Audit Committee
Composition
The audit committee was composed of the following members at 31 December 2006
Name Office expires
Wimel BVBA, representend by Wim Deblauwe 2010
Peter Op de Beeck 2010
Michel Van den Broeck 2010
* The term of office of members expires immediately following the General Shareholders’ Meeting of the year indicated next to the name of each member.
The powers of the audit committee
The audit committee of the company consists of at least three members, all of which are non-executive directors and the majority of which are independent directors.
The audit committee assists the Board of Directors in fulfilling its monitoring responsibilities in respect of control in the broadest sense. The audit committee reports regularly to the Board of Directors on the exercise of its duties and on any matters in respect of which the audit committee considers that action or improvement is needed, and may make recommendations as to the necessary steps to be taken. The audit committee is entrusted with the development of a long-term audit program encompassing all activities of the company and is, in particular, entrusted with the oversight of:
Financial reporting
The audit committee monitors the integrity of the financial information provided by the company: the audit committee ensures that the financial reporting provides a true, honest and clear picture of the situation and the prospects of the company, both on an individual and on a consolidated basis.
The audit committee assesses the correctness, completeness and consistency of the financial information. This task also includes the review of periodic information before this information is made public and the review of the relevance and consistency of the accounting standards used, the impact of new accounting rules, the treatment of ‘balancing items’ in the financial statements, prognoses, the work of the internal auditor, if appointed, and of the external auditor, etc. The audit committee discusses significant financial reporting issues both with the executive management and with the external auditor.
Internal controls and risk management
At least once a year, the audit committee must review the internal control and risk management systems set up by the executive management. It must ensure that the main risks are properly identified, managed and disclosed. Internal control also includes review and approval of the statements included in the annual report on internal control and risk management as well as review of the specific arrangements made by which staff members of the company may, in confidence, raise concerns about possible improprieties in financial reporting or other matters (whistle-blowers’ arrangement).
The audit committee must ensure that this arrangement is brought to the notice of all staff members of the company and its subsidiaries. If deemed necessary, the audit committee must make arrangements for independent investigation and appropriate follow-up of these matters in proportion to their alleged seriousness.
Internal audit
The audit committee must annually review the need for or the preservation of the internal audit function. If an independent audit function has been set up the following paragraphs will apply. The audit committee must ensure that the available resources and skills are adapted to the company’s nature, size and complexity.
The audit committee must approve the appointment and removal of the head of internal audit, as well as the work programme and the budget allocated to internal audit. It must review the effectiveness of the internal audit function, having regard to the complementary role of the internal and external audit functions. The audit committee must be provided with internal audit reports or a periodic summary of such reports.
The audit committee must discuss the performance of internal audit, the risk coverage and the quality of internal controls and risk management with the head of internal audit at least twice a year. The chairman of the audit committee must be available at all times to the head of the internal audit function to discuss issues relating to the company’s internal audit.
External audit
The audit committee makes recommendations to the Board of Directors on the selection, appointment and reappointment of the external auditor and on the terms of his or her engagement. These recommendations must be submitted to the shareholders’ meeting.
The audit committee must monitor the external auditor’s independence, in particular in view of the provisions of the Belgian Companies Code and the Royal Decree of 4 April 2003. For that purpose, the external auditor provides the audit committee with a report describing all relationships between the independent external auditor and the company and the group. The audit committee must review the effectiveness of the external audit, taking into account the relevant legal and professional standards.
The audit committee must monitor the external auditor’s work programme and review the effectiveness of the external audit process and the responsiveness of the management to the recommendations made by the external auditor in his or her management letter. The audit committee must ensure that the audit and the audit report cover the group as a whole. The audit committee must determine the manner in which the external auditor is involved in the content and the publication of financial information on the company other than the financial statements.
The audit committee must assist the Board of Directors in the development of a specific policy for the engagement of the external auditor for non-audit services, taking into account the specific provisions of the Belgian Companies Code and the application of this policy. The audit committee must investigate the issues giving rise to the resignation of the external auditor and may make recommendations as to any required action. The audit committee is the principal contact point for the head of the internal audit function and the external auditor.