Independent Auditor's Report (continued)
Report on the other information included in the Annual Report
Report of the Report of the Financial Sustainability
Introduction Executive Board Supervisory Board Statements Review
I OO Annual Report 2016
Taxes - provisions for uncertain tax positions and valuation of deferred tax assets
The Company operates across a number of different tax jurisdictions and is subject to periodic challenges by local tax authorities during the
normal course of business, including transaction-related taxes and transfer pricing arrangements. In those cases where the amount of tax payable
or recoverable is uncertain, the Company establishes provisions based on its judgement of the probable amount of the liability or recovery.
Deferred tax assets for tax losses carried forward are recognized by the Company to the extent that it is probable that future taxable income will
be available against which unused tax losses can be utilised. The income tax related accounting policies are specified in notes 3, 13 and 18 to the
We focused on these areas because of the level of judgement that is applied in quantifying appropriate provisions for uncertain tax positions and
in determining assumptions about future market and economic conditions, as it relates to the recoverability of deferred tax assets.
Using our own tax specialists, we obtained a detailed understanding of the Company's tax strategy including current transfer pricing arrangements.
We assessed tax risks, legislative developments and the status of ongoing local tax authority audits. We evaluated and challenged the Company's
judgements in respect of estimates of tax exposures, recoverable amounts and contingencies. We considered correspondence with tax authorities
and relevant historical and recent judgements, and also assessed legal opinions from third party tax advisors. With regard to recorded deferred tax
assets, we evaluated the Company's assumptions and estimates in relation to the likelihood of generating sufficient future taxable income based
on budgets and business plans.
Finally we considered the adequacy of the Company's disclosures in notes 3, 13 and 18 regarding uncertain tax positions and recognised deferred
Internal controls over financial reporting
The Company operates various processes and procedures, both centrally (e.g. the shared service centre in Poland, the Heineken Global Procurement
function and the central Information Technology organisation) as well as locally, that are important for reliable financial reporting. During 2016 the
Company further deployed its test program for internal controls over financial reporting. We considered the Company's internal controls over financial
reporting as a basis for designing audit procedures that are appropriate for our audit. We are however not required nor engaged to perform an audit
of internal controls over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Company's internal controls over
We have tailored our procedures performed to the diverse Information Technology landscapes and the locally established business processes of
the Company. We have performed walkthroughs to gain our detailed understanding of the entity and identify the relevant controls. Where effective
for the audit we have tested the operating effectiveness of controls. In cases of deficiencies we have evaluated the compensating controls and
measures of the Company and/or carried out tailored procedures to address the risk.
In addition to the financial statements and our auditor's report, the annual report contains other information that consists of:
- Report of the Executive Board;
- Report of the Supervisory Board;
- Other Information pursuant to Part 9 of Book 2 of the Dutch Civil Code; and
- Other information included in the Annual Report.
Based on the following procedures performed, we conclude that the other information:
- is consistent with the financial statements and does not contain material misstatements and
- contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements
or otherwise, we have considered whether the other information contains material misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720.
The scope of the procedures performed is less than the scope of those performed in our audit of the financial statements.
Management is responsible for the preparation of other information, including the Report of the Executive Board in accordance with Part 9
of Book 2 of the Dutch Civil Code and other information pursuant to Part 9 of Book 2 of the Dutch Civil Code.