Unilever 2003 Annual Report Download - page 72

Unilever Annual Report & Accounts and Form 20-F 2003 69
Report of the Audit Committee
The role of the Audit Committee is to assist the Unilever Boards in
fulfilling their oversight responsibilities regarding the integrity of
Unilever’s financial statements, risk management and internal
control, compliance with legal and regulatory requirements, the
external auditors’ performance, qualifications and independence,
and the performance of the internal audit function. During the
year ended 31 December 2003 the principal activities of the
Committee were as follows:
Financial Statements
The Committee considered reports from the Financial Director on
the quarterly and annual financial statements and reviewed the
Annual Report & Accounts and Form 20-F prior to publication.
It also reviewed critical accounting policies including proposed
changes in accounting principles in response to the changes in
Netherlands and UK law and UK and US GAAP.
Audit of the Annual Accounts
PricewaterhouseCoopers, Unilever’s external auditors, reported in
depth to the Committee on the scope and outcome of the annual
audit, and management’s response. Their reports included
accounting matters, governance and control, and accounting
developments.
Risk Management and Internal Control Arrangements
The Committee reviewed Unilever's overall approach to risk
management and control, and its processes, outcomes and
disclosure, including specifically:
• Corporate Audit’s interim and year-end reports on the Status of
Risk Management & Control, and management’s response
• The Corporate Risk Committee’s annual report, which included
its recommendation for the Boards’ statement on internal
control and its analysis of the 2003 risk assessment process
• The reports from the Code of Business Principles Compliance
Committee
• Controls over trade marketing investments
• Corporate risk management benchmarking study
• Implementation of recent corporate governance requirements
(as outlined on page 47)
• Proceedings of the Disclosure Committee
• Progress on the establishment of a global Ethics hotline which
included a procedure for handling complaints and concerns
relating to accounting, internal control and auditing matters
• An updated Code of Ethics for senior financial officers for
communication to the relevant officials in the Group
External Auditors
The report from PricewaterhouseCoopers confirming
their independence and objectivity was reviewed by the
Committee. It also reviewed the audit, audit-related, tax and
consulting services provided by PricewaterhouseCoopers, and
compliance with Unilever’s policy, introduced in January 2002,
under which the types of engagements for which the external
auditors can be used are prescribed. All non-audit services
undertaken by the external auditors were reviewed and
authorised by the Committee in advance. For further information,
see page 50.
The Committee conducted a formal evaluation of the
effectiveness of the external audit process and held independent
meetings with the external auditors, and have reported on their
conclusions to the Boards.
The Committee has recommended to the Boards the
re-appointment of the external auditors.
Internal Audit Function
The Committee engaged in discussion and review of the
Corporate Audit Department’s audit plan for the year, together
with its budget and resource requirements.
The Committee held independent meetings with the Chief
Auditor.
Audit Committee Charter
The Committee’s terms of reference have been updated to reflect
recent developments in corporate governance in the UK, the
European Union and the US. The revised charter enhances the
Committee’s role and responsibilities and, in particular, makes the
Committee responsible for overseeing Unilever’s relations with the
external auditors.
The Audit Committee Charter/terms of reference can be viewed
on Unilever’s website at www.unilever.com.
The Committee conducted a self-assessment of its own
performance for review with the Boards.