Other information
Ahold at a glance I Business review I Governance I Financials
Ahold 1^/1
Annual Report 2015 1 54
Based on our professional judgement,
we determined materiality for the financial statements as a whole as follows:
Overall group materiality
€52 million (2014: €45 million).
How we determined it
5% of profit before tax (2014: 4.5%).
Rationale for benchmark applied
We have applied this benchmark, a generally accepted auditing practice, based on our analysis of the common information needs of users of the financial statements. On this basis we
believe that profit before tax is an important metric for the financial performance of the company. We have increased our applied percentage in 2015 based on our increased
knowledge and understanding of the Company in our third year as the external auditor.
Component materiality
To each component in our audit scope, we, based on our judgement, allocate materiality that is less than our overall group materiality. The range of materiality allocated across
components was between €10 and €50 million.
We also take misstatements and/or possible misstatements into account that, in our judgement, are material for qualitative reasons.
We agreed with the supervisory board that we would report to them misstatements identified during our audit above €2.6 million (2014: €2.3 million) as well as misstatements below that amount that, in our view, warranted
reporting for qualitative reasons.
The scope of our group audit
Koninklijke Ahold N.V. is the parent company of a group of entities. The financial information of this group is included in the consolidated financial statements of Koninklijke Ahold N.V.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account: the geographic and management structure of the group,
including the nature of operations; the accounting processes and controls; and the markets in which the group operates through its retail channels. The group's financial statements are a consolidation of its world-wide reporting
units, comprising its retail operations and centralised functions.
A full scope audit was performed for four components as these components are individually significant to the group. These four components are: the combined retail operations in the US, the combined retail operations in the
Netherlands, the Corporate Center activities in the Netherlands and the financing activities in Switzerland. We further performed audit procedures of specific account balances at the Czech retail operations, the Corporate
Center activities in the United States, and at the insurance captives located in the US and Curacao in order to obtain sufficient coverage of specific financial statement line items in the consolidated financial statements. Lastly,
we performed analytical procedures with respect to the remaining components.
In establishing the overall group audit strategy and plan, we determined the type of work that needed to be performed at the components by the group engagement team and by component auditors. Where the work was
performed by component auditors, we determined the level of involvement we needed to have in the audit work at those components to be able to conclude whether sufficient appropriate audit evidence had been obtained
as a basis for our opinion on the consolidated financial statements as a whole. The group engagement team directed the planning, reviewed the results of the work undertaken by component auditors and assessed and
discussed the findings with the component auditors during conference calls and site visits. In the current year, the group engagement team visited components in the United States, the Netherlands and the Czech Republic.
Additionally, the group engagement team visits other components on a rotational basis. For the 2015 audit a senior member from the group engagement team visited Switzerland.
The group consolidation, financial statement disclosures and a number of complex items were audited by the group engagement team at the company's head office. These include derivative financial instruments, goodwill
impairment testing, share based payments and critical accounting positions.
Taken together, and excluding our group analytical procedures, our audit coverage as defined in percentages in the table below is based on the full scope audits performed as well as the audit procedures of specific account
balances as described above.
Net sales 96%
Total assets 90%
None of the remaining individual components represented more than 2% of total group net sales or 4% total group assets. For the remaining components we reviewed the monitoring controls performed by the head office
functions, which includes: the governance framework, internal audit reports, and oversight by central management. In addition we performed, amongst others, analytical procedures to corroborate our assessment that there
were no significant risks of material misstatements within those components.
By performing the procedures above at components, combined with additional procedures at group level, we have obtained sufficient and appropriate audit evidence regarding the financial information of the group to
provide a basis for our opinion on the consolidated financial statements.
