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“ Breach [WE] faces double inquiry by reporting watchdog” RULES REGULATIONS EIP/Audit EP Evaluation Local audit committee Report Group audit EP Group audit committee [WE] faces double inquiry by reporting watchdog”

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Not just within the EU... EU PIEs Estimated >30,000 PIEs in the EU EU entities listed on an EU regulated market EU PIEs Certain credit & insurance institutions (including non-EU headquartered) Entities designated by member states as PIEs Estimated >30,000 PIEs in the EU Cost in excess of €16bn The regulation will impact all entities governed by the law of a Member State, that have listed securities in the EU; this would include the PIE subsidiaries of non-EU Groups. Not just within the EU...

Mandatory firm rotation Provisions Transition NAS restrictions Start date What? […] […]% cap What does it mean...?

Country interpretation PIE definition Lorem ipsum dolor sit amet, consectetuer adipiscing elit Clarity Lorem ipsum dolor sit amet, consectetuer adipiscing elit Country interpretation Lorem ipsum dolor sit amet, consectetuer adipiscing elit

Extended to 24 years for joint audits (Note 2) Extended to 20 years where a public tendering process is conducted 10 years mandatory firm rotation required for all PIEs (Note 1) TEXT PLACE-HOLDER Transition measures for […] Tenure <11 years […] after 12 years from date of entry into force Tenure 11 – 20 years […] after 9 years from date of entry into force Tenure >20 years […] after 6 years from date of entry into force

Prohibitions extend beyond […] Additional prohibitions for: Tax Services linked to financing, capital structure and allocation, and investment strategy Plus services that involve playing any part in management or decision making process Member state option to allow certain tax and services All fees require audit committee approval

Expected start date for […]: 2 years after entry of entry into force – mid 2016 ‘Clean period’ requirements The statutory auditor is not permitted to provide prohibited NAS within the […] in: period between beginning of the period audited and the issuing of the audit report; and the financial year immediately preceding in relation to services relating to ‘designing and implementing internal control … financial information technology systems’. Any remaining permissible […] capped at 70% of average fees paid in the last three consecutive years for the statutory audit

Principles of independence are complied with Member states may allow certain tax and valuation services provided: No direct or have immaterial effect separately or in aggregate on the audited financial statements Likely Impact: Materiality exemption may be difficult to apply. A patchwork approach across the […]. Estimation of the effect is comprehensively documented and explained in additional report to the audit committee Principles of independence are complied with

Evaluate potential conflicts “ 1 July 2014 Network firm interests Deloitte counts cost of ignoring conflicts of interest at Rover” Reasonable and informed third party Safeguards “ Disclosure/consent Not adversarial Chinese Walls not the best solution for KPMG” Too confidential?

“KPMG to pay $8.2 million to settle SEC charges over auditor independence” AICPA affiliate rules Other (US to provide) Definition of control

Since Dublin... Breaches Conflicts AICPA affiliate rules Global independence training [KICS guidance] EIP induction Independence Clearance Process – Phase 1 Tax and legal guidance Advisory illustrative scope Threats and safeguards template Marketing and sponsorships Alert – February 2014 Alert - ?April 2014 Alert - ?March 2014 Announcement - ?March 2014 Announcement Nov 2013 Announcement Sept 2013 Alert Aug 2013

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