The Audit Committee assists the Board with of Directors with: the external auditors; the internal audit function; handling complaints reported through the Compliance Hotline; financial, social and environmental reporting (ESG reporting); and internal controls over financial and ESG reporting; business ethics compliance; IT security; and insurance coverage.

Under Danish law, the statutory external auditor is elected by the shareholders. All shareholders as well as the Board have the right to propose candidates for election. The Audit Committee recommends to the Board the statutory external auditor to be nominated by the Board and elected by the shareholders at the annual general meeting.

As part of its oversight of external reporting, the Audit Committee discusses significant legal and tax issues with the chief financial officer, head of finance & compliance, the general counsel, head of group internal audit and the external auditors. The chief financial officer is charged with responsibility for the tax strategy and policy, which is endorsed by the Board of Directors.

 

The Audit Committee has five members elected by the Board of Directors from among its members. One member is designated as chair and once member is an employee-elected Board member.

In March 2021, the Board of Directors elected the following members to the Audit Committee:

Out of the five members of the Audit Committee, three members qualify as independent as defined in the Danish Corporate Governance Recommendations and the Act on Approved Auditors and Audit Firms, including the chair, while Henrik Poulsen and Stig Strøbæk qualify as non-independent given that Henrik Poulsen is a member of the Board of Directors of the main shareholder Novo Holdings A/S and Stig Strøbæk is an employee-elected Board member. According to the Danish Corporate Governance Recommendations a majority of the members of a board committee should qualify as independent. Hence, the composition of the Audit Committee adheres to the Danish Corporate Governance Recommendations. In addition, two members, including the chair, have competences in accounting and auditing and collectively the members of the Audit Committee have competences relevant to the healthcare industry as required by the Danish Act on Approved Auditors and Audit Firms.

Pursuant to the US Securities Exchange Act three members qualify as independent, while two members rely on an exemption to the independence requirements. In addition, two members, including the chair, have been designated as financial experts as defined by the US Securities and Exchange Commission (SEC). 

In 2020, the Audit Committee conducted five meetings. All Audit Committee members attended all committee meetings within the member’s term in 2020 except one member who was excused from one meeting within the member’s term in 2020. Please refer to the Annual Report 2020 on page 44 for a detailed attendance overview.

 

Concerns of possible business ethics misconduct, financial fraud, breaches of the Novo Nordisk Way or quality misconduct may be raised anonymously by employees and other stakeholders through the global Compliance Hotline. Complaints made through the Compliance Hotline are received by the Audit Committee Secretariat. Complaint handling is monitored by the Board of Directors or the Audit Committee, depending on the nature of the complaint. As such the hotline works independently of Executive Management. The Compliance Hotline is available by telephone and online in multiple languages.

  • Conducted a performance evaluation including a review of the Audit Committee Charter and assessment of independence, financial expertise and other legal requirements of each member of the Audit Committee.
  • Conducted private meetings with selected members of Executive Management, General Counsel, Head of Group Internal Audit and with the external auditors. Requested similar written response from the remaining members of Executive Management. 
 

  • Evaluated the performance and the independence of the external auditor.
  • Recommended the election of the new external auditor, Deloitte to the Board of Directors and annual general meeting in 2021.
  • Reviewed the performance, independence, effectiveness and organisation of the internal audit function including a review of the charter for Group Internal Audit. Assessed the performance of targets and the remuneration for the head of Group Internal Audit.
  • The Head of Group Internal Audit and the external auditor presented the audit planning and audit resources. In addition, they presented the annual conclusion and results of audit activities conducted each quarter for review including the conclusion of the audit of internal controls over financial reporting. Finally, Deloitte presented the progress in shadow audit activities at a quarterly basis. 
  • Furthermore, the external auditor presented its annual long form report, and the annual Audit Committee Report required by the PCAOB.
  • The Audit Committee reviewed and approved the pre-approval policy for audit, non-audit and tax services to external auditors, reviewed the given pre-approvals for the current year and pre-approved the level for the next financial year (including engagement letter). Further the Audit Committee reviewed the procedure for hiring employees from external auditors.
 

  • Discussed with the CFO, Head of Finance and Compliance, the General Counsel, Head of Group Internal Audit and the external auditors:
    • material and relevant new accounting pronouncement, implementation of such, review of key accounting policies and the accounting for certain transactions and activities,
    • key accounting matters, incl. judgements and estimates, such as provisions for sales rebates, indirect production costs, ongoing tax and legal cases and intangible assets/impairment hereof,
    • transactions with related parties,
    • the scope of internal controls over financial reporting in relation to the requirements in the Sarbanes Oxley Act and Danish legislation, and
    • ESG reporting, key reporting categories within the environmental, social and governance section  
  • The Audit Committee performed a review of:
    • the global finance organisation,
    • the financial statement releases for the full year and interim financial reports,
    • the Annual Report including the financial, social and environmental statements (including ESG reporting and internal controls) and the Form-20 F,
    • the bi-annual risk management reporting,
    • the risk reporting process,
    • the company’s financial counterpart exposure in the company’s treasury policy, and approved an update hereto,
    • the funding structures related to acquisition
    • the appropriateness of the insurance coverage regarding property, business interruption and product liability
  • The Audit Committee performed a fraud risk assessment in Novo Nordisk.
 

  • Reviewed the Compliance reporting from the Chief Compliance officer,
  • Reviewed issues reported via Compliance Hotline and the Audit Committee agreed on the performed investigations, conclusions and sanctions reached, and
  • Reviewed the Information Security activities and focus areas.
  • On behalf of the Board of Directors, reviewed the Diabetes API capacity investment in the US incl. accounting treatment hereof and overall financial impact.