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REPORT OF THE BOARD OF MANAGEMENT
ANNUAL REPORT 2016 – BOSKALIS
54
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
the financial reporting of their respective business units.
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 line with the size
of its stake. Clear agreements have been reached with the
co-shareholders in such joint ventures regarding 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 most important aspects of our financial reporting 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
based on an annual audit plan and ad hoc examinations (also
known as financial audits). Moreover, the quality of the financial
control systems is evaluated regularly in the context of the
activities of the external auditor. Findings concerning 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.
EVALUATION OF RISK MANAGEMENT AND
INTERNAL CONTROL SYSTEMS
Major organizational changes have been implemented to
accommodate the rapid growth that Boskalis has experienced in
recent years, including the introduction of a divisional structure.
Further to this, and in light of the prevailing challenging market
conditions, we believe we have made considerable progress in
re-examining and redesigning the way we manage our policies
and processes, starting with our quality management systems.
During the year under review we conducted a group-wide
business process decomposition of our primary project processes,
covering key control requirements for functional disciplines such as
quality, occupational safety, health and environmental. The result
is currently being developed into a comprehensive definition of
what we refer to as the Boskalis Way of Working (WoW),
covering all relevant disciplines. As part of this effort, our project
risk classification approach has also been redefined and
harmonized.
The overriding objective of our WoW system is to give our staff
the best possible support in achieving operational excellence
when concluding and executing commercial contracts.
Operational excellence in this context means achieving
compliance with the internal and external control requirements
imposed on our primary project process with the minimum waste
of time and effort. We expect our WoW system to be implemented
in the course of 2017.
In 2016 Deloitte Risk Services completed an external quality
assessment of our Internal Audit Function (IAF). The principal
objective of this was to assess the IAF’s conformance with the
International Standards for the Professional Practice of Internal
Auditing (Standards), as issued by The Institute of Internal Auditors
(IIA). The assessment concluded that the Boskalis IAF conforms
with these Standards and this was confirmed by the IIA.
The structure and functioning of our risk management and internal
control systems are discussed annually with the Supervisory Board.
However much care is taken in setting up risk management and
internal control systems, they are unable to provide absolute
certainty with regard to realizing the corporate objectives, nor can
they preclude material mistakes, losses, fraud, or infringements of
legislation and regulations.
STATEMENT REGARDING RISKS RELATING TO THE
FINANCIAL REPORTING
With due consideration of the aforementioned scope for
improvement and restrictions, 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.