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In addition to retaining KPMG LLP to audit our consolidated financial statements for 2003, GE and its affiliates retained KPMG, as well as other accounting firms, to provide other auditing and advisory services in 2003. We understand the need for KPMG to maintain objectivity and independence in its audit of our financial statements. To minimize relationships that could appear to impair the objectivity of KPMG, our audit committee has restricted the non-audit services that KPMG may provide to us primarily to tax services and merger and acquisition due diligence and audit services, and has determined that we would obtain even these non-audit services from KPMG only when the services offered by KPMG are more effective or economical than services available from other service providers, and, to the extent possible, only after competitive bidding. It is also the committee’s goal that the fees which the company pays KPMG for non-audit services should not exceed the audit fees paid to KPMG, a goal which the company achieved in 2003.
The audit committee has also adopted policies and procedures for pre-approving all non-audit work performed by KPMG. Specifically, the committee has pre-approved the use of KPMG for detailed, specific types of services within the following categories of non-audit services: merger and acquisition due diligence and audit services; tax services; internal control reviews; employee benefit plan audits; and reviews and procedures that the company requests KPMG to undertake to provide assurances of accuracy on matters not required by laws or regulations. In each case, the committee has also set a specific annual limit on the amount of such services which the company would obtain from KPMG, and has required management to report the specific engagements to the committee on a quarterly basis and to obtain specific pre-approval from the committee for any engagement over $500,000.
The aggregate fees billed for professional services by KPMG in 2003 and 2002 for these various services were:
| Type of Fees |
2003 |
2002 |
|
|
|
|
| |
($ in millions) |
|
|
|
|
| Audit Fees |
$ 55.3 |
$ 38.7 |
| Audit-Related Fees |
22.9 |
23.3 |
| Tax Fees |
12.9 |
21.2 |
| All Other Fees |
0.5 |
6.1 |
|
|
|
|
| Total |
$ 91.6 |
$ 89.3 |
In the above table, in accordance with the SEC’s definitions and rules, “audit fees” are fees GE paid KPMG for professional services for the audit of GE’s consolidated financial statements included in Form 10-K and review of financial statements included in Form 10-Qs, and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements; “audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of GE’s financial statements; “tax fees” are fees for tax compliance, tax advice and tax planning; and “all other fees” are fees for any services not included in the first three categories.
Our audit committee has adopted restrictions on our hiring of any KPMG partner, director, manager, staff, advising member of the department of professional practice, reviewing actuary, reviewing tax professional and any other persons having responsibility for providing audit assurance on any aspect of their certification of the company’s financial statements. The committee also requires key KPMG partners assigned to our audit to be rotated at least every five years.
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