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Combined Independent Auditor’s and Assurance Report

General

The purpose of Triodos Bank N.V. (‘the Bank’), as disclosed in the annual report on page 11, is to render sustainable banking services to its customers. This includes financing of companies, institutions and projects that adds cultural value and benefits people and the environment, with the support of depositors and investors who want to encourage socially responsible business and a sustainable society. This purpose makes that customers and other stakeholders are interested in more than just the financial performance of the Bank.

Our assurance procedures therefore consisted of an audit of the annual accounts (‘the financial statements’) of Triodos Bank N.V. and limited assurance procedures (review procedures) over the sustainability information in the Bank’s Annual Report

Our scope can be summarised as follows:

Independent auditor’s report

To: the general meeting and Supervisory Board of Triodos Bank N.V.

Report on the financial statements 2017

Our opinion

In our opinion, the accompanying financial statements give a true and fair view of the financial position of Triodos Bank N.V. as at 31 December 2017, and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.

What we have audited

We have audited the accompanying financial statements 2017 of Triodos Bank N.V., Zeist (‘the Bank’). The financial statements include the consolidated financial statements of Triodos Bank N.V. and its subsidiaries (together: the Group) and the company financial statements.

The financial statements comprise:

  • the consolidated and company balance sheet as at 31 December 2017;
  • the consolidated and company profit and loss account for the year then ended; and
  • the notes, comprising a summary of the accounting policies and other explanatory information.

The financial reporting framework that has been applied in the preparation of the financial statements is Part 9 of Book 2 of the Dutch Civil Code.

The basis for our opinion

We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the section ‘Our responsibilities for the audit of the financial statements’ of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of Triodos Bank N.V. in accordance with the European Regulation on specific requirements regarding statutory audit of public interest entities, the ‘Wet toezicht accountantsorganisaties’ (Wta, Audit firms supervision act), the ‘Verordening inzake de onafhankelijkheid van accountants bij assuranceopdrachten’ (ViO – Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence requirements in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA – Code of Ethics for Professional Accountants, a regulation with respect to rules of professional conduct).

Our audit approach

Overview and context

The Bank operates in a low interest environment and, being a banking institution active across Europe, is subject to regulatory developments. During 2017, these developments significantly impacted the Bank’s profitability, amongst other things as a result of regulatory costs (such as contributions to the Depository Guarantee Scheme and Resolution Fund) and banking taxes. We have addressed these developments in the context of our audit.

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the Executive Board made important judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. In the notes to the consolidated financial statements the company describes the areas of judgment in applying accounting policies and the key sources of estimation uncertainty. Given the significant estimation uncertainty and the related higher inherent risks of material misstatement in loan impairments related to their main business of providing loans to customers, the fair value measurement of financial instruments and a contingent liability relating to potential VAT charges on intra-company transactions, we considered these to be key audit matters as set out in the section ‘key audit matters’ of this report.

Other areas of focus, that were not considered to be key audit matters were the valuation of deferred tax assets, IT and compliance with laws and regulation. As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Executive Board that may represent a risk of material misstatement due to fraud. Laws and regulations and changes therein have significant impact on the banking business and have therefore been addressed to the extent it was relevant to our audit.

The outlines of our audit approach were as follows:

Materiality

  • Overall materiality: €2.4 million.

Audit scope

  • We conducted audit work on the five branches, head office and Triodos Investment Management B.V.
  • Site visits were conducted to all branches.
  • Audit coverage: 97% of consolidated revenue, 98% of consolidated total assets and 96% of profit before tax.

Key audit matters

  • Valuation of the loan portfolio
  • Fair value of financial instruments
  • Disclosure of a contingent liability relating to potential VAT charges on intra-company transactions
Materiality

The scope of our audit is influenced by the application of materiality which is further explained in the section ‘Our responsibilities for the audit of the financial statements’.

Based on our professional judgment, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and to evaluate the effect of identified misstatements, both individually and in aggregate, on the financial statements as a whole and on our opinion.

€2.4 million (2016: €1.9 million)

We used our professional judgment to determine overall materiality. As a basis for our judgment we used 5% of profit before tax.

We used profit before tax as the primary benchmark, a generally accepted auditing practice, based on our analysis of the common information needs of users of the financial statements. On this basis we believe that profit before tax is an important metric for the financial performance of the Bank.

To each component in our audit scope, we, based on our judgement, allocate materiality that is less than our overall group materiality. The range of materiality allocated across components was between €0.2 million and €2 million.

