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Report of the Supervisory Board

We were appointed to the Supervisory Board of Ernst & Young Nederland LLP (EY NL) on July 1, 2015. This first report provides an insight into the issues that occupied our Board in its capacity as supervisor of and advisor to the Board of Directors. Our activities during the year were guided by the principles of effective supervision, good governance and good operational management in the public interest.

Duties and powers
The Supervisory Board has the general duty and corresponding powers to:
  1. supervise the Board of Directors of EY NL, the firm’s overall performance and that of the professional practices associated with it in the Netherlands;
  2. supervise the policies of Ernst & Young Accountants NL LLP Executive Board, the overall performance of EYA and that of its audit practice;
  3. supervise the Board of Directors insofar as the supervision relates to the policy and overall performance of professional practices other than EYA insofar as such policies and overall performance influence the quality of audits, the way in which the audit organization serves the public interest and the procedures to comply with the independence regulations and other professional codes of conduct (including codes of ethics) within EY NL.
Its roles and responsibilities are laid down in the Charter of the Supervisory Board (“Reglement Raad van Commissarissen”) as adopted on June 27, 2016.

The Supervisory Board’s mandate, composition and procedures are based on the Dutch Corporate Governance Code (DCGC), with some differences between EY NL’s and the DCGC’s envisaged target group on account of the specific legal and organizational aspects of EY NL.

The personal and financial independence of the members of the Supervisory Board are monitored by the Independence Officer of EY NL.

Activities in 2015/2016
The members of the Supervisory Board participated in an introduction program following their appointment. The program covered, among other things, general financial and legal matters, financial reporting, quality, protection of the public interest and independence. The Supervisory Board also adopted the Charter laying down its duties and powers. The Charter can be read at http://www.ey.com/NL/nl/About-us/EY-raad-van-commissarissen

During its first year, the Supervisory Board held ten meetings (including four meetings by conference call). Besides these meetings, most of which were attended by all members of the Supervisory Board, several additional meetings were to discuss the onboarding program and meetings with internal and external stakeholders.

To fulfill its responsibilities, the Supervisory Board discussed matters relating to the protection of the public interest, audit quality control and the results of inspections. More information on issues relating specifically to the audit organization is provided in the Report of the Supervisory Board included in the Transparency Report of Ernst & Young Accountants LLP.

Other topics considered during the meetings included:
  • A norm for the time spent by directors and policy makers on management activities and audit activities, respectively;
  • The regulations on private investments;
  • The profiles of the members of the Board of Directors and the succession of the Country Managing Partner Marcel van Loo;
  • KPIs and the remuneration policy for the Board of Directors and the individual members of the Board of Directors of EY NL. Each year, the Supervisory Board will evaluate the Board of Directors’ performance in the previous year and set its remuneration for the current year;
  • Appointments of partners in the audit practice;
  • Proposals to amend the Fundamental Rules and Regulations of the Partnership;
  • The claw-back regulation for the partners of Ernst & Young Accountants LLP, and the related amendment of the Fundamental Rules and Regulations of EY NL.
The Supervisory Board also discussed: strategy, the design and operation of internal risk management and control systems, acquisitions, including the approval of the acquisition of OC&C Strategy Consultants Benelux, and the findings of the branding survey and the labor market ratings.

No transactions or situations arose during the year that involved conflicts of interest.

In our opinion, the Board of Directors has taken good initiatives to improve quality and has made progress disciplining the internal organization and the decision-making process.

The Supervisory Board discussed and adopted its profile and composition and the supervision themes for the coming year and the resultant agenda for the year at a meeting not attended by the Board of Directors.

Financial Statements
The 2015/2016 Integrated Annual Review and Financial Statements of EY NL have been prepared by the Board of Directors. The Financial Statements of EY NL have been audited by BDO LLP, the external auditors. Its findings were discussed with the Supervisory Board in the presence of the Board of Directors. The Supervisory Board has approved the Financial Statements of EY NL.

Composition and independence of the Supervisory Board
The Supervisory Board is made up of a diverse team of members selected from many backgrounds. On June 30, 2016 the Supervisory Board consisted of three external members and one non-independent member. The members were appointed as of July 1, 2015 for a period of four years. The retirement roster can lead to earlier reappointment.

Pauline van der Meer Mohr, Chair (b. 1960)
Nationality: Dutch
Appointment: July 1, 2015 as independent member
Previous positions: President Executive Board, Erasmus University, various management positions at Shell, TNT and ABN AMRO
Other supervisory directorships: member of the Supervisory Boards of ASML and DSM, non-executive director of HSBC Holdings and Chair of the Supervisory Board of Nederlands Dans Theater.

Steven van Eijck, Vice-chair (b. 1959)
Nationality: Dutch
Appointment: July 1, 2015 as independent member
Previous positions: Chair of the Public Interest Committee of Ernst & Young Accountants, Chair of the Dutch Association of General Practitioners, State Secretary for Finance
Other positions: Chair of Major Alliance, President of the RAI Association for the Mobility Industry and of Stichting Verantwoord Alcoholgebruik (STIVA).

Monique Maarsen (b. 1968)
Nationality: Dutch Appointment: July 1, 2015 as independent member
Position: Managing Director and owner of real estate investment company the Maarsen Groep
Previous positions: various management positions at Nestlé International and DTZ Debenham Thorpe. Other supervisory directorships: Chair of the Supervisory Committee of Stichting KiKa
Other positions: commercial and social advisory roles at Amsterdam and Rotterdam municipalities; the TheNextWomen platform and TEDx Amsterdam Women 2016.

Jean-Yves Jégourel (b. 1961)
Nationality: French
Appointment: July 1, 2015 as non-independent member
Position: Member of EY Executive for Europe, Middle East, India and
Africa since July 2014, leading the Assurance practice; EY partner since 1995
Previous positions: Vice-chair of Quality and Risk Management for EY in the United States.

Supervisory Board vacancy
There is a vacancy for a fifth member of the Supervisory Board. The Supervisory Board will seek to fill the vacancy on the basis of the profile adopted on June 27, and intends to add a sixth member during the remainder of 2016/2017.

Evaluation of the performance of the Supervisory Board and the Board of Directors
The Supervisory Board has evaluated its performance in the past fiscal year and adopted supervision themes for the coming year.

The Supervisory Board will evaluate the performance of the Board of Directors and of its individual members in October 2016.

In conclusion
I was a challenging first year. The Supervisory Board looks forward to contributing to EY NL’s ambition of building a better working world. We would like to like to express our sincere appreciation for the dedication and commitment of the Board of Directors, partners and employees of EY in the Netherlands.

Rotterdam, September 28, 2016

On behalf of the Supervisory Board,

Pauline van der Meer Mohr, Chair