Report of the Audit Committee

  • Dr. Bernhard Walter, Chairman of the Audit Committee.

Dr. Bernhard Walter, Chairman of the Audit Committee.

Dear Shareholders,

On the basis of the allocation of tasks laid down in the Rules of Procedure for the Supervisory Board and its committees, the Audit Committee deals primarily with questions of financial reporting. It also discusses the effectiveness and functional capabilities of the risk management system, the internal control system, the internal auditing system and compliance management. In addition, it deals with the annual audit and reviews the qualifications and independence of the external auditors.

After receiving the approval of the Annual Shareholders’ Meeting, the Audit Committee engages the external auditors to conduct the annual audit and the auditors’ review of interim financial statements, determines the important audit issues and negotiates the audit fee with the external auditors.

As independent members of the Audit Committee, both the Chairman of the Audit Committee, Dr. h. c. Bernhard Walter, and Dr. Clemens Börsig have expertise in the field of financial reporting, as well as special knowledge and experience in the application of accounting principles and internal methods of control.

The six meetings of the Audit Committee in 2012 were attended by, in addition to the members of the Audit Committee, the Chairman of the Supervisory Board, the Chairman of the Board of Management, the members of the Board of Management responsible for Finance and Controlling and for Integrity and Legal Affairs, and the external auditors. The heads of specialist departments and other experts were also present for the appropriate items of the agenda. In addition, the Chairman of the Audit Committee held regular individual discussions, for example with the external auditors, the members of the Board of Management responsible for Finance and Controlling and for Integrity and Legal Affairs, the Monitor and the external compliance advisor of the Audit Committee, and the heads of Corporate Accounting, Internal Auditing, Group Compliance and Legal Affairs. The Chairman of the Audit Committee informed the Audit Committee about the results of those bilateral discussions in each case at the next available opportunity. The Chairman of the Audit Committee also informed the Supervisory Board about the activities of the Committee and about its meetings and discussions in the following Supervisory Board meetings.

In a meeting in early February 2012 attended by the external auditors, the Audit Committee dealt with the preliminary figures of the annual company financial statements and the annual consolidated financial statements, as well as with the dividend proposal made by the Board of Management. The preliminary key figures were published at the Annual Press Conference on February 9, 2012.

At the end of February 2012, also in a meeting attended by the external auditors, who reported on the results of their audit and were available to answer supplementary questions and to provide additional information, the Audit Committee examined and discussed the annual company financial statements, the annual consolidated financial statements and the combined management report for Daimler AG and the Daimler Group for the year 2011, which had been issued with an unqualified audit opinion by the external auditors, as well as the proposal on the appropriation of profits. In preparation, the members of the Audit Committee were provided with comprehensive documentation, including the Annual Report with the consolidated financial statements according to IFRS and the combined management report for Daimler AG and the Daimler Group, the corporate governance report and the remuneration report, the annual financial statements of Daimler AG, the proposal made by the Board of Management on the appropriation of profits, the audit reports of KPMG on the annual company financial statements and the annual consolidated financial statements according to IFRS of Daimler AG, each including the combined management report, and the drafts of the reports of the Supervisory Board and of the Audit Committee. The audit reports and important issues related to financial reporting were discussed with the external auditors. In this context, the Audit Committee of Daimler AG also dealt with the monitoring of the financial reporting process, the effectiveness of the internal control system, the risk management system and the internal auditing system, as well as questions of compliance. Following an intensive review and discussion, the Audit Committee recommended that the Supervisory Board approve the annual financial statements and adopt the recommendation of the Board of Management to pay a dividend of €2.20 per share entitled to a dividend.

Also in this meeting, the Audit Committee discussed the report on the fee paid to the external auditors in the year 2011 for auditing and non-auditing services, and – subject to the consenting vote of the shareholders in the Annual Shareholders’ Meeting – the proposal on fees to be agreed for the year 2012.

Furthermore, the Audit Committee approved the Report of the Audit Committee for the year 2011. With due consideration of the results of the independence review and the discussion of the quality of the external audit, the Audit Committee decided to recommend to the Supervisory Board, and subsequently to the Annual Shareholders’ Meeting, that KPMG be engaged to conduct the annual external audit and the external auditors’ review of interim financial reports. Finally, on the basis of its responsibility, the Audit Committee dealt with the draft agenda for the 2012 Annual Shareholders’ Meeting and the annual audit plan of the Internal Auditing department.

In the meetings during the year 2012 relating to the quarterly results, the Audit Committee discussed the interim financial reports before their publication with the Board of Management, dealt with the respective risk reports, and received activity reports from the Group Compliance and Corporate Audit departments. The Audit Committee regularly communicated with the independent Monitor. In this context, it was also involved in setting and evaluating the annual compliance targets for the Board of Management, and dealt on a quarterly basis with notifications received confidentially, and if desired anonymously, through the Group’s own whistleblower system and processed internally by the Business Practices Office. The whistleblower system was expanded in February 2012 with an external, independent, neutral mediator as an additional contact person. Employees can personally approach the neutral mediator in confidence, without being recognized as a whistleblower within the Daimler Group.

