Global Corporate Governance Guidelines Audit and Risk Management Audit AllianzGI expects companies to disclose information on the fees paid to the auditor and AllianzGI sees high quality external audit, robust provide explanation of any non-audit services oversight of financial controls and integrity of received from the auditor. We believe that high- financial statements as fundamental to the levels of non-audit fees can undermine the healthy functioning of financial markets and the auditor’s independence and can affect the success of our investments. As a result, we may quality of audit due to potential conflicts of withdraw our support from the company’s board interests arising when the audited company has and management if there are concerns over the acted on advice provided by the auditor’s own quality and integrity of financial statements and firm. Therefore, we expect companies to provide of the audit process, the independence of a clear breakdown of both audit and non-audit auditors or supervisory bodies, the integrity of the services and fees, and favour restrictions on the auditor selection process, or the robustness of non-audit work an external auditor can internal controls. undertake for its audit clients. We may vote against the re-election of the auditor or Audit We expect all companies to provide robust Committee members where non-audit fees disclosures in relation to the resolutions seeking exceed 50% of audit fees on a recurring basis. election or ratification of the external auditor. In AllianzGI recommends that companies with particular, we expect an explanation of any recurring needs for certain non-audit services changes in external audit arrangements and a consider seeking advice outside of their audit report on the selection process of a new external firms. auditor. Any resignation of the auditor before the end of their contract should be disclosed along AllianzGI considers it prudent for companies to with the reasons given by the auditor. tender the external audit mandate at least every 10 years and to change the auditor after a AllianzGI places high importance on the maximum of 20 years, unless there are stricter independence of the external auditor, objectivity local laws, to ensure auditor independence and of the audit process and professional scepticism benefit from a fresh perspective that a new applied by the auditor. We expect the Audit auditor brings. There is also mounting evidence Committee to have a direct ongoing dialogue from companies that have rotated their external with the external auditor. auditors in the past five years of an improvement in the quality of audits both before and after the AllianzGI does not support proposals that limit transition of the auditor. auditor liabilities as they could potentially reduce shareholders’ ability to recover any losses incurred. 10
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