Unilever 2004 Annual Report Download - page 93

90 Unilever Annual Report and Accounts 2004
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 2004 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 and Accounts 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 2004 risk assessment process;
• The reports from the Code of Business Principles Compliance
Committee;
• Implementation of recent corporate governance requirements
(as outlined on page 53);
• Monitoring the resolution of complaints received through the
global Ethics hotline which included a procedure for handling
complaints and concerns relating to accounting, internal control
and auditing matters;
• Risks and safeguards from extending the role of the Unilever
brand;
• Monitoring progress of the implementation of the requirements
under Section 404 of the Sarbanes-Oxley Act of 2002 with
respect to internal controls over financial reporting;
• The implications of the introduction of International Financial
Reporting Standards (IFRS);
• The experience gained from the setting up of financial shared
service centres; and
• Risk management and goodwill impairment of the Slim•Fast
business.
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
other 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 67.
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 approved the extension of the current
external audit contract by one year and recommended to the
Boards the reappointment 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 approved the appointment of a new Chief
Auditor following the scheduled retirement of the previous holder
of this post.
The Committee held independent meetings with the Chief
Auditor.
Audit Committee Charter
The Committee’s terms of reference were updated to reflect the
revised corporate governance structure with Non-Executive
Directors as approved by shareholders in May 2004.
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.
Hilmar Kopper Chairman of the Audit Committee
Oscar Fanjul
Claudio Gonzalez