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Independent Auditor's Report
Heineken N.V.
Annual Report 2020
Introduction
Report of the
Executive Board
Report of the
Supervisory Board
Financial
Statements
Sustainability
Review
Other
Information
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. The matters considered as key to our audit are consistent
with those identified in the prior year with the exception of IFRS 16 Leases after the implementation of the
standard in 2019. This year, we specifically considered the impact of COVID-19 on Heineken N.V.'s business
and its operating results. In addition to the aforementioned impact on materiality, scoping and group
oversight we evaluated those accounting areas for which the impact was most pervasive in our audit as a
key audit matter. We therefore added our specific audit considerations related to the increased judgement
involved with projecting future cash flows and calculating expected credit losses to the key audit matters on
impairment testing and contracts with customers, respectively.
The following 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.
Revenues from contracts with customers - Refer to Note 6.1 and 7.3 to the financial statements
Risk HEINEKEN provides a wide variety of discounts depending on the nature of the customer.
The Company also provides discounts with contractually agreed conditions for volume
and promotional rebates. Conditional discounts are recognised based on target realisation
as specified in Note 6.1 to the financial statements. The target realisation requires
management to estimate target realisation based on the expected or actual volume and
adjust the discount accruals at balance sheet date.
Given the estimate made by management to assess target realisation for conditional
discounts under IFRS 15 Revenue From Contracts with Customers and the inherent
presumed fraud risk related to year-end adjustments of revenues and discount accruals,
performing audit procedures to evaluate management's estimate of target realisation
based on expected and actual volumes and the resulting adjustments at balance sheet date,
required a higher degree of auditor judgement and an increased extent of effort.
How the scope Our audit procedures related to management's assessment of target realisation and the
of our audit related year end discount accrual included the following, amongst others:
- We obtained an understanding of management's process for the recognition of discount
accruals at the reporting date based on expected or actual volume data under IFRS 15
Revenue From Contracts with Customers.
- We evaluated forecasting accuracy and management's ability to appropriately estimate
the year end discount accrual by comparing the prior year amount accrued to the amount
subsequently settled.
- We tested the amount of the year end discount accrual through a combination of:
- Developing an expectation for the amount based on the historical and current sales
information recorded as a percentage of sales and comparing our expectation to the
amount recorded by management.
- Selecting a sample of customers based on current sales information and recalculating
the discount accrual by and using the terms of the agreement, accumulated experience,
and historical and current sales information.
- Evaluating subsequent settlement of the year end discount accruals
- Obtaining confirmations from customers to confirm sales data, contractual agreements
and/or outstanding receivables net of discounts payable.
Observation Applying the aforementioned materiality, we have audited the discount accruals for
promotional allowances and volume rebates as recorded in the financial statements.
Based on our procedures performed, we did not identify any reportable matters.
