BELGIAN ENGAGEMENT CHECKLIST

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Stanley Owen
6 years ago
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1 This checklist is to be used as a guide to review compliance with major legal and Deloitte requirements. It should not be considered as all inclusive. It must be completed in connection with each examination. It should be considered as an integral part of the audit program. COMMENT BRIEFLY ON ANY NO ANSWERS AND CONSIDER OPINION MODIFICATION. 1 PRE-ACCEPTANCE PROCEDURES AND INDEPENDENCE MATTERS YES NO N/A 1.1 In case of a new mandate or a renewal of mandate, have all pre-acceptance procedures been followed? 1.2 Have non-audit or non-attest services been rendered during the year (see manager and partner for analysis)? If non-audit or non-attest services have been rendered, - have all pre-acceptance forms been submitted for non-audit services or for non-attest services? - have all submitted pre-acceptance forms been approved by Deloitte Independence team? - have pre-acceptance requests been submitted and approved by the audit committee (if an audit committee has been installed) 1.3 Have we checked that 1 to 1 rule, if applicable, is respected? 1.4 Have we documented in our files, in the 1210, the inquiries made and the conclusions reached on those matters? 1.5 If we are requested to confirm the Belgian Firm s or all Deloitte Member Firms independence to the parent or investor of an audit Client, has this been consulted with the Belgian Independence Office? (We may only provide such confirmation when it is required, see DPM 1420) 1.6 If an affiliate to the audit client is a listed (publicly quoted) company, and the audit client or the listed affiliate is not listed in the International Restricted Entity List (IREL), have we considered the situation whether or not we have to include the listed affiliate in the IREL? (Consult with the Belgian Independence Office in case of doubts). 1.7 If the company is quoted and if an audit committee has been established in compliance with Art. 526bis, have we : (i) confirmed our independence to the audit committee in writing and on a yearly basis? (ii) communicated non-audit services to the audit committee on a yearly basis? 2 BOOKKEEPING YES NO N/A 2.1 Is the chart of accounts in conformity with the legal chart of accounts? 2.2 Is the chart of account of the company such that the balance sheet and the profit and loss statement directly derive from the sum of the related general ledger accounts? (Art 27 of RD of January 30, 2001) 2.3 Are the books kept in one of the national languages? 2.4 Is each entry supported by a document? 2.5 Are the accounting records kept for at least 10 years? 2.9 In case of change within the last 10 years, are the former accounting softwares Document last updated : September, 2009

2 still available so that accounting details can be subsequently edited? 2.6 For foreign based branches of a Belgian company having a separate system of books and records, are the balances of the accounts entered into the head office books at least every six months? 2.7 Are the valuation rules adopted by the Board of Directors 2.8 Are the valuation rules in going concern? 3 OTHER BOOKS YES NO N/A 3.1 Does the company keep an updated book of minutes of board of directors meetings? This is no legal obligation, but sometimes this obligation is mentioned in the company bylaws 3.2 Does the company keep an updated book of minutes of shareholders meeting? This is no legal obligation, but sometimes this obligation is mentioned in the company bylaws 3.3 Does the company keep an updated personnel s register? 4 ANNUAL ACCOUNTS YES NO N/A 4.1 Has the referencing checklist been completed? 4.2 Were the annual accounts provided to us at least one month before the shareholders meeting? If not, did we write to management and the board of directors? 4.3 Were the annual accounts of last year filed with the National Bank at the latest 1 month after the general shareholders' meeting? 4.4 Are the annual accounts filed at the latest 7 months after year end? 4.5 Were the deposited annual accounts the same as the ones which we referenced and included in the archive copy? 5 CONSOLIDATED ANNUAL ACCOUNTS YES NO N/A 5.1 Is the company subject to the Royal Decree of January 30, 2001 (replacing RD of March 6, 1990) regarding the consolidated accounts? If yes, is this because: the company is a parent company that meets the criteria? the company is a sub-parent company that meets the criteria? the company is a sub-parent company that does not meet the criteria but has a workers council? 5.2 If the company is subject to the Company law / Royal Decree of January 30, 2001, does it prepare consolidated accounts? If yes, go to question 5.3 If no: have the shareholders agreed not to prepare and publish consolidated annual accounts of the Belgian company? are the consolidated accounts prepared and published by the parent company in agreement with the EC directive of June 13, 1983 and have those consolidated financial statements been deposited at the National Bank in the relevant national language at the latest 7 months after year end? If no, have we sent a letter to the Board of Directors? If the company has a workers council and does not prepare consolidated financial statements, has an exemption to prepare consolidated annual accounts been asked and obtained from the workers' council? 5.3 In case the company prepared consolidated accounts: have the consolidated accounts been prepared in accordance with the Royal 2 / 9

