Chrysler 2011 Annual Report Download - page 354

353
Auditors’ Reports
Motions for AGM
3) Audit Engagement: revision of fees
Shareholders,
As a result of the acquisition of a controlling interest in Chrysler Group LLC during 2011 and the consequent inclusion of Chrysler in the audit plan for Fiat
Group’s consolidated financial statements, and in consideration of the fact that, for 2012, the Chrysler consolidated financial statements will be audited
by Deloitte & Touche, the Board of Directors hereby submits for your approval the proposal of the Statutory Auditors (presented below) to increase
fees for Reconta Ernst & Young S.p.A., the Company’s independent auditors for the nine-year period 1 January 2012 – 31 December 2020. Although
the original engagement agreement includes mechanisms for the revision of fees, due to the considerable increase in the scope of operations and the
volume of additional audit work required and the size of the consequent fee increase, the Board deemed it appropriate to submit the proposed increase
to Shareholders for approval.
“Proposal of the Board of Statutory Auditors of Fiat S.p.A. for increase in fees for Reconta Ernst & Young S.p.A. (EY)
Shareholders,
On 30 March 2011, you voted to appoint Reconta Ernst & Young S.p.A. (EY) as independent auditors of Fiat S.p.A.’s statutory and consolidated financial
statements for the nine-year period 1 January 2012 – 31 December 2020.
During 2011, Fiat acquired control of Chrysler, which was consolidated on a line-by-line basis by Fiat Group from 1 June 2011 and, in terms of both
revenues and assets, is considered a material subsidiary.
Although Chrysler’s Audit Committee has appointed Deloitte & Touche (DT) as independent auditors for the 2012 financial year, EY, as independent
auditors for Fiat Group, must in any event assume full responsibility for the audit of Fiat Group’s consolidated financial statements for the year ended 31
December 2012, pursuant to Italian law (Article 14 of Legislative Decree 39/2010 and Article 165 of Legislative Decree 58/1998) and international auditing
standards (ISA 600).
As a result, it has become necessary to consider an increase in EY’s fees, with respect to its existing mandate, to take into account the change in scope of
the Group’s activities, as well as the additional audit activities necessary for EY to acquire “sufficient appropriate audit evidence” with regard to Chrysler’s
consolidated financial statements to issue an audit opinion for the Fiat Group consolidated financial statements.
In formulating our proposal, we reviewed documents prepared by EY following the increase in the scope of audit activities requested by Fiat S.p.A. Those
documents address specific audit procedures for 2012 – necessary for issue of an auditor report on the Fiat Group consolidated financial statements and
entailing a review of the Chrysler consolidated financial statements, the annual and interim reporting packages, as well as the annual SOX internal control
attestation – and additional audit work for the period 2013-2020.
For both areas of additional activity, EY provided details on the mix of professional staff, proposed fees, and criteria for determining any fee adjustments
during the mandate.
In addition, the Statutory Auditors also took into consideration a benchmark analysis of audit fees for the automotive sector in the U.S. along with a
sensitivity analysis for Chrysler.
Finally, EY provided a schedule of the proposed increase in fees for 2012 and for the period 2013-2020, which is as follows: USD 4,000,000 (€3,053,000)
for 2012, USD 9,700,000 (€7,405,000) per year for the period 2013-2014, USD 9,200,000 (€7,023,000) per year for the period 2015-2016, and USD
8,900,000 (€6,794,000) per year for the period 2017-2020.