58
To the Shareholders
Introduction
The Chair of the Audit Committee held regular update
meetings with the CFO and other senior executives.
During the year, the Audit Committee reviews the
reports of the external auditor and Global Audit.
Furthermore, the Audit Committee in 2023 discussed
recurring topics, such as:
Sustainability
Review
Report
of the
Supervisory
Board
Other
Information
Financial
Statements
Report
of the
Executive
Board
The Executive Director Global Audit has direct access
to the Audit Committee, primarily through its
Chairperson. During the year, the Audit Committee
met once with the external auditors and once with the
Executive Director Global Audit, in both instances
without management being present. In addition, the
Chairperson of the Audit Committee and the
Executive Director Global Audit held regular update
meetings during the year.
The Audit Committee supervises the activities of the
Executive Board with respect to the publication of
financial information. The Committee reviews, in the
presence of the Executive Board and the external
auditor, the appropriateness of the half year reporting
and the annual financial statements, focusing on:
- The decisions made on the selection and application
of accounting policies.
- The reliability and completeness of disclosures.
- Compliance with financial and sustainability
reporting requirements.
- Significant judgements, estimates and assumptions
used in preparing the reports in respect of, among
others, accounting for acquisitions and divestments,
the annual impairment test and determining the level
of provisions.
At the beginning of the year, the Audit Committee
reviews and approves the audit plans of the external
auditor as well as the internal audit function. The
Committee focuses mainly on the scoping, key risks,
staffing and budget.
During the year, the Chair of the Audit Committee
informed the Supervisory Board of the discussions
held in the Audit Committee.
- The effectiveness and the outcome of the internal
control and risk management systems, as well as
changes made and improvements planned to
these systems.
- (Functional) Updates in respect of Global
Procurement, Global Treasury Insurance and
Global Tax, Pensions, Business Conduct and Global
Legal Affairs, as well as Risk Management.
- A dedicated deep dive in respect of Global Digital
Technology, including on cybersecurity.
- Specific updates in the area of sustainability
reporting and the preparations for the anticipated
European legislation in this area (including CSRD).
- HEINEKEN’s governance, risk and compliance (GRC)
activities, including the HEINEKEN Company Rules
and the HEINEKEN Code of Business Conduct.
- The outcome of the internal audit activities.
- The outcome of the annual Letter of Representation
process and the report from the Integrity Committee
related to fraud reporting and Speak Up policy.
- The evaluation of the external auditor, Deloitte
Accountants B.V.
- A post investment review of material asset and
equity investments that have been operationally live
for a certain period of time.
The Audit Committee spent significant time in 2023
on the selection process of the Company’s new
external auditor. Deloitte Accountants B.V. has been
the Company’s external auditor since the reporting
year 2014. The Audit Committee initiated the
selection process for a new external auditor in October
2022 in connection with the mandatory external audit
firm rotation as per the financial year 2025.
The Audit Committee considered it important to start
with the preparations and selection process in a timely
manner to ensure a thorough process, considering the
high level of complexity and wide range of
stakeholders involved. In addition, the Audit
Committee considered it essential to have sufficient
time for transitioning to the new external audit firm
and for transferring any non-audit services currently
performed by the newly appointed external audit firm.
The Audit Committee established a separate
Committee (the ‘Selection Committee’) to make
recommendations regarding the selection of the
external audit firm. The Selection Committee met
frequently during this process in 2023. The Chair of
the Audit Committee acted as Chair of the Selection
Committee. The CFO and the Executive Director
Global Audit were also part of the Selection
Committee. The Senior Director Global Accounting
Risk Management participated in the Selection
Committee as a non-voting member.
The Selection Committee invited all audit firms that
have a licence to audit public interest entities in the
Netherlands (other than the current engaged audit
firm), to participate in the selection process. The three
’big four’ audit firms decided to participate in the
selection process, whereas the other firms declined
participation considering HEINEKEN’s size and
footprint.
After conducting a series of interviews as well as two
presentation rounds, in which the participating firms
were offered the opportunity to present themselves
and their audit proposals, the Selection Committee
evaluated the participating audit firms based on
certain pre-defined selection criteria, such as the
international network of the audit firm, the experience
with the industry, the qualities of the engagement
team, the readiness related to non-financial reporting,
the ‘fit’ with the audit partner and the audit team, the
effectiveness of the audit approach, the transition
strategy, the competitiveness of the audit fee as well
as proposal documentation and presentations
provided by the invited audit firms.
On this basis the recommendation was made by the
Audit Committee to the Supervisory Board to propose
one of the two final participants at the AGM 2024 for
appointment, with a preference for KPMG, which
recommendation the Supervisory Board has followed.
Based on this assessment, it is intended to submit the
proposal to the 2024 AGM to appoint KPMG
Accountants N.V. as external auditor of the Company
for the financial year 2025.
In 2023, the following subjects were on the agenda:
- The profile, composition and rotation schedule of the
members of the Supervisory Board. This review has
resulted in recommendations for nominations for
appointment of one new member of the Supervisory
Board at the AGM 2024.
- The composition of the committees of the
Supervisory Board, considering the skills and
expertise of the various members and the focus
areas of the various committees. This review has
resulted in various proposed changes in the
committee composition.
- Evaluation of the Supervisory Board and the
Executive Board.
- The succession of various members of the Executive
Team as well as succession planning and talent
management.
- The Chief People Officer presented research on
‘Succeeding at HEINEKEN’, a study undertaken to
identify and understand individual and
organisational factors contributing to success or
early departure of new hires in senior management
leadership positions.
Selection and Appointment Committee
Composition: Mr. Huët (Chairman), Mr. de Carvalho,
Mr. Das, Mrs. Mars Wright, Mrs. Pardo and
Mr. Fernandez Carbajal (member until 15 February
2023). The Selection and Appointment Committee
met three times.
The two final participants subsequently presented
to the Selection Committee and the other members
of the Audit Committee. The Audit Committee
concluded that the proposal of KPMG best matched
the selection criteria of the Company, noting the
overall strength and in-depth knowledge of the
audit team, the proposed audit approach and the
competitiveness in the proposal. The Audit Committee
also recognised the cultural fit of the Company
with KPMG.
Heineken
N.V.
Annual
Report
2023
