Basis of the activities of the Audit Committee
The Audit Committee shall undertake the responsibilities it has been assigned pursuant to section 7 (2) of the Supervisory Board Rules of Procedure in accordance with the Statutes, Supervisory Board Rules of Procedure and these Rules of Procedure.
Term of office and composition; chairman of the committee
The composition of the Audit Committee and the term of office of the members of the committee shall be based on the rules in the Supervisory Board Rules of Procedure.
The chairman of the Audit Committee shall be determined by the Supervisory Board.
An independent member of the Audit Committee which can be also its chairman must have expertise in the areas of accounting or auditing. The chairman of the Audit Committee shall have expert knowledge and experience in the application of accounting principles and internal control systems. He must not be a former member of the Management Board of DEUTZ AG.
Statements of intent for the Audit Committee shall be submitted by the chairman of the committee.
Convening of meetings
Meetings of the Audit Committee shall be convened by the chairman in writing with at least 14 days' notice. An agenda must also be included with the invitation to the meeting. In urgent cases, the notice period can be shortened and a meeting convened by telephone or other means of telecommunication.
At least two meetings of the Audit Committee shall be held in each financial year. The meetings of the Audit Committee may also be held in the form of telephone conference calls or video conferences.
Decisions of the Audit Committee shall be taken in meetings. Decisions taken in writing, by telephone or by other means of telecommunication shall be permitted if so determined by the chairman of the Audit Committee on a case-by-case basis.
The decisions of the Audit Committee must be minuted or entered in a record. The chairman of the Audit Committee must sign the minutes or record. He must then make a copy available to each member of the Audit Committee. This shall also apply to decisions taken in writing, by telephone or by other means of telecommunication.
For the purposes of preparing the minutes or record, the chairman shall nominate a minute-taker who must not be a member of the Audit Committee.
The Audit Committee shall be quorate if at least three members of the committee participate in a decision.
Absent members of the Audit Committee may participate in a decision by submitting a written vote via another member of the Audit Committee or by casting a vote by telephone or other means of telecommunication.
Responsibilities of the Audit Committee
Within the framework of its main activities according to Section 7 (2) of the Supervisory Board Rules of Procedure the Audit Committee has the following tasks:
(1) The Audit Committee shall prepare the discussions and resolutions of the Supervisory Board with regard to
a) the audit and, if applicable, the adoption of the annual financial statements and the approval of the consolidated financial statements;
b) the resolution on the appropriation of retained earnings proposed by the Executive Board; and
c) the Supervisory Board’s proposal to the Annual General Meeting with regard to the appointment of the auditor, the Group auditor as well as the auditor of the condensed half year consolidated financial statements and consolidated interim management report, provided that they shall be audited or reviewed by the auditor.
For this purpose, the Audit Committee shall intensively discuss the annual financial statements and consolidated financial statements including the combined management report for the Company and the Group, whereby it deals in particular with the net assets, the financial position and the results of the preceding business year and the outlook, as well as the proposed resolution on the appropriation of retained earnings.
The Audit Committee shall discuss the audit reports with the auditor as well as the auditor’s findings and shall make recommendations to the Supervisory Board in this respect.
(2) Prior to the submission of the proposal for the appointment in accordance with section 1 sentence 1, the Audit Committee obtains a declaration from the intended auditor whether any and, if applicable, which professional, financial or other connections between the auditing company, its directors and officers as well as head auditors on the one hand and the Company and its directors and officers on the other hand exist which may cause doubts as to the auditor’s independence. This declaration shall also include the scope of other services, in particular in the advisory sector, rendered for the Company in the previous financial year or contractually agreed for the following year.
(3) Instead of the Supervisory Board, the Audit Committee shall deal with the following matters:
a) issues with respect to accounting, in particular the handling of basic issues as for instance the application of new accounting standards as well as the supervision of the accounting processes,
b) discussion of the semi-annual report and quarterly reports, if any, as well as the possible audit review of the condensed half year consolidated financial statements and consolidated interim management report with the Executive Board prior to its publication,
c) the supervision of the effectiveness of internal risk management systems, the internal control system, the internal revision system as well as compliance matters,
d) the supervision of the audit, in particular the required independence of the auditor and additional services rendered by the auditors,
e) the passing of resolutions on
- the audit mandate given to the auditor, in particular the possible audit assignment for the audit review or audit of the condensed half year consolidated financial statements and consolidated interim management report,
- the determination of the audit focal points,
- the auditor’s compensation,
- the conclusion of an information agreement with the auditor (in accordance with section 7.2.1 of the German Corporate Governance Code), stating that the Chairman of the Audit Committee will be informed immediately of any grounds for disqualification or partiality occurring during the audit, unless such grounds are eliminated immediately,
- the conclusion of a disclosure agreement (in accordance with section 7.2.3 of the German Corporate Governance Code), stating that the auditor shall inform the Supervisory Board and/or note in the Auditor’s Report if, during the performance of the audit, the auditor comes across facts which show misstatement by the Executive Board and Supervisory Board on the Code in accordance with § 161 AktG,
as well as other issues being in direct connection with the above-mentioned matters.
(4) The Chairman of the Audit Committee and the Chairman of the Supervisory Board shall sign the audit mandate and conclude the information agreement and the disclosure agreement.
(5)The Audit Committee shall also be responsible for carrying out any other duties that the Supervisory Board may from time to time assign to this committee.
(6)The chairman of the Audit Committee shall deliver a report on the work of the Audit Committee at all meetings of the full Supervisory Board.
The rules specified under sections 10 and 11 of the Supervisory Board Rules of Procedure shall also apply mutatis mutandis to the procedures of the Audit Committee unless otherwise specified by the Supervisory Board when the committee was established.
These Rules of Procedure shall replace the version dated 10. December 2009 and shall come into effect on 9. December 2015.
Approved by the Supervisory Board at its meeting held on 9. December 2015.