Chrysler 2015 Annual Report Download - page 284

284 2015 | ANNUAL REPORT
Independent Auditor’s Report
Risk
Our audit response
Provisions for product warranties
At December 31, 2015 the provisions for product warranties
amounted to €6,471 million. The Group issues various types of
product warranties under which the performance of products
delivered is generally guaranteed for a certain period or term;
the reserve for product warranties includes the expected costs of
warranty obligations imposed by law or contract, as well as the
expected costs for policy coverage, recall actions and buyback
commitments.
In addition, the Group periodically initiates voluntary service
and recall actions to address various customer satisfaction,
safety and emissions issues related to vehicles sold; the
estimated future costs of the service and recall actions are based
primarily on historical claims experience for the Group’s
vehicles.
We focused on this area because changes in the assumptions can
materially affect the levels of provisions recorded in the
financial statements.
The disclosures on warranty provisions are included in note 22.
We obtained an understanding of the warranty process,
evaluated the design of, and performed tests of controls
in this area. Our focus included evaluating the
appropriateness of the Group’s methodology,
evaluating and testing the basis for the assumptions
developed and used in the determination of the
warranty provisions, performing sensitivity analyses to
evaluate the judgments made by management, and
testing the validity of the data used in the calculations.
Responsibilities of management and the audit committee for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the report on operations in
accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore,management is responsible for such internal
control as management determines is necessary to enable the preparation of Financial Statements that are free from
material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the Company’s ability
to continue as a going concern. Based on the financial reporting frameworks mentioned, management should prepare
the financial statements using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so. Management should disclose events
and circumstances that may cast significant doubt on the Company’s ability to continue as a going concern in the
financial statements.
The audit committee is responsible for overseeing the Company’s financial reporting process.