Contents
Overview
Report of the
Executive Board
Report of the
Supervisory Board
Financial
statements
We agreed with the Supervisory Board that misstatements in excess of EUR3 million, which are identified during the audit, would be reported
to them, as well as smaller misstatements that in our view must be reported on gualitative grounds.
Scope of the group audit
Heineken N.V. is head of a group of entities. The financial information of this group is included in the Financial statements of Heineken N.V.
Because we are ultimately responsible for the audit opinion, we are also responsible for directing, supervising and performing the group audit.
In this respect we have determined the nature and extent of the audit procedures to be carried out for components. Decisive were the size
and/or risk profile of the components. On this basis, we selected components for which an audit had to be performed on the complete set of
financial information or specific items.
Applying these scoping criteria led to a full scope audit for 28 components. Furthermore, we performed specified audit procedures at group
level on significant risk areas such as goodwill and other asset impairment testing. This resulted in a coverage of 84 per cent of total revenue,
75 per cent of profit before income tax and 87 per cent of total assets. In addition, we performed procedures at consolidated level to re-examine
our assessment that there are no significant risks of material misstatement within the smaller components, none of which individually represented
more than 2 percent of total revenue, profit before income tax or total assets.
The group audit team provided detailed instructions to all component auditors, that covered significant audit areas including the relevant risks
of material misstatement, and set out the information reguired to be reported back to the group audit team. The group audit team visited
component auditors and performed file reviews in Singapore, Vietnam, Mexico, Nigeria, Spain, UK, Poland and India. Conference calls were
held with the majority of the component auditors. During these visits and calls, the findings and observations reported to the group audit
team were discussed in more detail. Any further work deemed necessary by the group audit team was subseguently performed.
By performing the procedures mentioned above at components, together with additional procedures at group level, we have been able to
obtain sufficient and appropriate audit evidence to provide an audit opinion on the Financial statements.
Our key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial statements.
We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of all
matters discussed.
These matters were addressed in the context of our audit of the Financial statements as a whole and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
The risk that revenue is overstated
Revenue could be overstated resulting from the pressure local management may feel to achieve performance targets. As a response to this
inherent risk, we tested the key internal controls on the timing of revenue recognition. In addition, we performed audit procedures on sales
transactions taking place close before or after the balance sheet date as well as credit notes issued after the year-end date, to assess whether
those transactions were recognised in the correct year. We also tested key reconciliations and manual journal entries posted to ensure that
revenue journals were approved and corroborated with supporting evidence.
Valuation of goodwill
Goodwill represents 30 percent of the balance sheet total and 77 per cent of total eguity. Procedures over management's annual impairment
test were significant to our audit because the assessment process is complex and the test imposes estimates. Goodwill is allocated to Cash
Generating Units (CGUs) and groups of CGUs. The Company uses assumptions in respect of future market and economic conditions such as
economic growth, expected inflation rates, demographic developments, expected market share, revenue and margin development. For our
audit we assessed and tested the assumptions, the Weighted Average Cost of Capital, methodologies and data used by the Company, for
example by comparing them to external data such as expected inflation rates, external market growth expectations and by analysing
sensitivities in the Company's valuation model. We included in our team a valuation specialist to assist us in these audit activities. We
specifically focused on the sensitivity in the available headroom of CGUs and whether a reasonably possible change in assumptions could
cause the carrying amount to exceed its recoverable amount, and the impairment for Tunisia recognised in the year. We also assessed the
historical accuracy of management's estimates. We assessed the adeguacy of the Company's disclosure note 15 in the Financial statements
about those assumptions to which the outcome of the impairment test is most sensitive.
Heineken N.V. Annual Report 2014
