Eli Lilly 2003 Annual Report Download - page 67

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PROXY STATEMENT
65
company structure, or other matters. The committee may also grant preapproval for other audit services, which are
those services that only the independent auditor reasonably can provide.
• Audit-related services are assurance and related services that are reasonably related to the performance of the
audit, and that are traditionally performed by the independent auditor. The committee believes that the provision of
these services does not impair the independence of the auditor. All audit-related services must be preapproved by
the committee.
• All tax services must be separately preapproved by the committee. The committee believes that, in appropriate
cases, the independent auditor can provide tax compliance services, tax planning, and tax advice without impairing
the auditor’s independence.
• Nonaudit services classifi ed as “all other services” must be separately preapproved by the committee. The
committee may approve such services if (i) the services are permissible under SEC rules, (ii) the committee
believes the provision of the services would not impair the independence of the auditor, and (iii) management
believes that the auditor is the best choice to provide the service.
• Process. At the beginning of each audit year, management requests prior committee approval of the annual audit,
statutory audits, and quarterly reviews for the upcoming audit year as well as any other engagements known at
that time. Management will also present at that time an estimate of all fees for the upcoming audit year. As specifi c
engagements are identifi ed thereafter, they are brought forward to the committee for approval. To the extent
approvals are required between regularly scheduled committee meetings, preapproval authority is delegated to the
committee chair.
For each engagement, management provides the committee with information about the services and fees suffi -
ciently detailed to allow the committee to make an informed judgment about the nature and scope of the services
and the potential for the services to impair the independence of the auditor.
After the end of the audit year, management provides the committee with a summary of the actual fees incurred for
the completed audit year.
Independent Auditor Fees
The following table shows the fees incurred for services rendered on a worldwide basis by Ernst & Young LLP, the
company’s independent auditor, in 2003 and 2002. All such services were preapproved by the committee in accor-
dance with the preapproval policy.
2003 (millions) 2002 (millions)
Audit Fees
• Annual audit of consolidated and subsidiary fi nancial statements
• Reviews of quarterly fi nancial statements
• Other services normally provided by auditor in connection with statutory and
regulatory fi lings
$3.9 $3.2
Audit-Related Fees
• Assurance and related services reasonably related to the performance of the
audit or reviews of the fi nancial statements:
—2003: primarily related to internal control reviews, employee benefi t plan
audits, and accounting consultations
—2002: primarily related to system control assessments and accounting
consultations
0.9 0.8
Tax Fees
• 2003: primarily related to tax planning and various compliance services
• 2002: tax assistance provided to company employees living outside their country
of permanent residence and assistance with tax planning
2.4
6.2
All Other Fees None None
Total $7.2 $10.2