CORPORATE GOVERNANCE
Risk Management and
Internal Controls
44 DELHAIZE GROUP ANNUAL REPORT '11
(In EUR)
2011
a. Statutory audit of Delhaize Group
450 000
SA111
b. Legal audit of the consolidated
234 398
financial statements111
Subtotal a,b: Fees as approved by
684 398
the shareholders at the Ordinary
General Meeting of May 26, 2011
c. Statutory audit of subsidiaries of
1 874 902
Delhaize Group
Subtotal a,b,c: Statutory audit of
2 559 300
the Group and subsidiaries
d. Audit of the 20-F (Annual Report
42 000
filed with U.S. Securities and
Exchange Commission)
e. Other legally required services
8 225
Subtotal d, e
50 225
f. Consultation and other non-rou-
339 813
tine audit services
g. Tax services
110 275
h. Other services
69 819
Subtotal f, g, h
519 907
Total
3 129 432
(1) Includes fees for limited audit reviews of quarterly and half-
yearly financial information.
As a company that has securities reg
istered with the U.S. Securities and
Exchange Commission (SEC), the Com
pany is required to provide a manage
ment report to the SEC regarding the
effectiveness of its internal controls, as
described in Section 404 of the U.S. Sar-
banes-Oxley Act of 2002 and the rules
implementing such act (see "Risk Man
agement and Internal Controls - Section
404 of the Sarbanes-Oxley Act of 2002"
below). In addition, the Statutory Audi
tor must provide its assessment of the
effectiveness of the Company's internal
controls. The fees related to this work
represent a part of the Statutory Audi
tor's fees for the "Statutory audit of Del-
haize Group SA", the "Statutory audit
subsidiaries of Delhaize Group" and the
"Legal audit of the consolidated financial
statements" in 2011. The Audit Commit
tee has monitored the independence
of the Statutory Auditor under the Audit
Committee's pre-approval policy, setting
forth strict procedures for the approval
of non-audit services performed by the
Statutory Auditor.
Overview
The Company's management is respon
sible for establishing and maintain
ing adequate internal controls. Internal
control is broadly defined as a process
effected by the Board and manage
ment, designed to provide reasonable
assurance regarding achievement of
objectives related to (i) effectiveness and
efficiency of operations, (ii) reliability of
financial reporting, and (iii) compliance
with applicable laws and regulations.
The Audit Committee ultimately oversees
major business and financial risk manage
ment and discusses the process by which
management of the Company assesses
and manages the Company's exposure to
those risks and the steps taken to monitor
and control such exposures.
The Company has established and oper
ates its internal control and risk man
agement systems based on guidelines
issued by the Committee of Sponsoring
Organizations of the Treadway Com
mission ("COSO"). The internal control
system is based upon COSOs internal
Control - integrated Framework, and
its risk management system is based
on COSOs Enterprise Risk Management
Framework.
Financial reporting
The Company's internal controls over
financial reporting are a subset of inter
nal control and include those policies
and procedures that (i) pertain to the
maintenance of records that, in reason
able detail, accurately and fairly reflect
the transactions and dispositions of
the assets of the Company, (ii) provide
reasonable assurance that transactions
are recorded as necessary to permit
preparation of financial statements in
accordance with IFRS as adopted by the
EU, and that receipts and expenditures
of the Company are being made only in
accordance with authorizations of man
agement and directors of the Company,
and (iii) provide reasonable assurance
regarding prevention or timely detec
tion of unauthorized acquisition, use
or disposition of the Company's assets
that could have a material effect on the
financial statements.
As a company that has securities regis
tered with the SEC, the Company must
provide (i) a management report on the
effectiveness of the Company's inter
nal control over financial reporting and
(ii) the Statutory Auditor's assessment
of the effectiveness of internal control
over financial reporting, as described
in Section 404 of the U.S. Sarbanes-
Oxley Act of 2002 and the rules imple
menting such act. The Statutory Audi
tor's related opinions regarding the
Company's year ended December 31,
2011 will be included in the Company's
Annual Report on Form 20-F for such
year, which is required to be filed with
the U.S. Securities and Exchange Com
mission by April 30, 2012. The Group's
2010 annual report filed on Form20-F
includes management's conclusion
that the Group's internal control over
financial reporting was effective as of
December 31, 2010. The Statutory Audi
tor concluded that the Group main
tained, in all material respects, effective
internal control over financial reporting
as of December 31, 2010.
Control Environment
The Company operates in 11 countries
across three continents, and as such
operates in a decentralized way. The
management of the group is organ
ized around strong banner and regional
management teams with assignment
of responsibility to Executive Committee
members as appropriate.The Company
provides centralized support and coor
dination functions to all local operating
companies and monitors selected activi
ties group-wide.
The Company provides support and coor
dination functions to all members of the
group and monitors selected activities
group-wide. Our operating companies
have acquired leading positions in food
retailing through a distinct go-to-market
strategy, benefiting from support func
tions at global and/or regional level,
whichever makes the most sense in
terms of efficiency.
