Mercedes 2010 Annual Report Download - page 109

Management Report | Risk Report | 105
We systematically assess the effectiveness of the internal control
and risk management system with regard to the corporate
accounting process. At first, there is a risk analysis and a defini-
tion of control. Significant risks are identified relating to the pro-
cess of corporate accounting and financial reporting in the main
legal entities and central functions. The controls required for
the identification of risks are then defined and documented in
accordance with Group-wide guidelines. Regular random tests
are carried out to assess the effectiveness of the controls. Those
tests constitute the basis for self-assessment of the appropriate
extent and effectiveness of the controls. The results of this self-
assessment are documented and reported in a global IT system.
Any weaknesses recognized are eliminated with consideration
of their potential effects. At the end of the annual cycle, the
selected legal entities and central functions confirm the effec-
tiveness of the internal control and risk management system
with regard to the corporate accounting process. The Board of
Management and the Audit Committee of the Supervisory Board
are regularly informed about the main control weaknesses and
about the effectiveness of the control mechanisms installed.
However, the internal control and risk management system with
regard to the accounting process cannot ensure with absolute
certainty that material false statements are avoided in accounting.
In order to ensure the complete presentation and assessment
not only of material risks and risks threatening the existence of
the Group, but also of the control and risk process with regard to
the corporate accounting process, Daimler has established the
Group Risk Management Committee (GRMC). It is composed of
representatives of the areas of Finance & Controlling, Account-
ing, Legal Affairs and Compliance, and is chaired by the Board of
Management Member for Finance (CFO). The Internal Auditing
department contributes material statements on the internal con-
trol and risk management system. In addition to fundamental
issues, the committee has the following tasks:
– The GRMC creates and shapes the framework conditions with
regard to the organization, methods, processes and systems
we need to ensure a functioning, Group-wide and thorough
control and risk management system.
– The GRMC regularly reviews the effectiveness and functionality
of the installed control and risk management processes.
Minimum requirements can be laid down in terms of the design
of the control processes and of risk management, and correc-
tive measures can be commissioned as necessary or appropri-
ate to eliminate any system failings or weaknesses exposed.
But responsibility for operational risk management for risks
threatening the existence of the Group and for the control
and risk management processes with regard to the corporate
accounting process remains directly with the corporate areas,
companies and central functions. The provisions taken by GRMC
ensure that relevant risks and any existing process weaknesses
in the corporate accounting process are identified and elimi-
nated as early as possible.
In the Board of Management and the Audit Committee of the
Supervisory Board of Daimler AG, regular reports are given
regarding the current risk situation and the effectiveness, func-
tionality and appropriateness of the internal control and risk
management system. Furthermore, the responsible managers
regularly discuss the risks of business operations with the
Board of Management.
The Audit Committee of the Supervisory Board is responsible
for monitoring the internal control and risk management
system. The Internal Auditing department monitors whether the
statutory conditions and the Group’s internal guidelines are
adhered to for the Group’s entire monitoring and risk management
system, and if required develops appropriate measures which
are initiated by the management. The external auditors audit
the system for the early identification of risks that is integrated
in the risk management system for its fundamental suitability
for identifying risks threatening the existence of the Group;
in addition, they report to the Supervisory Board on any signifi-
cant weaknesses that have been discovered in the internal
control and risk management system.