independent auditors

The awarding of the audit assignment, which includes auditing the separate and consolidated financial statements and performing the related regular reviews of the accounting records, to a company listed in the special register maintained by Consob, is a prerogative of the Shareholders’ Meeting, which also determines the corresponding compensation. Since 2007, the Shareholders’ Meeting has been selecting the Independent Auditors based on a detailed recommendation by the Board of Statutory Auditors. Previously, the recommendation was submitted by the Board of Directors and the Board of Statutory Auditors merely provided a reasoned opinion.

The award of the assignment to the current Independent Auditors, PricewaterhouseCoopers Spa, who were retained in accordance with the regulations in force at that time, was approved by the Shareholders’ Meeting of April 19, 2005 for a duration of three years. Subsequently, the Shareholders’ Meeting of April 5, 2007, acting on a recommendation by the Board of Statutory Auditors, extended the duration to the maximum term of nine years, as allowed by newly enacted regulations. As a result, the current audit assignment will end with the Shareholders’ Meeting convened to approve the 2010 financial statements.

The Italian subsidiaries, with very few exceptions, have also retained Independent Auditors, chosen from those listed in a special register maintained by the Consob, to audit their financial statements, as required by Legislative Decree No. 58/1998. Usually, the Independent Auditors thus selected are the same as those retained by Edison, so as to allow the Independent Auditors of the Group’s Parent Company to assume direct responsibility for the Group’s audits. The scope of these audits also includes compliance with the requirements of the Italian Civil Code, as amended by Legislative Decree No. 6/2003 on accounting control. While complying with the restriction that the audit assignment may not be awarded to the same Independent Auditors for more than nine years, the expiration of the assignments awarded to PWC by the Italian subsidiaries was aligned with that of the Edison assignment. The only exception is Edison Trading, whose nine-year assignment to PWC ended with the Shareholders’ Meeting convened to approve the 2009 financial statements, and which therefore appointed Deloitte as a new auditor. The head is Giulio Grandi.

In addition to the Italian subsidiaries, major foreign subsidiaries have also retained Independent Auditors as required under the Group’s general audit plan. In principle, the purpose of this plan is to ensure that the financial statements of all Group companies, and not just those that meet the Consob’s “materiality” requirements, are audited by Independent Auditors rather than by the Board of Statutory Auditors, as allowed pursuant to law. With some exceptions, companies that are either dormant or in liquidation are exempt from this requirement. In the remaining cases, in which only a Board of Statutory Auditors has been appointed, the audit was nevertheless performed by the Board of Statutory Auditors.

Consistent with a firmly established Group policy, Edison and its principal subsidiaries have also asked their Independent Auditors to audit their semiannual financial statements and, in the case of companies that operate in the electric power and natural gas industries, the separate financial statements that are prepared annually for the Electric Power and Hydrocarbons operations and to perform special audits needed to comply with contractual requirements or required by the Electric Power and Gas Authority.

These audits assignments have been revised to comply with relevant regulations issued recently by the Electric Power and Gas Authority.

Edison’s Independent Auditors, PricewaterhouseCoopers Spa and its international network (PWC), working in accordance with assignments they received directly, audited about 99.38% of total consolidated assets (2009) and about 99.98% of total consolidated revenue. Other Independent Auditors were retained exclusively by some foreign subsidiaries.

Edison’s Shareholders’ Meeting that granted the audit assignment also approved the corresponding fees. The total consideration owed for the provision at the Group level of auditing services and services other than auditing amounted to 2,298,000 euros in 2009. A breakdown is provided below:

Starting in 2008, the auditing costs include the review performed to ascertain that the Report on Operations was consistent with the financial statements, as required by Legislative Decree No. 32/2007, enacted to implement EU Directive No. 51/2003 (content of the Report on Operations and wording of the Independent Auditors’ Report), as well as the tests performed to comply with the requirements of Article 9 of Legislative Decree No. 471/1997. Starting in 2009, the auditing costs will include a review of the Corporate Governance Report, as required by current regulations.

Additional review assignments performed by the Independent Auditors PricewaterhouseCoopers and its network in 2009 included mainly certifications issued to satisfy contractual obligations, as well as reviews of accounting data (including those of the first interim report on operations for 2009) and certifications of certain accounting and financial information contained in documents concerning a 700-million-euro bond issue floated during the year.