Independent Auditor's Report (continued)
O Q,
Introduction Report of the Executive Board Report of the Supervisory Board
We have performed audit procedures ourselves at corporate entities and the operations in the Netherlands.
Furthermore, we performed audit procedures at group level, on areas such as consolidation, disclosures,
goodwill, intangible assets, joint ventures, financial instruments, acquisitions and divestments. Specialists were
involved, amongst others in the areas of treasury, information technology, tax, accounting, pensions and valuation.
For selected component audit teams, the group audit team provided detailed written instructions, which, in
addition to communicating the requirements of component audit teams, detailed significant audit areas
and information obtained centrally relevant to the audit of individual components, including awareness
for risk related to management override of controls. Furthermore, we developed a plan for overseeing
each component audit team based on its relative significance to the Company and certain other risk
characteristics. This included procedures such as visiting components (The Netherlands, Mexico, Brazil,
United Kingdom, Spain, France, Russia, Nigeria, Vietnam, Poland, Switzerland, Malaysia, Belgium, Ethiopia
and Romania) during the year, performing file reviews, holding conference calls, attending meetings and
reviewing component audit team deliverables to gain sufficient understanding of the work performed.
For smaller components we have performed review procedures or specific audit procedures.
By performing the procedures mentioned above at group entities, together with additional procedures
at group level, we have been able to obtain sufficient and appropriate audit evidence about the group's
financial information to provide an opinion on the consolidated financial statements.
Revenues PBT Assets
22%
Full scope auditor coverage
Other coverage
Our key audit matters
Key audit matters are those matters that, in our professional judgement, 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.
Heineken N.V. Annual Report 2018
Financial Statements
Sustainability Review
Other Information
Revenue recognition
Risk In our audit we have determined that promotional allowances and volume rebates are
the most relevant risk areas in relation to revenue recognition. In the normal course of
business the Company provides discounts, promotional allowances and volume rebates
to its on-trade and off-trade clients. Unconditional discounts are recognised at the
same moment as the related sales transaction. The Company also provides conditional
discounts. They are recognised based on target realisation, as specified in note 6.1 to
the financial statements. The target realisation requires judgement and management
estimate for sales related accruals as at balance sheet date.
We have also paid specific attention to the implementation of the new revenue
recognition standards (IFRS 15) that became effective in the current financial year.
The introduction of the new standard. This required management to reassess revenue
recognition, which requires significant judgement, including the treatment and
presentation of excise taxes. The changes to the accounting policies are disclosed in
note 4(a) to the financial statements.
Because of these risk factors, we have considered revenue recognition to be a key audit
matter relevant to our audit of the financial statements.
How the scope To address the risks related to promotional allowances and volume rebates, our audit
of our audit procedures included, amongst others, assessing the appropriateness of the Company's
responded revenue recognition accounting policy for promotional allowances and volume rebates,
to the risk as detailed in note 6.1 to the financial statements. It also included evaluating controls
relating to management's process for determining the value of promotional allowances
and the volume rebates. In addition, at group and component level, we performed
substantive testing and analytical procedures to test the accuracy and completeness of
the underlying calculation of the accruals. These procedures included challenging the
appropriateness of management's assumptions and estimates and agreeing input data,
including pricing and allowance data, to underlying agreements with customers.
With regard to the adoption of IFRS 15, we have evaluated the Company's process
to identify the necessary changes in the accounting and presentation of revenues.
Together with our component audit teams, we have determined whether all significant
revenue streams are adequately considered. Together with an IFRS specialist, we
have reviewed the outcome of the IFRS 15 adoption, including related disclosures
and footnotes.
