To the Board of Directors and Shareholders of 

Accionistas de Grupo Comercial Chedraui, S.A.B. de C.V.

 

In compliance with the provisions of article 43 of the Securities Market Law, the corporate By-Laws and the recommendations contained in the Code of best Corporate Practices, in my capacity as Chairman of the Committee on Auditing and Corporate Practices (hereinafter the “Committee”) of Grupo Comercial Chedraui, S.A.B. de C.V., I am pleased to report to you the relevant activities conducted by the Committee during the Company’s fiscal year ended December 31, 2012.

 

In order to analyze the results of operations and events relevant to the Company, the Committee held meetings that enabled It to assure strict, adequate and ongoing supervision of the resolutions adopted In the exercise of its functions and invited members of the management of the Company to its meetings as it considered appropriate.

 

I. Activities related to auditing:

 

a. The Company has an internal auditing area and an internal control system that were monitored and evaluated along with the principal aspects that require improvement. For the purpose of making pertinent recommendations, the reports and opinions of the Independent Auditors and Independent Experts were taken into consideration. In addition, the preventive and corrective recommendations were reviewed that were implemented for the purpose of avoiding compliance failures under the guidelines and policies for operations and accounting records. In this respect, in the opinion of the Committee, no material differences or deviations were found that should be reported and these elements comply with what the Company requires to operate in a control environment.

 

b. We evaluated the performance of the independent auditing firm responsible for the opinion covering financial information for the fiscal period ended on December 31, 2012 and the degree of adherence to applicable accounting standards, taking into account that Galaz, Yamazaki, Ruiz Urquiza, S.C., a member of Deloitte Touche Tohmatsu and its partner, Francisco Javier Pérez Cisneros in charge of the audit, fulfill the necessary requisites of professional quality and have the independence of intellectual and economic action that is required to audit the financial statements of the Company and its subsidiaries.

 

c. The additional or supplemental services rendered to the Company by the independent auditing firm were evaluated and It was concluded that the execution of such services did not impede the issuance of an opinion about the financial information with the required independence and diligence.

 

d. The Committee reviewed the Consolidated Financial Statements of the Company and its subsidiaries on a quarterly basis, including an analysis and approval of the operating policies, procedures and accounting practices of the Company and its subsidiaries that are periodically furnished to the Mexican Stock Exchange and the National Banking and Securities Commission, assuring ourselves that such information has the necessary quality and sufficiency and were prepared following the same accounting procedures, criteria and practices employed in the preparation of the annual information.

 

e. The Committee likewise prepared the opinion referred to in Article 28, section IV, paragraph c) of the Securities Market Law for subsequent presentation to the Shareholders’ Meeting with respect to the audited consolidated financial statements of the Company and Its subsidiaries at December 31, 2012 that were audited by the Company’s Independent Auditors.

 

f. Jointly with the management of the Company, Independent Auditors and internal auditors, the Committee verified the risk factors that might affect the operations of the Company and its net worth and determined that such risks have been appropriately identified and managed through an adequate Internal control environment.

 

g. The Committee held regular meetings with the Company’s management to keep itself informed on its progress, activities and general guidelines proposed for reporting important and unusual events. The Committee also met with the independent and internal auditors to discuss their work and limitations that may have been encountered and to facilitate any private communications they might wish to have with the Committee.

 

h. The Committee reviewed the degree of the Company’s adherence to the Code of Best Corporate Practices recommended by the Mexican Stock Exchange.

 

i. The members of the Committee have been vigilant in following up on all the resolutions adopted at the Shareholders’ Meeting and in meetings of the Board of Directors, fundamentally through reports and the matters addressed in the meetings of this Committee.