We also take misstatements and/or possible misstatements into account that, in our judgement, are material for qualitative reasons.

We agreed with the supervisory board that we would report to them misstatements identified during our audit above €120 thousand (2016: €97 thousand) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

The scope of our audit

Triodos Bank N.V. operates five branches across Europe and is the parent company of a group of legal entities. The financial information of this group is included in the consolidated financial statements of Triodos Bank N.V.

We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements as a whole, taking into account the management structure of the Group, the nature of operations of its components, the accounting processes and controls, and the markets in which the components of the Group operate. In establishing the overall group audit strategy and plan, we determined the type of work required to be performed at the component level by the group engagement team and by each component auditor.

The group audit focused on the significant components which are the five branches, head office and Triodos Investment Management B.V. These components were subject to audits of their complete financial information as those components are individually financially significant to the group.

In total, in performing these procedures, we achieved the following coverage on the financial line items:

97%

98%

96%

None of the remaining components represented more than 1% of total group revenue or total group assets. For those remaining components we performed, among other things, analytical procedures to corroborate our assessment that there were no significant risks of material misstatements within those components.

For the Triodos Bank N.V. head office and the Dutch branch the group engagement team performed the audit work. For Triodos Investment Management B.V. we used a component team from the Netherlands and for the Belgian, German, Spanish and the UK branches we used component auditors who are familiar with the local laws and regulations to perform the audit work.

Where the work was performed by component auditors, we determined the level of involvement we needed to have in their audit work to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the consolidated financial statements as a whole.

The group engagement team visited all component teams and branches at least once. Furthermore, detailed instructions were sent to component teams, several update calls were held to discuss the instructions and the progress and outcome of the work performed and review of selected working papers was done.

The group consolidation, financial statement disclosures and a number of complex items were audited by the group engagement team at the head office. These include derivatives, impairment of incurred but not reported losses and fair value disclosures.

Banks in general depend heavily on an effective and efficient information technology (‘IT’) environment. We engaged our IT-specialists to assist us in assessing, for the purpose and to the extend relevant for our audit, the information technology general controls (‘ITGCs’) at the Bank. This includes the policies and procedures used by the Bank to ensure IT-operates as intended and provides reliable data for financial reporting purposes. Furthermore, our IT-specialists supported us in our key report testing and application controls testing. Our approach was tailored towards the fact that the Bank operates an in-house developed IT-system as well as external IT-systems throughout the group.

We ensured that the audit team included the appropriate skills and competences which are needed for the audit of a bank. In addition to banking and IT-specialists, we therefore included valuation specialists and experts and tax specialists in our team.

By performing the procedures above at components, combined with additional procedures at head office level, we have obtained sufficient and appropriate audit evidence regarding the financial information of the group as a whole to provide a basis for our opinion on the consolidated financial statements.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements. We have communicated the key audit matters to the Executive Board and the Supervisory Board. The key audit matters are not a comprehensive reflection of all matters that were identified by our audit and that we discussed. In this section, we described the key audit matters and included a summary of the audit procedures we performed on those matters. Compared to prior year, we have not identified the valuation of deferred tax assets as a key audit matter anymore taken the positive developments in the expected future profitability of the German branch.

The key audit matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon. We do not provide separate opinions on these matters or on specific elements of the financial statements. Any comments or observations we make on the results of our procedures should be read in this context.

Key audit matter

Valuation of the loan portfolio

See paragraphs ‘The use of estimates and assumptions in the preparation of the financial’ and ‘Banks and loans’ of the accounting principles and note 4 ‘Loans’.

Given the size of the loan portfolio of €6,598 million (note 4 ‘Loans’ in the financial statements) and the high level of management estimates associated with the determination of impairments, we consider this to be a key audit matter in our audit.

The high level of management’s estimate associated with the valuation of the loan portfolio means that differences in judgements and changes in assumptions may result in higher or lower impairment charges.

Specific impairments

The Bank assesses whether there is an indication of a possible impairment of loans on an individual basis. As of 31 December 2017, the specific allowance for impairment amounts to €43.7 million (note 4 ‘Loans’ in the financial statements).

In accordance with Part 9 of Book 2 of the Dutch Civil Code, impairments are based on incurred losses at balance sheet date. When a trigger is identified, the Bank determines the level of impairment which includes judgements on elements such as:

  • the identification of an impaired loan;
  • the estimation of expected future cash flows;
  • their timing; and
  • the market value of the underlying collateral.

