Report of the Audit Committee

  • Dr. Clemens Börsig, Chairman of the Audit Committee.

Dr. Börsig, Chairman of the Audit Committee.

Dear Shareholders,

On the basis of applicable law, the German Corporate Governance Code and the Rules of Procedure of the Supervisory Board and its committees, the Audit Committee deals primarily with questions of financial reporting. In addition, it deals with the annual audit and reviews the qualifications and independence of the external auditors. Furthermore, it discusses the effectiveness and functional capabilities of the risk management system, the internal control system, the internal auditing system and compliance management.

After the external auditors are elected by 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 fees with the external auditors.

Several personnel changes occurred in the Audit Committee in 2014. The longstanding Chairman of the Audit Committee, Dr. Bernhard Walter, stepped down from the Supervisory Board as of the end of the Annual Shareholders’ Meeting on April 9, 2014. Dr. Bernhard Walter had been a member of the Audit Committee since 1998 and its Chairman since 2004. Dr. Bernhard Walter passed away in January 2015 at the age of 72. With deep appreciation and remembrance, the Audit Committee bids farewell to its former Chairman, who had a major influence on the Committee over many years with his great prudence and experience.

Following the departure of Dr. Bernhard Walter on April 9, 2014, in its constitutive meeting after the Annual Shareholders’ Meeting, the newly elected Supervisory Board elected Joe Kaeser as a member of the Audit Committee representing the shareholders. Subsequently, the members of the Audit Committee elected Dr. Clemens Börsig, a member of the Audit Committee since 2007, as the new Chairman of the Committee.

On April 30, 2014, Erich Klemm stepped down from the Supervisory Board and thus also from his position as Deputy Chairman of the Audit Committee. Effective as of May 1, 2014, the Supervisory Board elected Dr. Sabine Maassen to the Audit Committee as a member representing the employees. Furthermore, the members of the Audit Committee elected Michael Brecht as the Deputy Chairman of the Committee. As a result, the Audit Committee was fully and properly constituted.

As independent members of the Audit Committee, both the Chairman of the Committee, Dr. Clemens Börsig, and Joe Kaeser have expertise in the field of financial reporting, as well as special knowledge and experience in the application of accounting principles and methods of internal control. The same applied to Dr. Bernhard Walter, who was the Chairman of the Audit Committee until April 9, 2014.

The six meetings of the Audit Committee in 2014 were attended by, in addition to the members of the 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, and, if required, the heads of the specialist departments. The Chairman of the Audit Committee informed the Supervisory Board about the activities of the Committee and about the contents of its meetings and discussions in the following Supervisory Board meetings.

In a meeting in early February 2014, the Audit Committee dealt with the preliminary figures of the annual company financial statements and the annual consolidated financial statements for the year 2013, as well as with the proposal on the appropriation of profits made by the Board of Management. The preliminary key figures and the proposal on the appropriation of profits were published at the Annual Press Conference on February 6, 2014.

In another meeting in February 2014, the Audit Committee reviewed and discussed in detail 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 2013, each of which had been issued with an unqualified audit opinion by the external auditors, as well as the proposal on the appropriation of profits. Following an intensive review and discussion, the Audit Committee recommended that the Supervisory Board approve the annual financial statements and the combined management report, and on this basis adopt the recommendation of the Board of Management to pay a dividend of €2.25 per share entitled to a dividend. Furthermore, the Audit Committee approved the Report of the Audit Committee for the year 2013. Also in this meeting, the Audit Committee discussed the report on the fees paid to the external auditors in the year 2013 for auditing and non-auditing services. The Audit Committee also 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 for financial year 2014; the results of the independence review and the discussion of the quality of the external audit were taken into consideration. Subject to the outcome of voting by the Annual Shareholders’ Meeting, the Committee also discussed the proposal for the fees to be agreed upon with the external auditors for financial year 2014. Finally, the Audit Committee dealt with the draft agenda for the 2014 Annual Shareholders’ Meeting and with the annual audit plan of the Internal Auditing department for the year 2014.

