Boskalis_Annual_Report_2016

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.