RELATIONSHIP WITH THE EXTERNAL AUDITOR

 

The minimum responsibilities of the Audit and Control Committee include that of putting forward proposals to the Board of Directors for submission to the General Shareholders Meeting regarding the appointment of the Auditors referred to in Section 264 of the Companies Act (Ley de Sociedades de Capital), the terms under which they are hired, the scope of their professional remit, and the termination or renewal of their appointment. Likewise, the Committee must liaise with the Auditors in order to receive information on any issues that might threaten the latter's independence, and any others connected with the auditing procedure, and to receive information and to maintain with the Auditors the communications envisaged in audit legislation and in the technical auditing regulations.

In this manner, the Board of Directors establishes through the Audit and Control Commission a stable and professional relationship with the Company's Accounts Auditor, strictly respecting his independent nature.

In addition, and in compliance with the requirements established by the US Securities and Exchange Commission in implementation of the Sarbanes-Oxley Act, Telefónica's Audit and Control Committee approved an internal regulation to submit the provision of any type of service by the Company's external auditors to the Commission for approval.

 

AUDITORS’ FEES

Principal Auditor

The expenses accrued in respect of the fees for services rendered to the various member firms of the PwC international organization, of which PricewaterhouseCoopers Auditores, S.L. (the auditors of the Telefónica Group) forms part, amounted to 19.11 million euros and 19.78 million euros in 2018 and 2017, respectively.

The detail of these amounts is as follows:

Millions of euros 2018 2017

(1) Audit services: mainly audit services of the annual and reviews of interim financial statements, services related to the issuance of comfort letters, work to comply with the requirements of the Sarbanes-Oxley Act (Section 404), the work in connection with the 20-F report to file with the US Securities and Exchange Commission (SEC) and the issuance of comfort letters.

(2) Audit-related services: services related to the review of the information required by regulatory authorities, agreed financial reporting procedures not requested by legal or regulatory bodies, review of Corporate Social Responsibility Reports issued in the Group and Telefónica, S.A.’s verification Statement of Non Financial Information - Digital responsibility and well-being.

(3) Tax Services: permitted services by the applicable independence regulation, basically, they are tax advice and studies of transference prices.

(4) All other services: permitted services by the applicable independence regulation, mainly advisory services on migration questions to expatriates’ employees.

Audit services (1) 18.41 18.33
Audit-related services (2) 0.70 0.49
Tax services (3) --- 0.20
All other services (consulting, advisory, etc.) (4) --- 0.76
Total 19.11 19.78

In particular, the auditor of the Telefónica Group, PricewaterhouseCoopers Auditores, SL, during the year 2018 has provided services related to the issuance of the following reports: audit of the financial statements (includes SOX and 20-F), limited reviews of the intermediate periods, comfort letters, agreed procedures and corporate social responsibility.

Other auditors

The expenses accrued in respect of the fees for services rendered by other auditors in 2018 and 2017 amounted to 58.35 million euros and 40.50 million euros, respectively, as follows:

Millions of euros 2018 2017
Audit services 1.52 2.80
Audit-related services 1.01 0.48
Tax services 7.83 5.75
All other services (consulting, advisory, etc.) 47.99 31.47
Total 58.35 40.50