3 Decree of January 30, 2001? were the consolidated accounts available for the shareholders in due time? were the consolidated accounts filed at the National Bank within required time frame? has the consolidated annual report been prepared in accordance with RD? 6 COMPLIANCE WITH COMPANY LAW YES NO N/A 6.1 Did the company comply with the incorporation conditions at the moment of incorporation? Are the basic incorporation conditions still complied with? (SA/NV: Art. 439, 441, 448; SPRL/BVBA: Art. 214, 216, 223) 6.2 Are the company's activities in accordance with its statutory corporate object? 6.3 Are minimum capital requirements met? For a SA/NV, minimum capital is EUR For a SPRL/BVBA, minimum capital is EUR 6.4 Does the amount of share capital as per the coordinated bylaws agree with: the annual accounts? the shareholders' register, if any? 6.5 If the shares are nominal, is the shareholders' register kept up-to-date? 6.6 Is the minimum amount of directors properly appointed and have their powers been published in the "Belgisch Staatsblad / Moniteur Belge"? NV/SA: 3 directors unless the articles of association mention more directors. NV/SA with 2 shareholders: 2 directors unless the articles of association mention more directors. BVBA/SPRL: at least 1 managing director 6.7 Are the directors properly registered with the Crossroads Business Databank? 6.8 Is one statutory auditor appointed for a (renewable) term of 3 years? Has this nomination been published in the Belgisch Staatsblad / Moniteur belge? Do the minutes include our fixed remuneration (this does not have to be published)? 6.9 Have all the required quorums relating to presence and voting at the shareholders' meeting been respected? (art 481, 482 & 541 to 546 or statutory provisions) 6.10 Has the statutory auditor been invited to all shareholders meetings held during the year and if we did not attend, have we signed the required document to indicate that we were aware of the agenda? (waiver letter) 6.11 Have formalities been complied with in case of transactions or decisions for which there was a conflict of interest of one of the directors? (art 523, 524 & 529 for NV/SA and 259, 260, 261 for BVBA/SPRL) 6.12 Has an auditor s report been made, in case the company has acquired an asset from one of the incorporators, directors or shareholders for a value in excess of 10% of the subscribed capital, within two years after its incorporation?(art ) 6.13 Is the result appropriation made according to the coordinated bylaws and the company law? For dividend payments, have the restrictive conditions been respected? (Art ) 6.14 Have the conditions been respected in connection with interim dividends? (Art 618) 3 / 9

4 Have we joined the report prepared for the interim dividend to our annual auditor s report? 6.15 In case the company has acquired its own shares, have all formalities been complied with? (Art ) 6.16 Does the net assets value exceed 50% of the subscribed capital? If not, has a general shareholders' meeting been held within two months after this situation was known? Has the Board of Directors made a report to the shareholders including a plan to improve the financial position of the company?(art. 633 for SA/NV and Art 332 for SPRL/BVBA)) 6.17 Is the net asset value above EUR 61,500 (Art 634) for NV/SA or 6,200 (Art 333) for BVBA / SPRL? 6.18 Have loans to obtain company shares been granted to personnel of the company or to personnel of subsidiaries of the company in which personnel has at least 50% of the voting rights? (Art ) 6.19 Does the cumulative investment of all subsidiaries in the share capital of the parent company NV/SA represent less than 10% of the voting rights attached to all shares of the parent? (Art. 627) 6.20 In case the company has a cross participation into another company, does this participation represent less than 10% of the total voting rights? (Art. 632) 6.21 Were all conditions met in relation to a capital increase for the company's personnel? (Art. 609) 6.22 In case the company issued new shares whereby the preferential rights of the existing shareholders were not respected, have all conditions been respected? (Art ) 6.23 In case of a capital increase, did we check that nor the company nor one of the subsidiaries did subscribe on this capital increase? (Art ) 6.24 In case of an capital increase below fractiewaarde/pair comptable :are all conditions respected as described in Art. 598? 6.25 In case of a capital decrease: are all conditions respected as described in Art Is Book year > 1 month and < 23 months? 6.27 Does the company have more than one shareholder? 6.28 In case the company's capital is partly composed of non-voting shares, were all conditions respected? (Art.480) Do these shares represent less than 1/3 of total shares? Are these entitled to a preferential dividend? 6.29 Have any shareholders agreements been made to management's knowledge? (Art. 551) 6.30 Has an appropriate amount been transferred to the legal reserve? 6.31 If the company has "bearer" shares, has the shareholders' meeting been properly announced in the newspapers? 6.32 Has an auditor s report been issued in case of: Contribution in kind Change in corporate object Change of corporate form 4 / 9

