Unilever 2014 Annual Report Download - page 20

RISK MANAEMENT AND INTERNAL ONTROL ARRANEMENTS
The ommttee revewed Unlever’s overall approach to rsk
management and control, and ts processes, outcomes and
dsclosure It revewed
• the ontroller’s Quarterly Rsk and ontrol Status Report,
ncludng ode of Busness Prncples cases relatng to frauds
and fnancal crmes and sgnfcant complants receved through
the Unlever ode Support Lne
• the 2014 corporate rsks for whch the Audt ommttee had
oversght and the proposed 2015 corporate rsks dentfed
by the ULE
• management’s mprovements to reportng and nternal fnancal
control arrangements
• processes related to cyber securty, nformaton management
and prvacy
• tax plannng, nsurance arrangements and related
rsk management
• treasury polces, ncludng debt ssuance and hedgng and
• ltgaton and regulatory nvestgatons
The ommttee revewed the applcaton of the requrements
under Secton 404 of the US Sarbanes-Oxley Act of 2002 wth
respect to nternal controls over fnancal reportng In addton,
the ommttee revewed the annual fnancal plan and Unlever’s
dvdend polcy and dvdend proposals
Durng 2014 the ommttee oversaw the ndependent assurance
work that s performed on a number of our Unlever Sustanable
Lvng Plan (USLP) metrcs (selected on the bass of ther
materalty to the USLP)
In fulfllng ts oversght responsbltes n relaton to rsk
management, nternal control and the fnancal statements, the
ommttee met regularly wth senor members of management
and s fully satsfed wth the key udgements taken
INTERNAL AUDIT FUNTION
The ommttee revewed orporate Audt’s audt plan for the year
and agreed ts budget and resource requrements It revewed
nterm and year-end summary reports and management’s
response The ommttee carred out an evaluaton of the
performance of the nternal audt functon and was satsfed wth
the effectveness of the functon The ommttee met
ndependently wth the hef Audtor durng the year and
dscussed the results of the audts performed durng the year
AUDIT OF THE ANNUAL AOUNTS
KPM, Unlever’s external audtors and ndependent regstered publc
accountng frm, reported n depth to the ommttee on the scope and
outcome of the annual audt, ncludng ther audt of nternal controls
over fnancal reportng as requred by Secton 404 of the US
Sarbanes-Oxley Act of 2002 Ther reports ncluded accountng
matters, governance and control, and accountng developments
The ommttee held ndependent meetngs wth the external
audtors durng the year and revewed, agreed, dscussed and
challenged ther audt plan, ncludng ther assessment of the
fnancal reportng rsk profle of the roup The ommttee
dscussed the vews and conclusons of KPM regardng
management’s treatment of sgnfcant transactons and areas
of udgement durng the year and KPM confrmed they were
satsfed that these had been treated approprately n the
fnancal statements
EXTERNAL AUDITORS
As a result of the tender performed n 2013, shareholders approved
the appontment of KPM as the roup’s external audtor at the
2014 AMs n May and throughout the year the ommttee oversaw
and helped facltate a smooth transton from the former audtors
The ommttee has approved the extenson of the current external
audt contract by one year, and recommended to the Boards the
re-appontment of the external audtors On the recommendaton
of the ommttee, the Drectors wll be proposng the re-
appontment of KPM at the AMs n Aprl 2015
Both Unlever and KPM have safeguards n place to avod the
possblty that the audtors’ obectvty and ndependence could be
compromsed, such as audt partner rotaton and the restrcton
on non-audt servces that the external audtors can perform as
descrbed below The ommttee revewed the report from KPM
on the actons they take to comply wth the professonal and
regulatory requrements and best practce desgned to ensure
ther ndependence from Unlever
Each year, the ommttee assesses the effectveness of the
external audt process whch ncludes ganng feedback from key
stakeholders at all levels across Unlever
The ommttee also revewed the statutory audt, audt related and
non-audt related servces provded by KPM and complance wth
Unlever’s documented approach, whch prescrbes n detal the
types of engagements, lsted below, for whch the external audtors
can be used
• statutory audt servces, ncludng audt of subsdares
• audt related engagements – servces that nvolve attestaton,
assurance or certfcaton of factual nformaton that may be
requred by external partes
• non-audt related servces – work that our audtors are best
placed to undertake, whch may nclude
– tax servces – all sgnfcant tax work s put to tender
– acquston and dsposal servces, ncludng related due
dlgence, audts and accountants’ reports and
– nternal control revews
Several types of engagements are prohbted, ncludng
• bookkeepng or smlar servces
• systems desgn and mplementaton related to fnancal
nformaton or rsk management
• valuaton servces
• actuaral servces
• nternal audt
• broker, dealer, nvestment advser or nvestment bank
servces
• legal servces
• desgn and/or mplementaton of rsk management processes
and systems and
• staff secondments to a management functon
All audt related engagements over 250,000 and non-audt
related engagements over 100,000 requred specfc advance
approval by the Audt ommttee harman The ommttee
further approved all engagements below these levels whch have
been authorsed by the roup ontroller These authortes are
revewed regularly and, where necessary, updated n the lght of
nternal developments, external developments and best practce
EVALUATION OF THE AUDIT OMMITTEE
As part of the external Board evaluaton carred out n 2014,
the Boards evaluated the performance of the ommttee The
ommttee also carred out an assessment of ts own
performance Each concluded that the ommttee s performng
effectvely Nevertheless, the ommttee agreed that to enhance
ts effectveness t would seek opportuntes for all ommttee
members to vst a key accountng and reportng centre
Byron rote
harman of the Audt ommttee
Mary Ma
Hxona Nyasulu
John Rshton
57Unilever Annual Report and Accounts 2014 Governance