Corporate Governance Practices: Relationship with External Auditors

Introduction

The relationship between the management board, supervisory board, and external auditors is crucial in ensuring effective corporate governance practices. This article provides guidance on responding to questions related to this relationship.

Compliance Guidance

For each principle or best practice listed below, determine whether your company complies with it:

• Comply: If the company adheres to the principle or best practice.
• Deviate: If the company does not comply and explain why.
• Non-Applicable: If a particular principle or best practice is not applicable to your company.

Providing Information to External Auditors

1.7.1: Provision of information

• Does the management board provide all necessary information to the external auditor in a timely fashion?
  • Comply/Deviate/Non-Applicable:
    • If yes, provide an explanation.
    • If no, explain why (deviation).
    • If not applicable, indicate so.

Audit Plan and External Auditor’s Findings

1.7.2: Discussion of audit plan

• Does the management board discuss the draft audit plan with the external auditor before presenting it to the audit committee?
  • Comply/Deviate/Non-Applicable:
    • If yes, provide an explanation.
    • If no, explain why (deviation).
    • If not applicable, indicate so.

1.7.3: Scope and materiality of audit plan

• Does the audit committee annually discuss the scope, materiality of the audit plan, and principal risks identified by the external auditor?
  • Comply/Deviate/Non-Applicable:
    • If yes, provide an explanation.
    • If no, explain why (deviation).
    • If not applicable, indicate so.

Publication of Financial Reports

1.7.3: Involvement in content and publication

• Does the management board determine how to involve the external auditor in the content and publication of financial reports (other than annual accounts)?
  • Comply/Deviate/Non-Applicable:
    • If yes, provide an explanation.
    • If no, explain why (deviation).
    • If not applicable, indicate so.

Consultations with External Auditor

1.7.4: Meetings without management board presence

• Does the audit committee meet with the external auditor at least once a year, without the management board’s presence?
  • Comply/Deviate/Non-Applicable:
    • If yes, provide an explanation.
    • If no, explain why (deviation).
    • If not applicable, indicate so.

Examination of Discussion Points

1.7.5: Supervisory board examination

• Is the supervisory board permitted to examine the most important points of discussion between the external auditor and the management board (based on the draft management letter or audit report)?
  • Comply/Deviate/Non-Applicable:
    • If yes, provide an explanation.
    • If no, explain why (deviation).
    • If not applicable, indicate so.

External Auditor’s Attendance of Supervisory Board Meetings

1.7.6: Attendance at supervisory board meetings

• Does the external auditor attend the meeting of the supervisory board at which the report of the external auditor on the audit of annual accounts is discussed?
  • Comply/Deviate/Non-Applicable:
    • If yes, provide an explanation.
    • If no, explain why (deviation).
    • If not applicable, indicate so.

Composition and Size of Management, Supervisory, and Executive Committees

2.1: Diversity in committee composition

• Are these committees composed in a way to ensure diversity with regard to expertise, experience, competencies, other personal qualities, sex or gender identity, age, nationality, cultural or other background?
  • Comply/Deviate/Non-Applicable:
    • If yes, provide an explanation.
    • If no, explain why (deviation).
    • If not applicable, indicate so.

2.1.1: Profile of supervisory board

• Has the supervisory board prepared a profile addressing the desired expertise and background of its members and the desired diverse composition?
  • Comply/Deviate/Non-Applicable:
    • If yes, provide an explanation.
    • If no, explain why (deviation).
    • If not applicable, indicate so.