About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements to, in particular, accounting for impairments. The Supervisory Board also followed the further development and preparations for the implementation of Basel IV on capital requirements. These reforms will especially impact Dutch banks, including Rabobank, that have a relatively sizable mortgage portfolio. Audit In relation to the supervision on the bank'sfinancial reporting, the following topics were discussed with the internal and external independent auditor. These topics relate to financial, operational, compliance and legal risks that occurred throughout the year and on the basis of various reports discussed with management in the Audit and Risk Committee. As of January 1, 2018, the bank implemented IFRS 9. The Audit Committee last year already evaluated the implementation process for and the impact of this new accounting standard. In 2018, the implementation of the internal processes and key controls for the application of the standard, in particularly the impairment model, the impact on the opening balance sheet of 2018 and the outcome of the three-stage expected credit loss impairment model, including the areas of judgement and estimation in determining the level of loan impairments, were discussed. The Audit Committee evaluated the remedial control activities and impact assessments that were required for loan quality classification and the top level adjustment made to the loan impairments to address model and data limitations. The Audit Committee also assessed the appropriateness of the actions, management is taking to improve the process. The Audit Committee took note of the outcome of the audit procedures performed on the valuation of portfolios of derivatives and financial assets and liabilities that are measured at fair value. The committee considered the reports of the legal and the compliance officer as well as the external audit report to evaluate the adequacy of control effectiveness and the level of provisioning for legal and arbitration proceedings. The quality of the IT general controls has been audited by both internal and external audit and is critical in the period of extensive transformation of the bank. The committee has discussed the outcome oftesting of controls and the actions forfurther structural remediation of certain controls. Annual Report 2018 - Corporate Governance 114

Rabobank Bronnenarchief

Annual Reports Rabobank | 2018 | | pagina 116