Mercedes 2006 Annual Report Download - page 150

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Report of the Audit Committee
The Audit Committee convened eight times in 2006. In February
2006, in the presence of the external auditors, it reviewed the
accounting documentation for the year 2005 and recommended
that the Supervisory Board agree to the Board of Management’s
proposal on the appropriation of distributable profits and approve
the financial statements.
In further meetings during the course of the year, the Audit
Committee held detailed discussions with the Board of Manage-
ment attended by the external auditors concerning the 2006
half-year financial statements and the interim reports on the first
and third quarters of 2006.
The Audit Committee regularly examined the qualifications
and independence of the external auditors, and, in a separate
procedure, its efficiency. The Audit Committee continually
monitored the implementation of the principles decided upon
for the approval of services provided by the external auditors.
After receiving the approval of the Annual Meeting, the Audit
Committee engaged KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft, Wirtschaftsprüfungsgesellschaft, Berlin and
Frankfurt am Main, to conduct the annual audit, negotiated the
audit fee of the external auditors, and determined the important
audit issues for the year 2006.
The Audit Committee was also occupied with new accounting
standards and their interpretation in 2006, especially with
questions relating to the implementation and introduction of the
International Financial Reporting Standards (IFRS). Another key
point of discussion was the implementation of internal monitoring
mechanisms in accordance with Section 404 of the Sarbanes-
Oxley Act. The Audit Committee was also occupied with the risk-
monitoring system, the company’s risk reports and the risks
from legal proceedings, the reports and programs of the Corporate
Audit department, and new statutory developments of relevance
for the Audit Committee.
As in the prior year, the Audit Committee’s work in 2006 focused
in particular on the investigations taking place in the company
that wereinitiated by the United States Securities and Exchange
Commission (SEC). In each regular meeting, the Audit Committee
received information about the progress of the investigations
from the company’smanagement and the lawyers and external
auditorsinvolved. This included receiving reports on the existence,
application and monitoring of internal guidelines and rules of
conduct, the further development of compliance management,
and the elimination of deficits identified at the Group.
In order to institutionalize compliance activities at DaimlerChrysler
and to anchor such procedures as a key element of entrepreneurial
action, the Board of Management established the department
of Corporate Compliance Operations at the beginning of 2006 in
consultation with the Audit Committee. Not only the Group’s
management, but also the Audit Committee of the Supervisory
Board is regularly informed about all of this new department’s
goals and activities.