Ahold Case

Topics: Internal control, Corporate governance, Auditing Pages: 3 (820 words) Published: February 12, 2013
What was the role of members of the non-executive (Supervisory) Board in this?

The role of the Supervisory Board was to monitor the Executive Board’s decisions by making sure it wasn’t taking too much risk and supervise its individual members’ actions related to the company.

One of its main organs was the Audit Committee which was led by the chairman of the Supervisory Board Henny de Ruiter and addressed mainly internal financial controls. The external audit was under control of Deloitte & Touch. Their job was primarily restricted to collecting and processing work performed by internal audit. They clearly had an observer position. On the other hand, Ahold, through internal audit, should have done more, which means filling the work in internal audit. The issue of poor internal controls was first raised in the Audit Committee of the Supervisory Board in 1997 and worsened throughout the following years to the point that in 1999, Henny de Ruiter threatened to block new takeovers unless financial control didn’t improve. However, it remained a threat and no follow up was given. Also the Executive members didn’t try to improve the situation. In fact, they were only 10 employees to control Ahold company but also all the new acquisitions, all the new operating companies. The Meurs and Verhelst’s team also had troubles knowing how far they could go in the joint ventures accounts. The Supervisory board should have hired more people to control internal audit and should have clearly expressed the fact that they would take a more important control on all the joint ventures and acquisitions accounts. Another main trouble was their “de jure” or “de facto” control on companies. Ahold wasn’t always significantly monitoring all the firms they had taken over. That was again a failure in the way they negotiated their contracts. That represented a main fail in the responsibilities of the Supervisory Board. In March of 2001, the subject of a suspect financial item called...
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