5 Merger Split Liquidation 6.33 Have the bylaws of the company been updated to include all modifications required by the company law? 6.34 Was the annual shareholders meeting called within required time frame? If not, did we write to the management and board of directors? 6.35 If the company is quoted (as defined in Art. 4 of Company Code), has an audit committee been established in compliance with Art. 526bis? Do the independent directors comply with the requirements of art 526 ter, and if not, did we discuss the plans to comply by 2011? 6.36 If the company is either (i) a credit institution or (ii) an insurance company or (iii) an investment company, has an audit committee been established in compliance with laws regulating the activities of this kind of companies? 7 BOARD OF DIRECTORS REPORT YES NO N/A 7.1 In case the company is a "big company" (See RD of January 30, 2001) did the company deposit the annual report of the Board of Directors? 7.2 Has annual report been referenced? Do financial data correspond to data included in the annual accounts 7.3 If net equity decreased below legal required amount, did we inquire and document what actions management will take? 7.4 Does the management report include (Art 95, 96 and 119): a comment on the annual accounts to explain the evolution of the business and the situation of the company as well a description of the main risks and uncertainties that face the company, important events that took place after year end, including more specifically hose that relate to the period before year end, circumstances that can have a significant impact on the development of the company, in so far their public disclosure cannot bring serious damage to the company, information related to research and development activities (both quantitative and qualitative information), information on branches, if any, if the balance sheet shows accumulated losses or if the profit and loss statement shows two consecutive years of net losses, the BOD must justify why the annual accounts were prepared in a going concern perspective and give a clear and sufficient information on the proposed action all other information that need to be disclosed as a result of the company code o conflict of interest (art 259, 523, 524) o capital increase (art 608), see 8.6 below o purchase of own shares (art ), see 8.7 below o reference to plans adopted or to be adopted as a consequence of application of Article and evolution of this plan in subsequent years. adequate information on the use of financial instruments (Art 96 / 119), so far 5 / 9

6 relevant for the evaluation of the balance sheet and profit & loss statement. a justification of the independence and expertise in accounting and audit matters of at least one member of the audit committee (if applicable). 7.5 Article 608 of the company code states that the management report must include information related to capital increase, issuance of convertible bonds or issuance of preferred rights by the Board of Directors in the frame of authorised capital, including a specific comment if those issuances were done with a limitation of preference rights of existing shareholders. 7.6 Article 624 of the company law states that the management report must include information on own shares purchased by the company itself, by a person acting on behalf of the company, by a subsidiary directly controlled by the company or by a person acting on behalf of this company why own shares were purchased, the number and nominal amount of the shares (or accounting par value) acquired or sold during the year and the related capital proportion, the related value, and the number and nominal amount of all the shares owned at the end of the accounting year and the related capital proportion. 8 AUDITORS REPORT YES NO N/A 8.1 Has an archive copy been prepared and filed for the interoffice report or report to another auditor? Has the AS2 file supporting that report been archived in the archive tool within the 60 (SEC : 45) days after date of the report? 8.2 Have all the required documents been made available to the shareholders at least 15 days before the annual shareholders' meeting? (art.92 to 96 & art. 553)? If not, did we issue a rapport de carence/niet bevinding verslag? 8.3 If it is our first year of mandate, do we refer to our predecessor s report? 8.4 For first time engagements, have we obtained audit evidence that: opening balances did not contain misstatements that materially affect current year financial statements, prior period balances have been correctly brought forward and restated where applicable, and accounting policies have been consistently applied. See ISA 510. For first time engagements, if we were unable to obtain sufficient audit evidence covering opening balances, the audit report should include either a qualified or disclaimer of opinion. See ISA 510 and IRE/IBR book het commissarisverslag/le rapport du commissaire 8.5 If the period covered by annual accounts is more than 1 year, have we adapted the wording of the report accordingly? 8.6 Does the auditor s report refer to the right accounting standards (Belgian GAAP/IFRS)? If IFRS, are the financial statements properly identified - wording of the client ex. Balance sheet versus Statement of financial position 6 / 9

