BsimEiHHta
How we manage risk (continued)
Declaration
Risk factors
Ahold at a glance
Business review
Governance
Our key control requirements are documented in
Ahold Control Memoranda (ACMs). Compliance with
the ACMs is mandatory for all of Ahold's fully-owned
entities. The ACMs cover controls relating to financial
reporting and various other business processes.
They include the requirement for management
to assess the operating effectiveness of all ACM
key controls.
Our Global Code of Conduct (the "Code") focuses
on Ahold's core value "Doing what's right" and
establishes Group-wide principles and rules with
regard to employee conduct. It is intended to help
each employee understand and follow relevant
compliance and integrity rules and know when
and where to ask for advice or report a breach of
the Code. The principles of the Code apply to all
employees of Ahold and its operating companies.
Employees of defined grade levels have been trained
and acknowledge compliance with the Code on
an annual basis. The full Code is available in the
corporate governance section of Ahold's public
website at www.ahold.com.
Monitoring and assurance
We use a comprehensive business planning
and performance review process to monitor the
Company's performance. This process covers the
adoption of strategy, budgeting and the reporting
of current and projected results. We assess business
performance according to both financial and non-
financial targets. In order to meet business needs and
the requirements of the Dutch Corporate Governance
Code, we have a Group-wide management
certification process in place, which requires that the
executive management team members at each of our
reporting entities send letters of representation to the
Chief Corporate Governance Counsel on a quarterly
basis. These letters confirm whether the reporting
entities are in compliance with Ahold's global
Code of Conduct, policies on fraud prevention and
detection, accounting and internal control standards,
and disclosure requirements. Compliance with
Ahold's responsible retailing standards is confirmed
through bi-annual letters of representation. Both our
Internal Control and Internal Audit functions help to
ensure that we maintain and improve the integrity and
effectiveness of our system of risk management and
internal control. Internal Audit undertakes regular risk-
based, objective and critical audits. These functions
also monitor the effectiveness of corrective actions
undertaken by management, including significant
audit findings.
Governance, Risk management and
Assurance Committee
An ExCo sub-committee, the Governance,
Risk management and Assurance (GRA) Committee,
oversees governance, risk management and
assurance processes. The GRA Committee is chaired
by the Chief Corporate Governance Counsel and
(i) advises the Executive Committee on matters
concerning the GRA Framework, including an overall
GRA vision and strategy, (ii) oversees activities
to develop and maintain a fit-for-purpose GRA
Framework and (iii) engages with Ahold's senior
management on important developments in the
context of GRA.
During 2014, the GRA Committee met three times.
In addition to Ahold's Chief Corporate Governance
Counsel (Chairman), the Chief Financial Officer sits
on the GRA Committee, along with the heads of
Finance of our main businesses and other members
of management responsible for governance, risk
management, compliance and assurance functions.
Annual declaration on risk management and
control systems regarding financial reporting risks
Ahold supports the Dutch Corporate Governance
Code and makes the following declaration in
accordance with best practice provision II.1.5:
The Management Board is responsible for
establishing and maintaining adequate internal risk
management and control systems. Such systems are
designed to manage rather than eliminate the risk
of failure to achieve important business objectives,
and can only provide reasonable and not absolute
assurance against material misstatement or loss.
With respect to financial reporting, management
has assessed whether the risk management and
control systems provide reasonable assurance that
the 2014 financial statements do not contain any
material misstatements. This assessment was based
on the criteria set out in COSO: Internal Control -
Integrated Framework. It included tests of the design
and operating effectiveness of entity level controls,
transactional controls at significant locations, and
relevant general computer controls. Any control
weaknesses not fully remediated at year end were
evaluated. Based on this assessment, management
determined that the Company's financial reporting
systems are adequately designed and operated
effectively in 2014 and provide reasonable
assurance that the financial statements are free of
material misstatement.
Ahold
Annual Report 2014
The principal risk factors that may impede the
achievement of Ahold's objectives with respect to
strategy, operations, financial and compliance matters
are described in the following section. The enterprise
risk management system, the governance and control
standards incorporated within our ABC Framework,
and the monitoring systems described above are
the principal means by which we identify and
manage these risks. Management is not aware
of any important failings in these systems as of
year-end 2014.
The following overview of risks relating to Ahold
should be read carefully when evaluating the
Company's business, its prospects and the forward-
looking statements contained in this Annual Report,
Any of the following risks could have a material
adverse effect on Ahold's financial position, results
of operations and liquidity or could cause actual
results to differ materially from the results contemplated
in the forward-looking statements contained in this
Annual Report.
The risks described below are not the only risks the
Company faces. There may be additional risks that
we are currently unaware of or risks that management
believes are immaterial or otherwise common to
most companies, but which may in the future have a
material adverse effect on Ahold's financial position,
results of operations, liquidity and the actual outcome
of matters referred to in the forward-looking statements
contained in this Annual Report. For additional
information regarding forward-looking statements,
see the Cautionary notice.
