requests after receiving the complaint itself.
This firm informed us:
– “In the consolidated financial statements of Fiat at December 31,
2004, which were drafted in compliance with Group accounting
principles that conformed with the requirements of Legislative
Decree no. 127 of April 9, 1991, interpreted and supplemented by
the accounting principles issued by the National boards of “Dottori
Commercialisti e dei Ragionieri” and, where there were none and
not at variance, by those laid down by the International Accounting
Standards Board (IASB), the valuation principle applied for
accounting of reserves for current restructuring was described in
the notes to the consolidated financial statements in the section
“Principles of Consolidation and Significant Accounting Policies,”
at the subsection “Reserves for risks and charges and employee
severance indemnities.” The notes to the consolidated financial
statements specifically showed how the costs to carry out corporate
reorganization and restructuring plans were “provided in the year
the company formally decided to commence such plans and the
relative costs could be reasonably estimated.”
– In the Fiat Group consolidated financial statements at December
31, 2005, which were prepared in compliance with the International
Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board and approved by the European Union,
the valuation principle applied to restructuring costs is described in
the section entitled “Significant Accounting Policies,” at the subsection
“Provisions.” The notes to the consolidated financial statements
specifically state that “the Group records provisions when it has an
obligation, legal or constructive, to a third party, when it is probable
that an outflow of Group resources will be required to satisfy the
obligation and when a reliable estimate of the amount can be
made.”
Based on the audits we performed in those areas that fall under our
jurisdiction pursuant to Article 149 of Legislative Decree No. 58 of
February 24, 1998 and the information received from the External
Auditors, we have verified that the statutory financial statements,
which show a net income of 223,019,671 euros, compared with a
net loss of 949,100,522 euros in the previous fiscal year, have been
prepared and presented in accordance with the applicable provisions
of law.
Therefore, we recommend that you approve them as they have been
submitted to you, together with the motion put forward by the
Board to allocate the net income of 223,019,671 euros to partially
cover the losses carried forward.
We take this opportunity to thank you for your confidence and
to inform you that our term of office has expired.
Turin, April 6, 2006
The Statutory Auditors
Cesare Ferrero
Giuseppe Camosci
Giorgio Ferrino