Other information
continued
Overview
Business review
Governance
Financials
Investors
Ahold Delhaize Annual Report 2016
Component materiality
We also take misstatements and/or possible misstatements into account that, in our judgement, are material for qualitative reasons.
Materiality
The scope of our audit is influenced by the application of materiality which is further explained in the section ‘Our responsibilities for the audit of
the financial statements’.
We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the nature, timing
and extent of our audit procedures on the individual financial statement line items and disclosures and to evaluate the effect of identified
misstatements on our opinion.
We agreed with the Supervisory Board that we would report to them misstatements identified during our audit above €3.3 million
(2015: €2.6 million) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
€66 million (2015: €52 million).
5% of adjusted income before income taxes.
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 income before income taxes is an important metric for
the financial performance of the Company. In 2016, we adjusted income before
income taxes to exclude the effect of one-off items from our benchmark. Adjusted
income before income taxes therefore excludes non-recurring exceptional items of
€243 million related to the extinguishment of the JPY notes as disclosed in Note 9to
the financial statements and €38 million of merger transaction cost as disclosed in
Note 4 to the financial statements. Our 2016 materiality mainly increased as a result
of the Group’s merger with Delhaize.
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 €65 and €8 million.
Overall group materiality
How we determined it
Rationale for benchmark applied
