Inhoudsopgave Voorwoord Bestuursverslag Corporate governance Consolidated Financial Statements Company Financial Statements Pillar 3
Our audit approach
Overview and context of the 2016 audit
Rabobank is an international financial services provider
operating on the basis of cooperative principles. Rabobank
operates globally in 40 countries with focus on banking in
the Netherlands and food and agri financing in the Netherlands
and abroad. Its operations include domestic retail banking,
wholesale banking and international rural and retail
banking, leasing and real estate. Rabobank is in the midst of
a transformation. During 2016 Rabobank started executing its
'Strategic Framework 2016-2020'.The strategic objectives that
impact the financial statements directly are focussed on balance
sheet reduction and further improving financial performance.
In particular, we looked at where the Executive Board made
subjectivejudgements, for example in respect of significant
accounting estimates that involved making assumptions
and considering future events that are inherently uncertain.
In paragraph 'Judgements and estimates' in note 2.1 to the
financial statements the company describes the areas of
judgment in applying accounting policies and the key sources
of estimation uncertainty. Given the significant estimation
uncertainty in the impairment of loans and advances to
customers, valuation of financial instruments, litigation,
regulatory and client care, valuation of equity investments
and restructuring related provisions we considered these to
be key audit matters as set out in the key audit matter section
of this report. Furthermore, we identified hedge accounting
and asset and disposal portfolios as key audit matter because
they require more complex judgements in the application of
International Financial Reporting Standards adopted by the
European Union (EU-IFRS). Lastly the continuity and reliability
of information processing was identified as key audit matter
since this is significant to the Bank's operational, regulatory and
financial reporting processes.
The group comprises of multiple components and therefore
we considered our group audit scope and approach as set out
in the scope of our group audit section. We designed our audit
by determining materiality and assessing the risks of material
misstatement in the financial statement.
As in all of our audits, we also addressed the risk of
management override of internal controls, including evaluating
whether there was evidence of bias by senior management that
may represent a risk of material misstatement due to fraud.
We ensured that the audit teams, both at group and at
component levels, collectively contain the appropriate skills
and competences which are needed forthe audit of a bank.
We therefore included specialists in the areas of IT, tax, real
estate, hedge accounting, financial instruments, employee
benefits and valuation in our team.
PwC's first year as auditor of Rabobank
Prior to becoming the Bank's auditor, we developed
a comprehensive transition plan commencing in July 2015
to understand the connection between the Bank's strategy,
the related business risks and the way they impact the
Bank's financial reporting and internal controls framework.
Our transition plan included amongst others:
Close interaction with the previous auditor, including
a process of file reviews and formal hand over procedures as
prescribed by our professional standards;
Active knowledge sharing and discussions with the Finance,
Risk and Internal Audit functions ('Audit Rabobank') to
understand their perspectives on the business and audit risks;
Attendance as observers of a number of meetings between
the previous auditors with senior management and the
Audit Committee during the 2015 year-end financial closing
process;
Evaluation of key accounting positions and audit matters
from prior years.
Performed walkthrough procedures, to understand the
design effectiveness of processes and internal controls, in
the first half year of 2016 to support our knowledge and
understanding at the early stage of our audit; and
Introduction meetings with the European Central Bank as key
regulator of the Bank.
We discussed and agreed our audit plan with the Bank's Audit
Committee in April 2016 and we reported status, progress and
key findings from our half year review and audit process during
the year.
Materiality
Overall materiality: EUR 135 million which
represents 5% of profit before tax.
Audit scope
We conducted audit work in 26 components.
Site visits by the Group Engagement
Team were carried out to 5 countries - the
Netherlands, USA, the UK, Australia and Brazil.
Audit coverage: 97% of total assets, 94% of
profit before tax and 94% of revenues.
Key audit matters
Impairment of loans and advances to
customers
Valuation of financial instruments
Hedge accounting
Valuation of equity investments
Litigation, regulatory and client care
Audit Implications of Rabobank's strategy
execution
Reliability and continuity of the information
technology
Muleriulily
Audit svtipc
246 Rabobank Jaarverslag 2016