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 associate conduct. It is intended to help
each associate 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
associates of Ahold and its operating companies.
Associates 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 Legal Officer
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 the Company's governance,
risk management and assurance processes.
The GRA Committee is chaired by the Chief Legal
Officer 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 ft-for-purpose
GRA Framework and (iii) engages with Ahold's
senior management on important developments
in the context of GRA.
During 2015, the GRA Committee met four times.
In addition to Ahold's Chief Legal Officer (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 our 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 2015 financial statements do not contain any
material misstatements. This assessment was based
on the criteria set out in COSO: Internal Control -
Integrated Framework 2013. 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 2015 and provide reasonable
assurance that the financial statements are free
of material misstatement.
Ahold
Annual Report 2015
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 GRA 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 2015.
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.
Our principal risks remain substantially unchanged
from 2014. A risk related to the intended merger
with Delhaize has been added. No significant
incidents, which impacted the business and its
results substantially, have occurred during 2015.
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.
