Unilever 2004 Annual Report Download - page 70

Unilever Annual Report and Accounts 2004 67
Corporate governance
(continued)
Kingdom. We assume in our combined earnings per share
calculation that both companies will be able to pay their dividends
out of their part of our profits. This has always been the case in
the past, but if we did have to make a payment from one to the
other it could result in additional taxes, and reduce our combined
earnings per share.
Auditors
Subject to the annual appointment of auditors by the
shareholders and in addition to our ongoing process of
monitoring the auditors’ performance, we undertake a formal
review every three years. The most recent review was completed
in November 2002 and resulted in the reappointment of
PricewaterhouseCoopers. On the recommendation of the Audit
Committee, the Directors will be proposing the reappointment
of PricewaterhouseCoopers at the Annual General Meetings in
May 2005 (see pages 171 and 174).
Both the Executive Committee and the auditors have for
many years had safeguards to avoid the possibility that the
auditors’ objectivity and independence could be compromised.
In overview, our procedures in respect of services provided by
PricewaterhouseCoopers are:
• Statutory audit – Procedures in respect of statutory audit
services are detailed above. This category includes fees for the
statutory audit of Unilever’s financial statements and those of
its subsidiaries.
• Other audit services – This is audit and similar work that
regulations or agreements with third parties require the
auditors to undertake. These services include procedures
undertaken by our external auditors in connection with
borrowings, shareholder and other circulars and various other
regulatory reports.
• Audit-related services – This is work that, in their position as
the auditors, they are best placed to undertake. It includes
internal control reviews, other reports and work in respect of
acquisitions and disposals.
• Tax services – In cases where they are best suited, we use the
auditors. All other significant tax consulting work is put to
tender.
• General consulting and other services – Since early 2002, our
policy has been that our external auditors may not tender for
any new general consulting work. We use our auditors to
perform a limited number of other services, including risk
management advisory work and training, where these are
compatible with their work and subject to the appropriate level
of pre-approval.
The Audit Committee approved a policy in 2003 regarding the
pre-approval of the above three non-audit categories. This lists
in detail the particular services which PricewaterhouseCoopers
is and is not permitted to provide. In the case of the types of
work which PricewaterhouseCoopers is allowed to perform,
the policy provides that they are only appointed to an assignment
if proper consideration has been given to other potential service
providers, there must be bona fide advantages in using
PricewaterhouseCoopers, and, in addition, if the fee is over
€100 000, the engagement must be specifically approved in
advance by the Chairman of the Audit Committee.
Potential engagements for any services not already covered by
this policy must be referred to the Chairman of the Audit
Committee for specific pre-approval (to be ratified at the next
meeting of the Audit Committee) before PricewaterhouseCoopers
can be appointed.
The Boards concluded that the procedures were effective for
2004 in preserving the objectivity and independence of
PricewaterhouseCoopers.
The policy is regularly reviewed and updated in the light of
internal developments, external developments and best practice.
During 2004, the Audit Committee issued clarification of the
policy in the context of the implementation of International
Financial Reporting Standards and the Sarbanes-Oxley Act
of 2002.
The external auditors report to the Directors and the Audit
Committee on the actions they take to comply with the
professional and regulatory requirements and best practice
designed to ensure their independence from Unilever, including,
for example, the periodic rotation of key team members. The lead
partner in charge of the audit changed in 2001.
See note 2 on page 108 for the actual fees payable to
PricewaterhouseCoopers.