8 Independent auditors

8.1 Duration of mandate and term of office

8.1.1 Date of acceptance of existing auditing mandate

Every year, the General Meeting of Shareholders appoints one or more natural or legal entities as the independent auditors in accordance with the legal provisions. The independent auditors examine the company’s adherence to the legal provisions, the statutes and the other regulations.

For corporate governance reasons and in view of the probable introduction of a mandatory rotation of auditors, the Board of Directors proposed to the General Meeting of Shareholders held on 7 May 2021 that the independent auditors be changed from PricewaterhouseCoopers AG, St. Gallen, to KPMG Liechtenstein AG, Vaduz. PricewaterhouseCoopers AG, St. Gallen, had excercised this function for more than twenty years.

The General Meeting approved the proposal of the Board of Directors and appointed KPMG Liechtenstein AG as the independent auditors, pursuant to person and company law and banking law, for a period of one year.

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

Philipp Rickert has been the responsible auditor in charge since 2021. The auditor in charge changes every seven years.

8.2 Audit fees

In the 2021 business year, KPMG invoiced the companies of the LLB Group for CHF thousands CHF 1’027 (2020: CHF thousands 1’301) in respect of audit fees. These fees include the work carried out as required by the respective regulatory authorities. In addition, in the 2021 business year, KPMG received CHF thousands 82 (2020: CHF thousands 233) for services in connection with our own investment funds.

The Group Audit Committee oversees the fees paid to KPMG for their services.

8.3 Additional fees

For other services, KPMG invoiced the LLB Group companies CHF thousands 268 (2020: CHF thousands 250) in 2021.

Audit fees and additional fees

8.4 Information instruments of the external auditors

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

• Discussing and taking note of the risk analysis made by the external auditors, the auditing strategy derived from it and the respective risk-oriented auditing plan;
• The discussion of major problems identified during the auditing process with the external auditors;
• the monitoring of the implementation of recommendations put forward by the external auditors and Group Internal Audit to eliminate problems;
• The evaluation of the audit reports submitted by the external audit and Group Internal Audit to the Board of Directors;
• The assessment of the qualification, quality, independence, objectivity and performance of the external and Group Internal Audit;
• The discussion of the annual activity report and annual planning including risk analysis of Group Internal Audit with assessment of whether this business unit has adequate resources and competences and submission of a proposal for approval to the Board of Directors;
• 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 evaluation of the collaboration between the external auditors and Group Internal Audit;
• 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 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 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 to the Board of Directors once a year. In addition, the responsible auditor in charge of the external auditors presents a report at one meeting of the Group Audit Committee. All reports from the internal and external auditors concerning all Group companies are dealt with by the Group Audit 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 Committee. The Head of Group Internal Audit is responsible for providing the relevant information and reports directly to the Group Audit Committee. He is appointed by the Board of Directors and is subordinate to the Board’s Chairman.
Representatives of the external auditors participated in six meetings of the Group Audit Committee but did not attend any meetings of the Board of Directors during the report period. The Head of Group Internal Audit attended all the meetings of the Group Audit Committee and all the meetings of the Board of Directors except one. 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 with budgeted fees.

The Group Audit 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 KPMG Liechtenstein AG and an assessment of their conduct. The cost planning and its observance are also reviewed and discussed annually. Furthermore, the Group Audit Committee periodically 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 Committee bases its assessment of the placing of orders for additional services on the periodic reports it receives from Group Internal Audit regarding reliability, scope and relation to audit fees.

The Group Audit 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 Committee.