Other information
continued
Overview
Business review
Governance
Financials
Investors
Ahold Delhaize Annual Report 2016
How our audit addressed the matter
The Group has defined benefit plans, primarily in the
Netherlands and in the USA, giving rise to defined benefit
obligations of €4.6 billion and €1.6 billion, respectively
(Note 23). We considered this to be a key audit matter
because of the magnitude of the amounts, management’s
judgement applied (for example around salary increases,
inflation, discount rates and mortality rates) and technical
expertise required to determine these amounts.
The group also has a significant number of union employees
in the USA whose pension benefits are covered by multi
employer plans (we also refer to the risk factor on pension
plan funding on page 170 of the annual report). In Note
23 management has disclosed a calculation, which is based
on different assumptions and leads to an estimate of the
group’s possible proportionate share of the total net deficit
in these plans.
Our procedures included understanding and evaluating the design and testing
the operating effectiveness of controls related to key inputs and key outputs of
the Group’s pension process.
We tested the actuarial and demographic assumptions and valuation
methodologies used by management to determine the Group’s various pension
obligations. We assessed whether the key actuarial assumptions are reasonable
and consistently applied. We tested payroll data, through a combination of
controls and test of details, and reconciled the membership census data used in
the actuarial models to the payroll data.
In addition, we evaluated the potential exposure under the multi-employer plans
in the USA as disclosed in Note23. We reconciled the related inputs used by
management to determine the Group’s possible proportionate share of the total
net deficit in these plans to supporting documentation such as the latest available
plan information and actuarial calculations.
Key audit matter
Employee benefit plan measurement
Note 23
