See Notes 7.1 "Goodwill", 7.2 "Other intangible assets", 7.3 “Impairment tests of intangible assets” and 4 “Other operating income and expenses”, to the consolidated financial statements
| Risk identified | Our response |
|---|---|
| Risk identified
As at December 31, 2023, the net book value of goodwill and that of indefinite-life brands amounted respectively to M€ 13,103 and M€ 2,653 (representing a total of 30% of assets) as described in Note 7 to the consolidated financial statements. These assets are subject to an impairment test whenever an adverse event occurs, and at least once a year, in order to verify that their book value does not exceed their recoverable value. The recoverable values of each cash-generating unit (CGU) are determined based on the discounted projections of future operating cash flows over a ten-year period (the necessary period for the strategic positioning of an acquisition) and a terminal value. The assumptions taken into account in the valuation of the recoverable value are described in Note 7.3 and mainly relate to:
The impairment tests carried out in 2023 showed an impairment of M€ 250 on goodwill and an impairment of M€ 20 on brands. We considered the valuation of these assets to be a key audit matter given their relative proportion in the consolidated financial statements, and because determining their recoverable value requires significant judgment from Management in order to determine future cash flow projections and the key assumptions used. |
Our response
We obtained an understanding of Management's methodology for conducting impairment tests and sensitivity analyses. We evaluated these, especially by reconciling them with our own sensitivity analyses, in order to define the nature and scope of our work. We assessed the quality of the budgeting and forecasting processes. For the impairment tests of the assets considered the most sensitive, our work consisted in particular in assessing the reasonableness of the main estimates, and more specifically in:
We assessed the appropriateness of the information given in the notes to the consolidated financial statements. |
See Note 3“Operating items - Sector-specific information - Accounting principles – Revenue“, to the consolidated financial statements
| Risk identified | Our response |
|---|---|
| Risk identified
Your Group's revenue is presented net of product returns and discounts, rebates and other benefits granted to distributors or consumers (such as commercial cooperation), as described in Note 3 to the consolidated financial statements. These various deductions from revenue are recorded simultaneously with the recognition of sales in particular on the basis of contractual conditions and statistical data from past experience. At the end of the financial year, the valuation of the revenue thus includes estimates related to the amounts deducted, which we considered to be (i) complex, due to the diversity of contractual agreements and commercial conditions existing in your Group’s various markets, (ii) sensitive, the revenue being a key indicator in the valuation of your Group’s and its Management’s performance, and (iii) significant, given their impact in the financial statements. The valuation of product returns, discounts, rebates and other benefits granted to customers therefore constitutes a key audit matter. |
Our response
We assessed the appropriateness of your Group's accounting principles relating to the recognition of product returns, discounts, rebates and other benefits granted to customers, in accordance with IFRS. We obtained an understanding of the internal control system put in place in your Group’s commercial entities, which allows the valuation and recognition of the items deducted from the revenue, especially at closing, and we tested, by sampling, the main controls of this system. We also carried out substantial tests in order to assess the reasonableness of the product returns and customer benefits estimates. These tests specifically consisted in:
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