Management’s judgements change over time as new information becomes available, or as recovery strategies evolve, resulting in revised scenarios to individual impairments.

The Bank has controls in place by which the Bank regularly reviews the methodology and assumptions used for estimating both the amounts and timing of future cash flows, to reduce any differences between loss estimates and actual loss experiences.

Incurred but not reported losses

Furthermore, the Bank estimates an impairment for incurred but not reported losses (‘IBNR’). As of 31 December 2017, the IBNR amounts to €5.9 million (note 4 ‘Loans’ in the financial statements). For loans that are individually not impaired, the Bank determines, based on experience and historical loss data, whether further impairment losses are present in the portfolio. The key parameters used in this calculation are:

  • the exposure (‘E’);
  • the loss rate (‘LR’); and
  • the loss identification period (‘LIP’).

How our audit addressed the matter

 

Our audit procedures included an assessment of the overall governance of the credit and impairment process of the Bank and the testing of design and operational effectiveness of the key controls directly related to:

  • the identification of impairment triggers;
  • the parameters and data applied in the impairment models (e.g. exposures, cash flows, market values of collateral etc.); and
  • the review and approval by management on the outcomes of the individual impairments and the impairment models.

We determined that we could rely on these controls for the purpose of our audit.

Specific impairments

We examined the methodology that is applied by the Bank in determining specific impairments. Based on a risk assessment we tested a sample of loans included in the specific loan loss provision to verify the judgemental elements such as:

  • classification as performing or non-performing loans based on the existence or non-existence of triggering events;
  • nature and accuracy of the expected future cash flows based on the source from which the cash flows arise;
  • the accuracy of the applied discount rate given the applicable latest interest rate; and
  • the valuation of the corresponding collateral based on appraisal reports and other external information.

Furthermore, we assessed the completeness of the provision through reconciliation of past due listings and loans with low credit ratings as compared to the detailed listing of the loans actually provided for in specific loan loss provision.

We found the assumptions applied by management in determining the specific provision to be consistent with historical practices and in line with our expectations and we did not identify any material exceptions.

Incurred but not reported losses

We examined the methodology that is applied, as well as the calculation used by the Bank in determining the IBNR. We assessed the assumptions applied by management with respect to the E, LR and LIP parameters by amongst other:

  • reconciling the E to the banking system;
  • reperforming the calculation of the LR and reconciling the LR source data to the Bank’s historical loss data; and
  • performing sensitivity checks on both the LR and the LIP.

We found the IBNR calculation to be mathematically accurate and, based on our sensitivity checks, to fall within acceptable ranges.

We also assessed the completeness and accuracy of the disclosures relating to impairments of loans at amortised cost to assess compliance with disclosure requirements included in Part 9 of Book 2 of the
Dutch Civil Code.

We found the recognised impairments of management were within a reasonable range of outcomes in the context of the overall loan portfolio and the related uncertainties and sensitivities as disclosed in the financial statements.

Key audit matter

Fair value of financial instruments

See paragraphs ‘Financial Instruments’, ‘Participating interests’ and ‘Derivatives and hedge accounting’ of the accounting principles section, note 7 ‘Participating interests’, note 11 ‘Prepayments and accrued income’, note 15 ‘Accruals and deferred income’ and the note disclosure ‘fair values’.

As of 31 December 2017, the items carried at fair value in the financial statements concern:

  • Participating interests amounting to €14.7 million at 31 December 2017.
  • Derivatives amounting to €14.5 million on the asset side and €13.4 million on the liability side of the balance sheet.

Loans, government paper and interest-bearing securities are valued at amortised cost. The fair values, disclosed in ‘Fair values’ on page 118 of the financial statements, amount to €6.6 billion, €26.5 million and €1.4 billion respectively.

Quoted prices from liquid market sources can be obtained for a portion of the portfolio. The areas that involved significant audit effort and judgement relate to the valuation of illiquid instruments that are valued based on models and assumptions that are not market observable. These areas have a higher potential risk of being affected by error or bias and consequently we determined the fair value of financial instruments to be a key audit matter.

How our audit addressed the matter

 

Our audit procedures included an assessment of the overall governance of the treasury and investment process of the Bank and the testing of design and operational effectiveness of the key controls with respect to financial instrument deal capturing and source data management. We determined that we could rely on these controls for the purpose of our audit.

