Risks with regards to financial reporting
Financial reporting structure
Financial reporting at Boskalis is structured along a tight framework of budgeting, reporting and forecasting. A distinction is made between reports for internal and external use. External reporting at group level consists of an annual report, including financial statements audited by the external auditors, as well as a mid-year report, containing summarized financial information, both consolidated and segmented, along with intermediate trading updates. The external reports are set up in accordance with EU-IFRS on the basis of the internal financial reporting. Internal financial reporting consists of extensive consolidated quarterly reports in which current developments are compared to the quarterly (cumulative) budgets and previous forecasts. In addition, each quarter forecasts are prepared for the annual results, cash flows and balance sheet positions at the end of the financial year. The quarterly budgets are part of the annual group budget, which is prepared every year by the Board of Management and approved by the Supervisory Board. Internal financial reporting has a layered structure - in accordance with the internal allocation of management responsibilities - with consolidation taking place at successive levels, starting with the projects, through the business units and divisions, and resulting in consolidated group reports. The financial and operating results are analyzed and clarified at each of these levels. Project and contract managers are responsible for budgets, income statements and balance sheets for their projects or contracts, and these are drawn up in accordance with the applicable guidelines and instructions. In turn, business unit managers are responsible for their business unit’s financial reports.
Boskalis holds substantial investments in joint ventures and associated companies and these holdings are intensively monitored. Shareholder and/or board meetings are held regularly, with Boskalis being represented in accordance with the size of its stake. Clear agreements have been reached with the co-shareholders in such joint ventures with regard to topics such as board and management representation, filling of management positions, strategy and policy, budget, financial reporting, the appointment of auditors, investments and financing. The policy is that such joint ventures are in principle financed without guarantees from the shareholders.
The Board of Management discusses the quarterly reports with the relevant business unit managers in formal quarterly meetings. These meetings are minuted. The consolidated group reports are discussed with the Supervisory Board on a quarterly basis.
The structure and quality of the financial accounting and control systems of Boskalis and its group companies are safeguarded by unambiguous periodical internal and external audits. Relevant aspects of the financial accounting and control systems are set out in manuals, guidelines and procedures, all of which are available electronically. Staff are trained in how to apply accounting standards, guidelines and procedures. Internal audits to monitor and improve quality and discipline are conducted on the basis of an annual audit plan and ad hoc investigations (financial audits) that also encompass internal procedures and training. Moreover, the quality of the financial control systems is evaluated regularly in the context of the activities of the external auditor. Any findings with regard to the quality of the financial control systems identified during the audit of the financial statements are reported by the external auditor in the management letter.
Statement regarding risks relating to financial reporting
Despite the risk management and control systems that Boskalis has put in place, there can be no absolute certainty that mistakes, losses, fraud or unlawful activities will be prevented.
Major organizational changes have been implemented to accommodate the rapid growth of Boskalis in the past few years. During the year under review we introduced a divisional structure and started harmonizing various business processes and supporting (ICT) systems, especially in the area of financial recording and reporting. In addition we made a start on reviewing and, where necessary, adapting and/or supplementing our systems and processes in the area of quality management and risk management and control, and to achieve this we attracted the necessary expertise.
The effectiveness and functioning of the internal risk management and control systems are discussed annually with the Supervisory Board.
No material changes were introduced in the risk management and internal control systems during the course of the year under review. However, as explained above we did commence the process of reviewing and enhancing the effectiveness of these systems.
Having considered the structure and operation of the .nancial reporting and control systems at Boskalis, the Board of Management is of the opinion that:
- the internal risk management and control systems provide a reasonable degree of assurance that the financial reporting does not contain any errors of material importance; and
- the risk management and control systems worked properly during the year under review.
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