Standing orders of the Audit Committee
Version: 4 April 2023
Version: 4 April 2023
These standing orders ('the Standing Orders') were originally adopted by the Supervisory Board ('the Supervisory Board') of the Foundation for Internet Domain Registration in the Netherlands ('the Foundation') on 28 March 2011. The Standing Orders were subsequently amended and the amended version adopted by the Supervisory Board, as provided for in Article 5.2 of the Statement of Principles and Best Practices for the Supervisory Board, pursuant to Article 27 of the Constitution on 4 April 2023.
1.1 Notwithstanding the provisions of Article 5.1 of the Statement of Principles and Best Practices for the Supervisory Board, the Audit Committee shall advise the Supervisory Board regarding matters pertaining to its duties, and make preparations for decision-making by the Supervisory Board regarding relevant matters.
1.2 The Audit Committee's duties shall involve generally supporting the Supervisory Board in the discharge of its supervisory responsibilities pertaining to the integrity and quality of the financial reporting of the Foundation and the associated group companies, in the sense of Article 2:24b of the Dutch Civil Code (referred to below collectively as 'SIDN'), and to the effectiveness of SIDN's internal risk management and control systems. The Audit Committee shall additionally support the Supervisory Board in the discharge of its supervisory responsibilities pertaining to:
a) relations with and implementation of the recommendations of the external auditor;
b) the funding of SIDN;
b) the taxation policy of SIDN.
The Audit Committee shall report its findings to the Supervisory Board. 1.3 More specifically, the Audit Committee shall oversee the following:
a) fulfilment of statutory and other legal requirements and compliance with regulations relating to the assessment, content or presentation of financial information and reports, or audit reports;
b) significant discrepancies between the forecast and actual financial performance;
c) significant changes in the presentation van financial reports;
d) movement in relevant financial indicators and changes in SIDN's presentation of certain financial information;
e) the principles applied by the Executive Board when producing and analysing prognoses or discussing the financial results expected in the future; and
f) important business risks and the recommendations and comments of the external auditor and Chief Financial Officer.
1.4 The Audit Committee shall review financial information and non-financial information relevant to the Committee's responsibilities, prior to its publication in annual and interim reports and other such documents, including statements by SIDN in which SIDN's financial performance is analysed, and shall assess the accuracy and completeness of such information in consultation with the external auditor and SIDN's advisor. The Audit Committee shall report its findings to the Supervisory Board, and shall discuss such reports and information with the Supervisory Board before the documents in question are signed by the Supervisory Board or published by SIDN.
1.5 Where necessary, the Audit Committee shall discuss analyses made by the Executive Board and the external auditor, which deal with important (annual or interim) reporting matters and principles relating to the compilation of financial or other reports.
1.6 The Audit Committee shall assess all matters regarding which generally accepted accounting or auditing principles require the external auditor to report on to the Supervisory Board and the Executive Board.
1.7 In connection with the external audit, and in preparation for definitive decision-making by the Supervisory Board, the Audit Committee shall:
a) assess the scope and methodology proposed by the external auditor for each year's annual audit, including coordination with the Chief Financial Officer;
b) hold discussions with the external auditor regarding the latter's end-of-year report and internal audit report, and advise the Supervisory Board accordingly;
c) hold discussions with the external auditor regarding all essential accounting policies, all alternative ways of approaching financial information discussed with the Chief Financial Officer, the implications of those alternatives, and the approach chosen by the external auditor;
d) undertake all other action pertinent to the relationship between the Foundation and its external auditor required by applicable law; and
e) act as the first point of contact for the external auditor, if the latter discovers any irregularities in the Foundation's financial reporting.
1.8 The Audit Committee shall hold discussions with the Executive Board annually regarding the identification, analysis and management of financial risks associated with SIDN's strategy and activities, as well as regarding the effectiveness of the design and performance of the internal risk management and control systems, and the monitoring of them.