We used our valuation specialists to assist us in performing our substantive audit procedures. For every type of financial instrument, we have tested the outcome of management’s valuations of the illiquid market financial instruments by:

  • assessing the appropriateness of the valuation of instruments measured based on quoted prices from liquid market sources or instruments in an illiquid market;
  • evaluating the appropriateness of the valuation models used considering market practices;
  • comparing on a sample basis the observable input data against externally available market data and evaluating the adequacy of the unobservable inputs applied; and
  • independently reperforming management’s valuation using our own valuation tools for a sample of instruments.

We found no significant differences in the reperformance of the valuation of the liquid and illiquid market financial instruments nor in the testing of the input data. In comparing the models with market practices and reperforming the valuations for a sample ourselves, we found that the estimates made by management were within an acceptable range considered in the context of the estimation uncertainty in the fair valuation of the financial instruments.

Finally, we assessed whether the Bank’s disclosures in the consolidated financial statements in relation to the valuation of financial instruments are compliant with the disclosure requirements included in Part 9 of Book 2 of the Dutch Civil Code.

Key audit matter

Potential VAT charges on intra-company transactions

See ‘Value added tax’ in note 20 under ‘Irrevocable facilities’.

The Bank disclosed a contingent liability relating to possible value added tax (‘VAT’) assessments in Belgium on intra-company transactions. Following EU case-law around VAT treatment of intra-company transactions, Belgium has published a Decision that results in charges from a foreign establishment to a Belgian establishment being VAT taxable in case one of these establishments is part of a local VAT group. The Bank faces possible charges / VAT assessments as a result of this decision, that is effective since 1 July 2015. Following the Decision the Bank faces double VAT taxation for externally bought supplies or services by Triodos Bank NV’s head office in The Netherlands which are allocated to Triodos Bank Belgian Branch.

The Bank is of the opinion that it has good arguments to not have to pay these VAT charges. Management obtained an opinion from a tax expert supporting the view of management. The outcome of the process is not known and management is of the opinion that disclosing this matter is the appropriate response. If management would have to pay the VAT charges, the impact would be a charge to the income statement of €4 million as of 31 December 2017 (2016: €2.6 million). Inclusion of this position as an off-balance sheet liability as opposed to a provision on the balance sheet is dependent on the likelihood and the ability to estimate the magnitude (€4 million is the maximum exposure). Given the high level of estimation uncertainty and the potential exposure, we considered this to be a key audit matter.

How our audit addressed the matter

 

We assessed the accounting requirements with respect to provisions and off-balance sheet liabilities included in Part 9 of Book 2 of the Dutch Civil Code. We obtained the opinion from management’s tax expert. We assessed the competence, objectivity, reputation and capabilities of this tax expert. We evaluated the content of the expert’s report with the help of our tax specialist.

We discussed and challenged management’s position both at branch and head office level. We challenged management’s point of view with respect to the likelihood of having to pay the VAT and the eligible elements.

Based on these procedures we agreed management made a reasonable evaluation of the situation specifically with respect to the likelihood of outflow of funds. We recalculated the maximum impact of the contingent liability. We found no significant differences.

We assessed whether the wording as included in the off-balance sheet liabilities adequately represented the current situation and found this to be reasonable.

Report on the other information included in the Annual Report

In addition to the financial statements and our auditor’s report thereon, the Annual Report contains other information that consists of:

  • Key figures;
  • About this Report;
  • Triodos Bank Group Structure;
  • Our Purpose: Sustainable Banking;
  • Triodos Bank Business Model: Creating Value;
  • Executive Board Report;
  • UN Sustainable Development Goals;
  • Corporate Governance;
  • Supervisory Board Report;
  • Other Information;
  • Report by the Foundation for the Administration of Triodos Bank Shares (‘SAAT’);
  • Appendices;
  • Addresses; and
  • Production.

Based on the procedures performed as set out below, we conclude that the other information:

  • is consistent with the financial statements and does not contain material misstatements;
  • contains the information that is required by Part 9 of Book 2 of the Dutch Civil Code.

We have read the other information. Based on our knowledge and understanding obtained in our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements.

By performing our procedures, we comply with the requirements of Part 9 Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of such procedures was substantially less than the scope of those performed in our audit of the financial statements.

The Executive Board is responsible for the preparation of the other information, including the Executive Board Report and the other information in accordance with Part 9 Book 2 of the Dutch Civil Code.

Report on other legal and regulatory requirements

Our appointment

We were appointed as auditors of Triodos Bank N.V. at the recommendation of the supervisory board following the passing of a resolution by the shareholders at the annual meeting held on 22 May 2015 for a total period of 4 years. This resolution is subject to be renewed annually by the shareholders. This was our second year as auditors of Triodos Bank N.V.

