The Audit Committee
The Audit Committee has three members elected by the Board of Directors from among its members. One member is designated as chairman. Two members qualify as independent and have been designated as financial experts under US Securities and Exchange Commission (the "SEC") rules. Under the Danish Act on Approved Auditors and Audit Firms, two members qualify as financial experts and as independent.
In 2012, the Audit Committee held four meetings and all members participated in all meetings. The CFO also attended all meetings.
The Board has in 2013 elected the following to the Audit Committee:
- Hannu Ryöppönen (re-elected to the Audit Committee, chairman since March 2012, member since March 2009)
- Liz Hewitt ( re-elected to the Audit Committee, member since 2012)
- Stig Strøbæk (elected as new member of the Audit Committee)
Roles and responsibilities
The Audit Committee assists the Board with oversight of a) the external auditor, b) the internal audit function, c) the procedure for handling complaints regarding accounting, internal accounting controls, auditing or financial reporting matters and business ethics matters ('whistleblower function'), d) financial (including social and environmental) reporting, e) business ethics compliance, f) post-completion review's and post investment reviews of fixed asset and IT investments previously approved by the Board, g) long-term incentive programmes, and h) other tasks on an ad hoc basis as specifically decided by the Board.
Under Danish law, the statutory external auditor is elected by the shareholders. All shareholders as well as the Board have the right to propose candidates for election. The Audit Committee recommends to the Board the statutory external auditor to be nominated by the Board and elected by the shareholders at the Annual General Meeting.
Concerns of possible business ethics misconduct, financial fraud, breaches of the Novo Nordisk Way or quality misconduct may be raised anonymously by employees and other stakeholders through the global Compliance Hotline. Complaints made through the Compliance Hotline are received by the Audit Committee secretariat. Complaint handling is monitored by the Board of Directors or the Audit Committee, depending on the nature of the complaint. As such the hotline works independently of Executive Management. The Compliance Hotline is available by telephone and online in nine languages.
Public Audit Committee Reporting
The Audit Committee works according to an Annual Work Plan with fixed agenda items following key events of the annual financial reporting cycle. In addition, the Audit Committee request topics to be discussed on their meetings from time to time.
For the financial reporting year 2012 the Audit Committee held four meetings (three meetings hosted in Denmark and one in China) and discussed the following matters:
- The Audit Committee discussed with the CFO, Head of Finance, Head of Business Assurance, the General Counsel, Head of Group Internal Audit and the external auditors:
- material and relevant new accounting pronouncement, implementation of such, review of key accounting policies and the accounting for certain transactions and activities
- accounting for significant legal and tax issues
- critical accounting estimates
- transactions with related parties, and
- the scope of internal controls over financial reporting in relation to the requirements in the Sarbanes Oxley Act and Danish legislation.
- The Audit Committee
- evaluated the performance and the independence of the external auditor
- recommended the election of the external auditor to the Board of Directors and Annual General Meeting, and
- reviewed the performance and organisation of the internal audit function including a review of the charter for Group Internal Audit
- The Audit Committee reviewed
- the financial statement releases for the full year and interim financial reports,
- the Annual Report including the statements of financial, social and environmental performance, and the Form-20 F.
- The Head of Group Internal Audit and the external auditor presented the audit planning and audit resources. In addition, they presented the annual conclusion and results of audit activities conducted each quarter for review including the conclusion of the audit of internal controls over financial reporting. Furthermore, the external auditor presented its annual long form report, effectiveness of the Audit Committee’s oversight over financial reporting and internal controls, and annual Audit Committee report.
- The Audit Committee performed a review of:
- the quarterly risk management reporting
- the risk reporting process
- the calculation of the long term incentive Programme for management
- the Groups Treasury policy
- the global finance and assurance organisation
- the status on IT security
- the model account for the statements of the financial, social and environmental performance.
- The Audit Committee performed a review of established Business Ethics activities including a review of:
- reporting of NN compliance with the three year Deferred Prosecution Agreement entered into with the US Department of Justice and the US Securities and Exchange Commission as of 11 May 2009 (ended June 2012)
- the Business Ethics strategy, the Compliance Programme and the compliance organisation including initiatives taken in relation to the Corporate Integrity Agreement entered into with the US Office of Inspector General and Novo Nordisk Inc. as of May 2011
- Compliance reporting from the Business Ethics Compliance officer and the US compliance officer.
- The Audit Committee received updates on issues reported via the Compliance Hotline and the Audit Committee agreed on the performed investigations, conclusions and sanctions reached. The Audit Committee reviewed and approved the pre-approval procedure for audit, non-audit and tax services to external auditors, reviewed the given pre-approvals for the current year and pre-approved the level for the next financial year.
- The Audit Committee conducted a self-assessment including a review of the Audit Committee charter.
- The Audit Committee performed a fraud risk assessment in Novo Nordisk A/S.
- The Audit Committee performed post completion reviews and post investment reviews of finalized fixed asset investments approved by the Board of Directors.
- The Audit Committee Chairman conducted interviews with candidates when hiring the new Head of Group Internal Audit.
- The Audit Committee conducted a private meeting with each of the CEO, CFO, Head of Finance, Head of Business Assurance, General Counsel, Head of Group Internal Audit, Chief of Staff and with the external auditors.