Aflac's 2015 Proxy

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AUDIT COMMITTEE REPORT
The Audit Committee of the Company’s Board of
Directors is composed of four Directors, each of
whom, the Board has determined, is independent as
defined by the NYSE listing standards and SEC rules
and is financially literate. The Board of Directors has
also determined that two members of the Audit
Committee (Douglas W. Johnson and W. Paul
Bowers) qualify as audit committee financial experts
as defined by the SEC rules. The Audit Committee
operates under a written charter adopted by the Board
of Directors. The charter, which is annually reviewed
and complies with all current regulatory requirements,
can be viewed on the Company’s website,
, by clicking on “Investors,” then
“Corporate Governance,” then “Audit Committee” (or
committee.aspx).
In 2014, the Audit Committee met 13 times. During
these meetings the Audit Committee reviewed and
discussed with management, KPMG (the Company’s
independent registered public accounting firm), the
internal auditors, the chief risk officer, the general
counsel and others a variety of topics, including, but
not limited to the Company’s earnings releases and
SEC filings related to quarterly and annual financial
statements, statutory insurance financial statement
filings and the Company’s system of internal control
over financial reporting. The Audit Committee has
discussed with, and received regular status reports
from, the Company's Director of internal audit and
KPMG on the overall scope and plans for their audits
of the Company. The Audit Committee met with the
internal auditors and KPMG, with and without
management present, to discuss the results of their
examinations, their evaluations of the Company’s
internal controls, and the overall quality of the
Company’s financial reporting.
The Audit Committee has monitored the Company’s
compliance with Section 404 of the Sarbanes-Oxley
Act of 2002 regarding the reporting related to internal
control over financial reporting. The monitoring
process has included regular reports and
representations by financial management of the
Company, the internal auditors, and by KPMG. The
Audit Committee has also reviewed the certifications
of Company executive officers contained in the
Annual report on Form 10-K for the year ended
December 31, 2014 filed with the SEC, as well as
reports issued by KPMG, included in the Company’s
Annual report on Form 10-K related to its audit of (i)
the consolidated financial statements and (ii) the
effectiveness of internal control over financial
reporting.
The Audit Committee is responsible for the
appointment, compensation, retention and oversight
of the Company’s independent registered public
accounting firm. In accordance with SEC rules and
KPMG’s policies, audit partners are subject to rotation
requirements to limit the number of consecutive years
an individual partner may provide service to the
Company. For the lead audit partner the maximum
number of consecutive years of service in that
capacity is five years. The process for selection of the
lead audit partner for the Company pursuant to this
rotation policy involves a meeting between the Chair
of the Audit Committee and the candidate, as well as
discussions with the full Audit Committee and with
management. The Audit Committee evaluates the
performance of KPMG, including the senior members
of the audit engagement team, each year and
determines whether to reengage them or consider
other audit firms. In doing so, the Audit Committee
considers the quality and efficiency of the services
provided, their global capabilities, particularly in the
US and Japan, their technical expertise, their tenure
as the Company’s independent registered public
accounting firm (KPMG has served in this capacity
since 1973), and their knowledge of the Company’s
operations and industry. Based on this review and
discussions with members of senior management, the
Audit Committee concluded that it was in the best
interest of the Company and the shareholders to
recommend KPMG for approval and therefore the
Audit Committee recommended to the Board of
Directors that KMPG serve as the Company’s
independent registered public accounting firm during
2014. Although the Audit Committee has the sole
authority to appoint the independent auditors, the
Audit Committee will continue its long-standing
practice of recommending that the Board ask the
shareholders, at the Annual Meeting, to ratify the
appointment of the independent registered public
accounting firm (see RATIFICATION OF
APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM (Proposal 3) on the
following page).
The Audit Committee also discussed with KPMG
those matters required to be discussed by the auditors
with the Audit Committee under the rules adopted by
the Public Company Accounting Oversight Board, (the
PCAOB). The Audit Committee received the written
disclosures and the letter from KPMG required by
applicable requirements of the PCAOB regarding the
independent auditors’ communications with the Audit
Committee concerning independence and has
discussed with KPMG their independence. The Audit
Committee considered with KPMG whether the
provision of non-audit services provided by them to
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