pwc
About this Chairman's Corporate Consolidated Financial Company Financial
Report Foreword Management Report Appendices Governance Statements Statements
Key audit matter
Management judgement
The recognition and measurement of provisions and
the disclosure of contingent liabilities requires
considerable management judgement around future
outcome of legal, regulatory or client care disputes,
including the provision for the execution of the
Uniform Recovery Framework for SME Interest Rate
Derivatives. As at 31 December 2018 the SME
provision amounted to EUR 316 million.
Given the inherent uncertainty and the judgemental
nature of contingent liabilities and provisions, we
determined the provisions and disclosures on
contingent liabilities to be of particular importance to
our audit, since this area is subject to a higher risk of
material misstatement due to error or fraud. Therefore
determined this to be a key audit matter in our audit.
Our audit work and observations
We held regular bilateral meetings with the Chairs of the
Supervisory Board, Audit committee and Risk
committee.
We inquired with internal legal counsel to understand
the risk position of new and existing regulatory matters
and reviewed audit reports and assessments of the
internal audit department relating to compliance with
laws and regulations.
In general we noticed that compliance, related matters
and improvement of procedures and tooling around
compliance receive adequate attention of management.
More specifically we noticed significant management
attention on specific programs in place that aim to
improve the quality of its customer files and
transactions monitoring throughout the entire network.
Also following regulatory enforcement actions related to
AML and CDD in the United States and the Netherlands.
We obtained an understanding of the initiatives which
are part of this program through inquiry of the program
owners, Managing Board, Audit committee, reading
correspondence with AFM, DNB, Federal Reserve and
ECB related to these matters and discussed the
outcomes of audits performed by Audit Rabobank with
respect AML and CDD.
Based on the aforementioned we noticed that funds and
resources were made available for this change program
and that the program receives significant attention of
management.
Substantive audit procedures
We obtained legal letters from the Bank's external
lawyers to verify completeness of he identified
exposures. We assessed customer complaints received
and the analysis prepared by management of these
complaints. We used this analysis to understand
whether there were indicators of more systematic
exposures being present for which provisions or
disclosures should be made in the financial statements.
These procedures did not result in the identification of
any new provisions or systematic exposures.
The majority of our detailed audit work was on the
provision for SME interest rate derivatives.
Coöperatieve Rabobank UA. - EH44X5NCPJUJ-1288894667-935
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