No prohibited non-audit services

To the best of our knowledge and belief, we have not provided prohibited non-audit services as referred to in Article 5(1) of the European Regulation on specific requirements regarding statutory audit of public interest entities.

Services rendered

The services, in addition to the audit, that we have provided to the company and its controlled entities, for the period to which our statutory audit relates, are disclosed in note 28 to the financial statements.

Responsibilities for the financial statements and the audit

Responsibilities of the Executive Board and the Supervisory Board for the financial statements

The Executive Board is responsible for:

  • the preparation and fair presentation of the financial statements in accordance with Part 9 of Book 2 of the Dutch Civil Code; and for
  • such internal control as the Executive Board determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, the Executive Board is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting framework mentioned, the Executive Board should prepare the financial statements using the going-concern basis of accounting unless the Executive Board either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. The Executive Board should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements.

The Supervisory Board is responsible for overseeing the company’s financial reporting process.

Our responsibilities for the audit of the financial statements

Our responsibility is to plan and perform an audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence to provide a basis for our opinion. Our audit opinion aims to provide reasonable assurance about whether the financial statements are free from material misstatement. Reasonable assurance is a high but not absolute level of assurance which makes it possible that we may not detect all misstatements. Misstatements may arise due to fraud or error. They are considered to be material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.

A more detailed description of our responsibilities is set out in the appendix to our report.

Assurance report of the independent auditor

To: the general meeting and Supervisory Board of Triodos Bank N.V.

Report on the sustainability information 2017

Our conclusion

Based on our review procedures performed, nothing has come to our attention that causes us to believe that the sustainability information included in the Annual Report 2017 of Triodos Bank N.V. does not present, in all material respects, a reliable and adequate view of:

  • the policy and business operations with regard to sustainability; and
  • the events and achievements related thereto for the year ended 31 December 2017;

in accordance with the Sustainability Reporting Standards of the Global Reporting Initiative (GRI) and the internally applied reporting criteria.

What we have reviewed

The sustainability information contains a representation of the policy and business operations of Triodos Bank N.V., Zeist (‘Triodos’) regarding sustainability and the events and achievements related thereto for 2017.

We have reviewed the sustainability information for the year ended 31 December 2017, as included in the following sections in the Annual Report 2017 (‘the sustainability information’) of Triodos:

  • Our Purpose: Sustainable Banking
  • Triodos Bank Business Model: Creating Value
  • Executive Board Report sections 
    • Our Stakeholders
    • Results
    • Reflections, Risk and company results in more detail
  • Appendix on pages 215-222.

page 11
page 12-13
page 14-46

The links to external sources or websites in the sustainability information are not part of the report itself. We do not provide assurance over information outside of this report.

The basis for our conclusion

We conducted our review in accordance with Dutch law, which includes the Dutch Standard 3810N ‘Assurance engagements on corporate social responsibility reports’ (‘Assuranceopdrachten inzake maatschappelijke verslagen’). This review engagement is aimed at obtaining limited assurance. Our responsibilities under this standard are further described in the section ‘Our responsibilities for the review of the sustainability information’ of this report.

We believe that the assurance information we have obtained is sufficient and appropriate to provide a basis for our conclusion.

Independence and quality control

We are independent of Triodos Bank N.V. in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assuranceopdrachten’ (ViO – Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence requirements in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA – Code of Ethics for Professional Accountants, a regulation with respect to rules of professional conduct).

We apply the ‘detailed rules for quality systems’ (Nadere voorschriften kwaliteitsystemen) and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and other applicable legal and regulatory requirements.

Reporting criteria

Triodos developed its reporting criteria on the basis of the Sustainability Reporting Standards of GRI: Comprehensive option, as disclosed on page 7 of the Annual Report 2017. The information in the scope of this assurance engagement needs to be read and understood in conjunction with these reporting criteria. The Executive Board is responsible for selecting and applying these reporting criteria. The absence of a significant body of established practice on which to draw, to evaluate and measure non-financial information allows for different, but acceptable, measurement techniques and can affect comparability between entities and over time.

Inherent limitations

The sustainability information includes prospective information such as ambitions, strategy, plans, expectations and estimates and risk assessments based on assumptions. Inherently, the actual results are likely to differ from these expectations, due to changes in assumptions. These differences may be material. We do not provide any assurance on the assumptions and achievability of prospective information in the report.

