Internal control
Ahold's internal controls are designed to provide
reasonable assurance that the Company's objectives
are achieved. Ahold takes a structured and consistent
approach to internal control by aligning strategy,
charters, policies, manuals, procedures, instructions,
guidelines and processes and people and technology,
for the purpose of identifying, evaluating and
managing the uncertainties that the Company faces.
Ahold business control framework
For this purpose, the Company has developed the Ahold
Business Control Framework ("ABC Framework") to
encompass its standards. The ABC Framework was
implemented at the Corporate Center. Going forward, the
ABC Framework will be implemented at the Company's
U.S. and European continental organizations as appropriate,
to enhance their existing local internal control frameworks.
The ABC Framework is based on the recommendations of
the Committee of Sponsoring Organizations of the Treadway
Commission: Internal Control - Integrated Framework
("COSO Framework"). The goal of these recommendations
is to provide a reasonable level of assurance concerning
internal control.
Monitoring
Ahold uses a comprehensive business planning and
performance review process to monitor its performance.
This consists of a coherent set of instruments, which cover
adoption of strategy, budgeting and reporting of current
and projected results. Business performance is assessed
with respect to both financial and non-financial targets.
Ahold operates a group-wide certification process designed
in response to the internal control requirements of the
Sarbanes-Oxley Act and the Dutch Corporate Governance
Code. The certification process is designed to provide
Ahold's Disclosure and Compliance Committee with
quarterly confirmation by means of a letter of representation
from subsidiary management that compliance has been
maintained with, among others, Ahold's Global Code of
Professional Conduct and Ethics, fraud prevention and
detection procedures, accounting and internal control
standards and disclosure requirements.
Management is responsible for managing risks associated
with business activities and for compliance with relevant
local laws and regulations, following normal reporting lines
to senior management. Authority limits for operating
company management have been established. This system
establishes a line of authority for management to obtain
approval for certain decisions and provides appropriate
information to senior management.
The Disclosure and Compliance Committee assists the
Company's 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, 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 regular risk-based,
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
laws 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 monitoring instruments.
Disclosure controls and procedures
Disclosure controls and procedures are those designed to
ensure that information required to be disclosed in the
Company's reports filed or submitted under the 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
management, including the Company's CEO and CFO,
as appropriate, to allow timely decisions regarding required
disclosure. Disclosure controls and procedures can provide
only reasonable, rather than absolute, assurance of achieving
the desired control objectives.
Ahold Annual Report 2006 29