1.9 The Audit Committee shall perform an annual assessment of the effectiveness and outcomes of the procedures used by the Executive Board for investigation and follow-up. The Audit Committee shall receive regular updates from the Executive Board, the external auditor and the Chief Financial Officer.
1.10 In preparation for decision-making by the Supervisory Board, the Audit Committee shall provide the Supervisory Board will all the information and documentation that the Supervisory Board may reasonably require to perform the supervisory duties referred to in this Article, and all information and documentation requested by the Supervisory Board.
1.11 The Supervisory Board delegates to the Audit Committee only those powers required to perform the duties ascribed to the Audit Committee by these Standing Orders or by law, and to perform other duties ascribed to the Audit Committee by the Supervisory Board.
2.1 The Audit Committee shall recommend an external auditor. The Audit Committee shall assess and, where appropriate, recommend replacement of the external auditor.
2.2 The Audit Committee shall ensure that the external auditor confirms their independence in any report they prepare. The confirmation shall state the basis for the assertion of independence, and shall address all matters pertaining to the auditor's independence, including the internal quality control measures put in place by the external auditor, the procedures for tracing and gathering information, the related assessment procedures or findings, and any conflict with any policy that the Foundation may have regarding the independence of the external auditor. The reports prepared by the external auditor shall additionally address any significant issue with an audit performed by the external auditor, which has been brought to light in the preceding five years by the external auditor's internal quality control mechanisms, or by a professional or governmental body, as well as the steps taken to rectify the issue in question.
3.1 The Audit Committee shall have at least two members.
3.2 Notwithstanding the provisions of Article 3.3 of the Statement of Principles and Best Practices for the Supervisory Board, the composition of the Audit Committee shall satisfy the following requirements:
i) at least two members shall have demonstrable knowledge of financial reporting, analysis and control, of whom at least one shall have expertise in the preparation and review of annual financial statements;
ii) the Chair of the Supervisory Board shall not also act as Chair of the Audit Committee.
The Audit Committee shall appoint one of its members to act as Chair, in compliance with Article 3 of these Standing Orders. The Chair shall bear primary responsibility for the performance of the Audit Committee. The Chair shall act as the Audit Committee's spokesperson, and as the principal point of contact for the Supervisory Board.
5.1 The Audit Committee shall meet at least twice a year. If there is reason, one or more additional meetings may be arranged at the request of the Chair of the Audit Committee, the Executive Board and/or the external auditor. Meetings shall ordinarily be held at the Foundation's offices, but may be held elsewhere or by electronic means.
5.2 The Foundation's external auditor may ask the Chair of the Audit Committee for permission to attend an Audit Committee meeting. The Audit Committee shall determine whether and, if so, when members of the Executive Board or administrative personnel from SIDN or the external auditor may attend its meetings. The Chief Financial Officer shall ordinarily attend meetings of the Audit Committee, unless the Audit Committee determines otherwise.
5.3 Audit Committee meetings shall be convened by the Chair of the Audit Committee. Insofar as practicable, a notice of and an agenda for each Audit Committee meeting shall be issued to members at least seven days before the meeting in question.
5.4 Audit Committee meetings shall be minuted. The minutes of a meeting shall ordinarily be adopted at the next meeting. However, if all Audit Committee members agree that the minutes of a meeting are a true record of proceedings, the minutes may be adopted sooner. As evidence of their adoption, the minutes of an Audit Committee meeting shall be signed by the Chair of the Audit Committee. As soon as possible thereafter, copies shall be sent to all Audit Committee members and all Supervisory Board members.
The provisions of the Statement of Principles and Best Practices for the Supervisory Board shall apply equally to (members of) the Audit Committee. If the provisions of the Statement of Principles and Best Practices for the Supervisory Board are found to conflict with the provisions of these Standing Orders, the former shall prevail, unless Dutch law or the Constitution of the Foundation requires otherwise, in which case the latter shall prevail.