Responsibilities for the sustainability information and the assurance engagement

Responsibilities of the Executive Board

The Executive Board of Triodos is responsible for the preparation of the sustainability information in accordance with Sustainability Reporting Standards] of GRI and the internally applied reporting criteria as disclosed on page 4-9 of the sustainability information, including the identification of stakeholders and the definition of material topic. The choices made by the Executive Board regarding the scope of the sustainability information and the reporting policies are summarised in the section ‘About This Report’. The Executive Board is responsible for determining that the applicable reporting criteria are acceptable in the circumstances.

The Executive Board is also responsible for such internal control as it determines necessary to enable the preparation of the sustainability information that is free from material misstatement, whether due to fraud or errors.

The Supervisory Board is responsible for overseeing the company’s reporting process.

Our responsibilities for the review of the sustainability information

Our responsibility is to plan and perform the review engagement to obtain sufficient and appropriate assurance information to provide a basis for our conclusion.

This review engagement is aimed at obtaining limited assurance. In obtaining a limited level of assurance, the performed procedures are aimed at determining the plausibility of information and are less extensive than those aimed at obtaining reasonable assurance in an audit engagement. The assurance obtained in review engagements aimed at obtaining limited assurance is therefore significantly lower than the assurance obtained in assurance engagements aimed at obtaining reasonable assurance.

Misstatements may arise due to irregularities, including fraud or error and are considered to be material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the report. The materiality affects the nature, timing and extent of our review and the evaluation of the effect of identified misstatements on our conclusion.

Procedures performed

We have exercised professional judgement and have maintained professional scepticism throughout the assurance engagement, in accordance with the Dutch Standard 3810N, ethical requirements and independence requirements.

Our main procedures include:

  • Performing an external environment analysis and obtaining insight into relevant social themes and issues, relevant laws and regulations and the characteristics of the organization.
  • Developing an understanding of internal control relevant to the assurance engagement in order to design assurance procedures that are appropriate in the circumstances, but not for the purpose of expressing a conclusion on the effectiveness of the company’s internal control.
  • Evaluating the appropriateness of the reporting criteria used and its consistent application, including the evaluation of the results of the stakeholders’ dialogue and the reasonableness of estimates made by the Executive Board and related disclosures in the report.
  • Evaluating the overall presentation, structure and content of the report, including the disclosures.
  • Evaluating whether the sustainability information represents the underlying transactions and events free from material misstatement.
  • Interviewing the Executive Board and relevant co-workers at corporate level, responsible for providing the strategy and information in the report, carrying out internal control procedures on the data and consolidating the data in the report.
  • Reviewing internal and external documentation to determine whether the sustainability information, including the disclosure, presentation and assertions made in the report, is substantiated adequately.
  • Assessing whether the sustainability information has been prepared ‘in accordance’ with GRI.

We communicate with the Supervisory Board on the planned scope and timing of the engagement and on the significant findings that result from our engagement, including significant shortcomings in the internal controls.

Amsterdam, 14 March 2018
PricewaterhouseCoopers Accountants N.V.

Original has been signed by G.J. Heuvelink RA

Appendix to our auditor’s report on the financial statements 2017 of Triodos Bank N.V.

In addition to what is included in our auditor’s report we have further set out in this appendix our responsibilities for the audit of the financial statements and explained what an audit involves.

The auditor’s responsibilities for the audit of the financial statements

We have exercised professional judgement and have maintained professional scepticism throughout the audit in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. Our audit consisted, among other things of the following:

  • Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the intentional override of internal control.
  • Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.
  • Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
  • Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained, concluding whether a material uncertainty exists related to events and/or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report and are made in the context of our opinion on the financial statements as a whole. However, future events or conditions may cause the company to cease to continue as a going concern.
  • Evaluating the overall presentation, structure and content of the financial statements, including the disclosures, and evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Considering our ultimate responsibility for the opinion on the company’s consolidated financial statements we are responsible for the direction, supervision and performance of the group audit. In this context, we have determined the nature and extent of the audit procedures for components of the group to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole. Determining factors are the geographic structure of the group, the significance and/or risk profile of group entities or activities, the accounting processes and controls, and the industry in which the group operates. On this basis, we selected group entities for which an audit or review of financial information or specific balances was considered necessary.

We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

In this respect we also issue an additional report to the audit committee in accordance with Article 11 of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report.

We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Supervisory Board, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest.