Changes in controls over financial reporting
Evaluation of disclosure controls and procedures
Compliance with provision II.1.4 of the Dutch
Corporate Governance Code
to senior management. Authority limits for arena and
operating company management have been established.
This system requires relevant management levels to obtain
approval from a higher level of authority for a number of
matters and provides appropriate information to senior
management.
The Disclosure and Compliance Committee assists the CEO
and CFO in fulfilling their responsibilities to ensure that
Ahold makes timely and accurate disclosures.
The Disclosure and Compliance Committee meets, reviews,
discusses and reports quarterly on disclosure related issues.
The objective is to ensure that all disclosures made by Ahold
are accurate, complete and timely and fairly present the
financial condition and the results of operations in all
material aspects.
Internal Audit at Ahold helps ensure that the integrity and
effectiveness of Ahold's system of control is maintained and
continuously improved through risk-based, regular objective,
independent and critical evaluations. Internal Audit
monitors the internal controls of Ahold to provide the
Corporate Executive Board and the Supervisory Board,
through its Audit Committee, with reasonable assurance on
the reliability of financial reporting, compliance with
relevant law and regulations, safeguarding of resources and
effectiveness and efficiency of operations. Also, Internal
Audit monitors the effectiveness of associated corrective
actions, through follow-up on specific previous audit reports
and review of the effectiveness of Management Internal
Control Reports and similar monitoring instruments.
Ahold has implemented an internal control issue monitoring
process which tracks the progress and remediation status of
internal control issues. This relates to improvements in
operational, compliance and financial controls, identified by
both internal and external sources. In this process, audit
findings from internal and external audit, as well as issues
brought forward by management via the letters of
representation, are summarized and the progress and
remediation status are reported each period.
During the course of the closing and the annual audit of our
2004 financial statements two material weaknesses and a
number of reportable conditions under the interim standards
of the U.S. Public Company Accounting Oversight Board,
as well as other internal control issues were identified.
The 2004 material weaknesses related to our accounting
for income tax provisions and to our US GAAP financial
statement reconciliation process.
We have committed, and will continue to commit,
considerable resources to our efforts to improve and
strengthen our internal controls. We believe we have taken
and are taking adequate steps to strengthen our internal
controls.
We have concluded that as of the end of the period covered
by this annual report the above mentioned material
weaknesses no longer exist.
As of the end of the period covered by this annual report,
the Company carried out an evaluation, under the
supervision and with the participation of the Company's
management, including the Company's CEO and the
Company's CFO, of the effectiveness of the design and
operation of the Company's disclosure controls and
procedures, pursuant to Rule 13a-15 promulgated under
the Exchange Act.
Disclosure controls and procedures are those designed to
ensure that information required to be disclosed in our
reports filed or submitted under the Securities Exchange Act
is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms.
Disclosure controls and procedures are also designed to
ensure that the information is accumulated and
communicated to our management, including our CEO and
our CFO, as appropriate, to allow timely decisions regarding
required disclosure. Our disclosure controls and procedures
can provide only reasonable, rather than absolute, assurance
of achieving the desired control objectives.
Based on the evaluation, the Company's CEO and CFO
concluded that the Company's disclosure controls and
procedures were effective to ensure that information
required to be disclosed by Ahold in the reports that it files
or submits under the Exchange Act is recorded, processed,
summarized and reported within the required time periods
specified in the SEC's rules and forms.
Except as indicated in the section "Corporate governance -
Compliance with Dutch Corporate Governance Code" of this
Annual Report, we apply all of the relevant provisions of the
Dutch Corporate Governance Code. Provision II.1.4 of this
code requires management to assess the adequacy of the
internal risk management and control systems.
The concept of internal risk management and control
systems as used in the Dutch Corporate Governance Code
varies significantly from the concept of disclosure controls
AHOLD ANNUAL REPORT 2005 37