7 - statements included 8.7 Does the auditor s report refer to the right auditing standards (IBR/IRE)? 8.8 Did we consider the following in the audit report: - internal control - cooperation of management and BOD - going concern - completeness of BOD report - compliance with Company law, Royal Degree 30/1/2001, Coordinated bylaws - agreement of result allocation with Company law and Coordinated bylaws 8.9 Is our statutory report dated after the date of the BOD meeting but before the shareholders meeting and dated the same date as the representation letter? Note : our audit report should not be dated before all substantial work is completed. The report date is not necessarily BoD+1. As the archiving deadline is 60 (SEC : 45) days after report date, avoid too much anti-dating of reports. Examples : assembling the audit file by transferring wps on the P: drive is not substantial work; waiting for the lawyer confirmation is substantial audit work. Referencing the FS is substantial audit work; filing the signed copy is not substantial Have we obtained a copy of: the minutes of the BOD meeting approving the annual accounts and the signed annual accounts as approved by the BOD 8.11 Did we update the subsequent review work up to the statutory audit report s date? 8.12 Have we obtained the representation letter dated after the date of the BOD meeting, and including any customized items as we deem necessary? 8.13 Did we update our lawyer s circularization or do the working papers contain adequate documentation of the reasons why this update is not necessary? 8.14 Have all EQAR procedures been followed? 8.15 If our report is qualified, have we adapted accordingly the wording of the second part of the report (re accounting law and company law)? 8.16 If we include an explanatory paragraph, do we explicitly refer to the related information in the board of directors report or the annual accounts? 8.17 If our opinion is a disclaimer of opinion or negative opinion, have we adapted wording accordingly in the first and second parts of the report? 8.18 If we issued a rapport de carence/niet bevinding verslag, is it attached to our final auditor s report? 8.19 If our report is modified: do the working papers include adequate documentation and conclusions? does our report clearly identify why we issue a modified opinion and include financial impact consequences, if can be assessed? 8.20 Has an archive copy been prepared for the annual audit report? 8.21 If the company publishes incomplete or summarized financial statements in a brochure, have we checked that: the text mentions that it is a summarized version of the annual accounts and refers to the legal publication of the complete version, 7 / 9

8 the summarized version cannot give a different view of the assets, liabilities and results of the company, the auditor s report is not included in the brochure but that its nature is referred to (Art 105) 8.22 Whether or not we make reference to the report of other auditors in our own report, have we obtained appropriate representations from the other auditors as to their independence. When the other auditor is located in another country, have we obtained confirmation that they have complied with the auditing standards generally accepted in the reporting country? 9 WORKERS COUNCIL YES NO N/A 9.1 If the company has a worker s council, have the required documents been transmitted and reviewed by the auditor? If not, have we sent a letter to management to ask them to do so? And to the workers council to inform them? If they have not reacted, have we adapted the second part of our report accordingly? (See separate check list only available in Dutch) 10 GOING CONCERN YES NO N/A 10.1 Has form 2360 been filled in? 10.2 Have we considered the IRE/IBR checklist for our report and for audit documentation? 10.3 If the company has significant accumulated losses and is in a difficult financial situation, have we asked that a comfort letter be addressed to the Board of Directors of the audited company? In case a comfort letter has been obtained from the mother company, have we verified the financial situation of this mother company? 11 VARIOUS YES NO N/A 11.1 Have all the required Fost Plus Val I Pac BEBAT and/or Recupel reports been issued? Have we taken into account the IRE/IBR communication of April 29, 2004 related to those reports? 11.3 Are all final masters archived on the audit cabinet of the partner, on the P drive? Have we properly followed the New AS/2 archiving policy? - back up of the file on the P: drive (no differences allowed) - upload the back-up file in the archiving tool (no exceptions allowed) - one record for each opinion, (if statutory and interoffice opinions are not dated close to each other, respect the archiving deadline for interoffice opinion by filing the evidence obtained at interoffice reporting date) - one record for each legal entity - within 60 (SEC : 45) days of the audit report date 11.4 Are our audit working papers based on the latest version of the AS/2 packs (01/09)? -US packs: please refer to DeloitteAuditPlus US site 11.5 If listed company, did we refer to VADEMECUM of CBFA 8 / 9

9 OVERALL SIGN OFF Based on my review of the applicable working papers, each of the above matters has been properly addressed and I am satisfied that all matters raised during the course of the audit that could materially impact our auditors' report on the financial statements were satisfactorily resolved and documented in the working papers. Date Engagement Senior Date Engagement Manager Date Engagement Partner 9 / 9

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