amend the Articles of Association, to appoint members of the Supervisory Board and to approve and
endorse management and supervision. In addition, account is rendered to the members in respect of
the Bank's management and supervision.
Partnership model
In the Partnership model, the Board of each local Rabobank consists of persons elected by the members
from their ranks, plus a managing director who is appointed by the Supervisory Board. The managing
director is primarily concerned with the day-to-day management of the Bank's operations. The Supervisory
Board supervises the Board. In addition, there is a General Meeting. An increasing number of banks using
the Partnership model have established a Member Council as well. The Member Council is a delegation
of all members elected by the members from their ranks. The Member Council assumes the bulk of the
powers of the General Meeting and promotes and structures member control and engagement.
Executive model
In the Executive model, each local Rabobank has a Board of Directors comprising several persons
appointed by the Supervisory Board, which operates under the supervision of the Supervisory Board.
In this model, no Board members are elected by the members from their ranks, as is the case in the
Partnership model. Local Rabobanks using the Executive Model must institute a Member Council in
order to firmly and permanently embed member influence and control in the structure. The General
Meeting continues to exist, but decides only on major issues that impact the local Rabobank's
continued existence.
Controls over financial reporting
Rabobank Group constantly seeks to improve its corporate governance and overall internal controls,
for example, by endorsing the principles of the Dutch Corporate Governance Code (Tabaksblat Code).
Rabobank Group seeks an open culture and transparent accountability in respect of policies and
supervision, and to remain in line with the leading risk management practices in the world.The market
demands heightened awareness of world-wide best practices in governance and control, and Rabobank
Group proudly embraces ethical business practices, transparency and accountability in its operations.
In this spirit, Rabobank Group voluntarily assessed the internal controls over financial reporting in a
manner similar to what US-registered companies have done pursuant to Sarbanes-Oxley 404, even
though Rabobank Group is not a registrant with the United States Securities and Exchange Commission
and, thus, is not subject to the Sarbanes-Oxley Act or related regulations and oversight.
Rabobank Group believes that the review of its internal controls over financial reporting has increased
the effectiveness of those controls, including our ability to identify and to remediate any deficiencies at
an earlier stage. This results in greater transparency for all stakeholders of the quality of Rabobank
Group's financial reporting process. As a result of our review, Rabobank Group has identified areas in
which specific business processes may be improved, simplified and standardised.
Internal controls
Rabobank Group has established and maintains a comprehensive system of internal controls designed
to ensure that transactions are executed as authorised, financial reporting is accurate and reliable, and
assets are safeguarded.
Rabobank Group has implemented a process whereby finance and business executives throughout
the Group assess and attest to the accuracy of financial information as well as the adequacy and
effectiveness of internal control over financial reporting. Rabobank Group has adopted policies and
procedures that:
- pertain to the maintenance of records that in reasonable detail accurately and fairly reflect
transactions and dispositions of assets;
- provide reasonable assurance that transactions are recorded as necessary to permit the preparation of
financial statements in accordance with International Financial Reporting Standards as adopted by the
European Union, and that receipts and expenditures are made only in accordance with authorisations
of management;
- provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition,
use or disposition of assets that could have a material effect on the financial statements.
The internal control framework for the organisation and control of Rabobank Group's activities is based
on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). As set out in the report included in the financial statements, the Executive Board concluded that
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Control aspects