In the meetings during 2014 relating to the quarterly results, the Audit Committee discussed the interim financial reports before their publication with the Board of Management and with external auditors engaged to carry out the auditors’ review of interim financial statements. Each quarter, the Committee also dealt with notifications concerning possible violations of rules submitted by employees and third parties confidentially and if desired anonymously (if compatible with local data-protection law) to the Company’s own whistleblower system, the BPO (Business Practices Office), which then processed them. In addition, the Committee received reports from the Group Compliance, Legal and Corporate Audit departments.

In its meeting in early June 2014, the Audit Committee discussed the Group’s internal control and risk management system, and dealt in particular with its changes and further development. As well as the area of financial reporting, the internal control system also includes the functions of internal auditing and compliance management. Furthermore, the Committee received a report on the non-auditing services provided by the external auditors. In this meeting, the important audit issues for the external audit of the reporting period and the framework of approval for engaging the external auditors to provide non-audit services were also determined. In addition, this meeting was used to analyze the external audit for the year 2013.

Also in the meeting in June 2013, the Audit Committee dealt with new developments in accounting and financial reporting and other audit-relevant areas. Furthermore, the Committee was informed in detail about the Group’s legal system and legal risk reporting, and received a report on the current status of financial market regulation and its impact on Group Treasury.

In the meeting held in July 2014, the Audit Committee received the annual report from the Group’s Data Protection Officer and was informed about the main topics and current developments in the field of data protection. In its meeting in October 2014, the Committee dealt with a report on the implementation of the EU Audit Directive and after discussing a proposal by the Board of Management on that subject, made a recommendation to the Supervisory Board to restructure the real-estate portfolio in Germany.

In a meeting in early February 2015, the Audit Committee dealt with the preliminary figures of the annual company financial statements and the annual consolidated financial statements for the year 2014, as well as with the proposal on the appropriation of profits made by the Board of Management. The preliminary key figures and the proposal on the appropriation of profits were published at the Annual Press Conference on February 5, 2015.

In another meeting in mid-February 2015, 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 2014, which had been issued with an unqualified audit opinion by the external auditors, as well as with the proposal on the appropriation of profit; thereby the external auditors reported on the results of their audit and were available to answer supplementary questions and to provide additional information. The audit reports on the company and consolidated financial statements and on the internal control system (ICS), the report on the risk management system for the year 2014, the Annual Report 2014 and important issues related to financial reporting were discussed with the external auditors. Following an intensive review and discussion, the Audit Committee recommended that the Supervisory Board approve the annual financial statements and the combined management report, and on this basis as before adopt the recommendation of the Board of Management to pay a dividend of €2.45 per share entitled to a dividend. Furthermore, the Audit Committee approved the Report of the Audit Committee for the year 2014.

Also in this meeting, the Audit Committee discussed the report on the fees paid to the external auditors in the year 2014 for auditing and non-auditing services. Taking into consideration 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 external audit and the external auditors’ review of interim financial reports for financial year 2015. Amongst other things, the Audit Committee based this recommendation on the very good results of the analysis of the quality of the external audit of financial year 2013 carried out by the Audit Committee in May 2014. Subject to the election of the proposed external auditors by the Annual Shareholders’ Meeting, the Committee approved the fees to be agreed upon with the external auditors for the year 2015. Finally, within the framework of its responsibility, the Audit Committee dealt with the draft agenda for the 2015 Annual Shareholders’ Meeting and the annual audit plan for 2015 of the Internal Auditing department.

As in previous years, the Audit Committee once again conducted a self-evaluation of its own activities in 2014. The positive results of this efficiency review were presented and discussed in the meeting in mid-February 2015. 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 2015

The Audit Committee

Dr. Clemens Börsig
Chairman