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Audit partner rotation

EY supports mandatory audit partner rotation to help strengthen auditor independence. We comply with the audit partner rotation requirements of the code of the International Ethics Standards Board for Accountants (IESBA), the Dutch Wet Toezicht Accountantsorganisaties, the Dutch Besluit Toezicht Accountantsorganisaties, the Dutch Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO), as well as the U.S. Securities and Exchange Commission (SEC), where required. Our firm supports audit partner rotation because it provides a fresh perspective and promotes independence from company management while retaining expertise and knowledge of the business. Audit partner rotation, combined with independence requirements, enhanced systems of internal quality controls and independent audit oversight, helps strengthen independence and objectivity and are important safeguards of audit quality.

We employ tools to track partner rotation that enable effective monitoring of compliance with requirements.
We have also implemented a process for partner rotation planning and decision-making that involves consultation with, and approvals by, our Professional Practice and Independence professionals.

ViO partner rotation requirements
The Dutch Regulation regarding the Independence of Auditors in the case of Assurance engagements (Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten, ViO) has been in effect since 1 January 2014. The ViO stipulates that a long-term association of senior audit team members with a particular engagement – seven years or more – may pose a threat to independence.

Under this framework, we continuously monitor and assess situations with a potential impact on independence resulting from long-term association with a client at our audit (WeCo and non-WeCo) clients and other assurance engagements.

In response to the introduction of the ViO, we have developed a policy for team rotation and implemented tooling to track and monitor partner and team involvement per client. As from this calendar year 2015, in principle none of our partners will be involved in an audit engagement for a continuous period of more than seven years, unless in the case of specific circum¬stances such as it being the final year of our involvement. With the implementation of the EU Audit Reform rules, we are currently amending our policies and processes for engagements with financial years starting after 17 June 2016.

Other ViO requirements
The ViO also resulted in amendments to our policies on topics such as non-audit services in combination with assurance engagements, fees, business relationships and financial interests. New policies to adapt to the ViO have also been implemented with regard to hospitality and social events. For more information, see the Independence section of this Transparency Report.

The text of the ViO is available on the NBA (Netherlands Institute of Chartered Accountants) website (www.nba.nl).