The Audit Committee received the report on non-audit services provided by the external auditors in its meeting in June 2011. In this meeting, the important audit issues for the external audit of the year 2012 and the framework of approval for engaging the external auditors to provide non-audit services was determined. This meeting was also used to analyze the audit for the year 2011 and the performance of the Audit Committee’s monitoring duties with regard to the financial reporting process and the functional capabilities of the internal control system, the risk management system and the internal auditing system. In this context, on the basis of the statements of the external auditors as assessed by the Audit Committee, the internal control system was also dealt with. As well as the area of financial reporting, the internal control system also includes internal control and risk management with the areas of internal auditing and compliance management. The Committee discussed the activity reports on the internal control system and dealt in particular detail with changes to the system and its further development.

Furthermore, the Audit Committee received information during this meeting on new developments in accounting and financial reporting and other relevant areas, on the status of legal risks, on the further development of the global treasury system, on the funding status of pension obligations and on other current topics.

In the meeting in July 2012, on the basis of the report by the Group’s data protection executive, the Audit Committee dealt with key topics and current developments in the field of data protection. In its meeting in October 2012, the Audit Committee was also informed about the main contents of the Monitor’s follow-up report, including the certification of the compliance program. In this context, the Audit Committee was once again convinced of the careful design and thorough implementation of compliance processes at Daimler. Subsequently, the Audit Committee was informed about the Group’s ongoing activities with regard to integrity and about the newly created guidelines on behavior, the Integrity Code, which sets out the principles of behavior and guidelines for ethical conduct at Daimler.

In a meeting in early February 2013 attended by the external auditors, the Audit Committee dealt with the preliminary figures of the annual company financial statements and the annual consolidated financial statements and with the Board of Management’s proposal on the appropriation of profits. The preliminary figures were published at the Annual Press Conference on February 7, 2013.

In another meeting in February 2013 attended by the external auditors, who reported on the results of their audit, the Audit Committee dealt with the annual company financial statements, the annual consolidated financial statements and the combined management report for Daimler AG and the Daimler Group for the year 2012, which had been issued with an unqualified audit opinion by the external auditors, as well as with the proposal on the appropriation of profits. In preparation, the members of the Audit Committee and the other members of the Supervisory Board were provided with comprehensive documentation, including the Annual Report with the consolidated financial statements according to IFRS and the combined management report for Daimler AG and the Daimler Group, the corporate governance report and the remuneration report, the annual financial statements of Daimler AG, the proposal made by the Board of Management on the appropriation of profits, the audit reports of KPMG on the annual financial statements and the annual consolidated financial statements according to IFRS of Daimler AG, each including the combined management report, and the drafts of the reports of the Supervisory Board and of the Audit Committee. The audit reports and important issues related to financial reporting were discussed with the external auditors. In this context, the Audit Committee of Daimler AG also dealt with the monitoring of the financial reporting process, the effectiveness of the internal control system, the risk management system and the internal auditing system, as well as with questions of compliance. This also included the further development and required adjustments of Group-wide compliance structures and activities, which had been decided upon by the Board of Management. Following an intensive review and discussion, the Audit Committee recommended that the Supervisory Board approve the annual financial statements and adopt the recommendation of the Board of Management on the payment of a dividend of €2.20 per share entitled to a dividend. Furthermore, the Audit Committee approved the Report of the Audit Committee in the current version.

Also in this meeting, the Audit Committee discussed the report on the fee paid to the external auditors in the year 2012 for auditing and non-auditing services, and – subject to the consenting vote of the shareholders in the Annual Shareholders’ Meeting – the proposal on fees to be agreed for the year 2013. With due consideration of the results of the independence review, the Audit Committee decided to recommend to the Supervisory Board, and subsequently to the Annual Shareholders’ Meeting, that KPMG be engaged to conduct the annual audit and the auditors’ review of interim financial reports. The Audit Committee based its recommendation also on the very good results of the quality analysis carried out by the Audit Committee in May/June 2012 of the external audit in the previous year. Finally, on the basis of its responsibility, the Audit Committee dealt with the draft agenda for the 2012 Annual Shareholders’ Meeting and the annual audit plan of the Internal Auditing department.

As in previous years, the Audit Committee once again conducted a self-evaluation of its own activities in 2012. This did not result in any need for action with regard to the Committee’s tasks, or with regard to the content, frequency or procedure of its meetings.

Stuttgart, February 2013

The Audit Committee

 

Dr. h. c. Bernhard Walter
Chairman