8 Independent auditors

8.1 Duration of mandate and term of office of the auditor in charge

8.1.1 Date of acceptance of existing auditing mandate

PricewaterhouseCoopers AG, St. Gallen, has served as the independent auditors of the Liechtensteinische Landesbank according to company and banking law since 1998. The auditing mandate was taken over in 1998 from Revisuisse Price Waterhouse AG, St. Gallen, and its predecessor Revisa Treuhand AG, St. Gallen. Pursuant to person and company law and banking law, the independent auditors are appointed by the General Meeting of Shareholders at the proposal of the Board of Directors for the period of one year.

8.1.2 Term of office of the auditor in charge of the current auditing mandate

Roman Berlinger has been the responsible auditor in charge since 2011. The auditor in charge changes every seven years.

8.2 Audit fees

In the 2012 business year, PricewaterhouseCoopers AG invoiced the companies of the LLB Group for CHF thousands 2'689 (2011: CHF thousands 2'743) in respect of audit fees. These fees include the work carried out by the auditors as required by the regulatory authorities. The Group Audit & Risk Committee oversees the fees paid to PricewaterhouseCoopers AG for their services.

8.3 Additional fees

For other services, PricewaterhouseCoopers AG invoiced the companies of the LLB Group for CHF 1'034 million (2011: CHF 525 million).

Audit fees and additional fees

(XLS:)

 

 

 

in CHF thousands

2012

2011

Audit fees

2'689

2'743

Additional fees

1'034

525

Corporate Finance

768

67

International accounting

9

55

Taxation advice

65

110

Regulatory issues and questions

55

67

Project consulting IT platform

0

62

Legal and other advice

137

164

8.4 Information instruments of the external auditors

The Group Audit & Risk Committee fulfils a supervisory, control and monitoring function, which also extends to the external auditors. It is responsible, among other tasks, for:

  • taking note of and discussing the risk analysis made by the external auditors, the auditing strategy derived from it and the respective risk-oriented auditing plan;
  • the critical analysis of the audit reports submitted by the external audit and Group Internal Audit to the Board of Directors;
  • the discussion of major problems identified during the auditing process with the external auditors;
  • the monitoring and implementation of recommendations put forward by the external auditors and Group Internal Audit to eliminate weak points and deficiencies;
  • the assessment of the quality of the external and internal audit functions (external and internal auditors according to banking law and person and company law) as well as their cooperation;
  • the discussion of the annual activity report and the annual audit plan of Group Internal Audit, including the evaluation of whether this function has adequate resources and competences, as well as the approval of proposals to the Board of Directors;
  • the assessment of the qualification, independence, objectivity and performance of the external auditors and Group Internal Audit;
  • the examination of the compatibility of external auditors' auditing activities with possible consulting mandates, as well as the evaluation and discussion of their professional fees;
  • the submission of a proposal to the Board of Directors for the attention of the General Meeting regarding the appointment or dismissal of the external auditors (appointed according to banking law and person and company law). The Group Audit & Risk Committee is responsible for defining the procedure to appoint new external auditors.

The external auditors perform their work in accordance with the legal provisions, and according to the principles of the profession in the respective country of domicile of the Group company, as well as according to the «International Standards on Auditing». The independent auditors regularly report to the Board of Directors, the Group Audit & Risk Committee and the Group Executive Board about their findings and submit suggestions for improvements to them. The most important report is the audit report on the LLB Group required by banking law. This summarized report is submitted in writing once a year to the Board of Directors. In addition, the responsible auditor in charge of the external auditors presents a report at one meeting of the Group Audit & Risk Committee. All reports from the internal and external auditors concerning all Group companies are submitted to the Group Audit & Risk Committee.

Important findings in the reports of the internal and external auditors since the last meeting and all reports concerning the Group companies are addressed at the next meeting of the Group Audit & Risk Committee. The Head of Group Internal Audit is responsible for providing the relevant information and reports directly to the Group Audit & Risk Committee. He is appointed by the Board of Directors and is subordinate to the Board's Chairman.

Representatives of the external auditors participated in two meetings of the Group Audit & Risk Committee but did not attend any meetings of the Board of Directors during the report period. The Head of Group Internal Audit attended all of the meetings of the Group Audit & Risk Committee and all but two extraordinary meetings of the Board of Directors. The external auditors submit periodic reports dealing with the audit planning based on risk analysis, the current audit reporting, the annual activity report as well as on a comparison of actual to budgeted fees.

The Group Audit & Risk Committee annually evaluates the performance of the external and internal auditors in their absence. The following criteria are applied in assessing the performance of the external auditors and their professional fees (auditing and additional fees): comparison of fees and budgeted fees as well as the previous year's fees, feedback from the departments audited, quality of the auditors' findings, structured assessment of the auditors' expertise. The independence of the external auditors is evaluated on the basis of the information concerning independence provided in the annual report of PricewaterhouseCoopers AG and an assessment of their conduct. The cost planning and its observance are also reviewed and discussed annually. Moreover, the Group Audit & Risk Committee annually reviews alternatives and submits a proposal to the full Board of Directors for the attention of the General Meeting regarding the appointment of the external Group auditors.

Additional orders are placed on the basis of offers from competitors taking into consideration the level of expertise. The Group Audit & Risk Committee bases its assessment of the placing of orders for additional services on the periodic reports it receives from Group Internal Audit regarding the reliability, scope and relationship to audit fees.

The Group Audit & Risk Committee reports to the full Board of Directors once a year concerning the activities of the external auditors and the assessment of their performance.

The external auditors have direct access to the Board of Directors at all times. They hold regular discussions with the Chairman of the Board of Directors and the Chairman of the Group Audit & Risk Committee. Topics in 2012 included the:

  • analysis and evaluation of risks;
  • auditing strategy and auditing plan;
  • implementation level of auditing recommendations;
  • discussion of important audit findings;
  • areas of judgement in the annual financial statement;
  • developments in accounting;
  • determination of the auditing fee;
  • evaluation of the work of the independent auditors;
  • cooperation between the internal and external audit.
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