Supervisory Board report
Audit Committee
REMUNERATION COMMITTEE
SELECTION AND APPOINTMENT COMMITTEE
The Audit Committee assists the Supervisory Board in its
responsibilities to oversee our financing, our consolidated
financial statements, the financial reporting process and the
system of internal business controls and risk management.
The Audit Committee has six meetings per year. In addition,
the Audit Committee has conference calls before the release
of each quarterly trading statement. If necessary other Audit
Committee meetings are called. The members of the
Corporate Executive Board, the Chief Accounting Officer,
the Chief Internal Audit Officer and the external auditor are
invited to the Audit Committee meetings. Other members of
senior staff are invited when the Audit Committee finds it
necessary or appropriate.
In 2005 the Audit Committee had six meetings, one before
each quarterly results release and two other meetings. In
addition four conference calls were held prior to the release
of each quarterly trading statement. Four other conference
calls were held on matters relating to the closing of the
2004 accounts and one on the solicitations to sell notes
announced on October 11, 2005. At the end of the regular
meetings, the Audit Committee had several individual
meetings with the CEO, CFO, interim CFO, the Chief
Internal Audit Officer and the external auditor.
The Audit Committee considered the quarterly trading
statements and results release. The Audit Committee
reviewed the annual report 2004 and recommended it for
approval to the Supervisory Board. The Audit Committee
received regular updates on internal controls and the
progress on the project to comply with the requirements of
Section 404 of the Sarbanes Oxley Act as of December 31,
2006. The Audit Committee closely monitored the
Company's efforts to improve and strengthen its internal
controls, including with respect to the two material
weaknesses and other internal control issues which were
reported in the 2004 annual report. The 2004 material
weaknesses related to accounting for income tax provisions
and to U.S. GAAP financial statement reconciliation process
and no longer exist as of the end of the period covered by
this annual report. Every quarter a report from the
whistleblower procedure was provided to the Audit
Committee and discussed with the Corporate Executive
Board in the meetings. Regularly the Audit Committee was
informed on litigation and the related exposure. The Audit
Committee was updated on IT whereby information strategy,
information architecture, outsourcing, information
management governance and information security were
addressed. The Audit Committee assessed the independence
and performance of the external auditor and for that purpose
pre-approved the fees for audit and permitted non-audit
services to be performed by the external auditors as
negotiated by the Corporate Executive Board. It reviewed
the internal audit plan. The Audit Committee approved the
solicitations to sell notes announced on October 11, 2005.
In December the Audit Committee considered the budget for
2006. The Audit Committee also reviewed the charter for
the Audit Committee and concluded that it was adequate.
The composition of the Audit Committee changed during
2005, as Lodewijk de Vink and Rene Dahan resigned from
the Audit Committee and Derk Doijer and Stephanie Shern
were appointed to the Audit Committee in May 2005.
The Remuneration Committee met nine times in 2005.
The CEO was invited to all of these meetings. For a report
on remuneration and the activities of the Remuneration
Committee, see the "Remuneration" section of this annual
report.
The Selection and Appointment Committee met seven times
in 2005 and its main focus was the selection of a new CFO
and replacements of the members of the Supervisory Board
who retired in 2005. The Selection and Appointment
Committee was further engaged in a search for an additional
Supervisory Board member and in the 2006 Management
Development Plan.
In May 2005, Dr. Cynthia Schneider retired from the
Selection and Appointment Committee. Dr. Myra Hart and
Benno Hoogendoorn were appointed to the Selection and
Appointment Committee. Benno Hoogendoorn resigned from
the Selection and Appointment Committee on September
29, 2005 due to medical reasons.
This annual report and the 2005 consolidated financial
statements, audited by Deloitte Accountants B.V., have been
presented to the Supervisory Board. The consolidated
financial statements were discussed with the Audit
Committee in the presence of the Corporate Executive Board
and the external auditor. The Supervisory Board endorses
this annual report. The Supervisory Board recommends that
the General Meeting of Shareholders adopts the 2005
consolidated financial statements included in this annual
report.
Supervisory Board
Amsterdam, the Netherlands, March 28, 2006
