Porsche 2010 Annual Report Download - page 105

Risk report of the Volkswagen group
Integrated internal control and
risk management system relevant
for the financial reporting process
The accounting-related internal control and
risk management system that is relevant for the
financial statements of Volkswagen AG and the Volks-
wagen group comprises measures that are intended
to ensure the complete, accurate and timely trans-
mission of the information required for the prepara-
tion of the financial statements of Volkswagen AG,
the consolidated financial statements and the group
management report, and to minimize the risk of
material misstatement in the accounts and in the
external reporting.
Main features of the integrated internal control
and risk management system relevant for the
financial reporting process
The Volkswagen group’s accounting is or-
ganized along decentralized lines. For the most part,
accounting duties are performed by the companies
themselves or transferred to the group’s centralized
shared-service centers. The single-entity financial
statements of Volkswagen AG and the subsidiaries
are prepared in accordance with the applicable
national laws, reconciled to IFRSs and transmitted
to the group in encrypted form. A standard market
product is used for encryption.
The group accounting manual ensures the
application of uniform accounting policies based on
the requirements applicable to the parent. This
manual and other group-wide accounting regulations
contain rules applicable to the financial statements
of Volkswagen AG prepared in accordance with the
German Commercial Code (HGB) and stipulate pre-
cisely defined formal requirements to be met by the
consolidated financial statements prepared in ac-
cordance with IFRSs. In particular, these include
more detailed guidance on the application of legal
requirements and the determination of the entities
to be included in the consolidated financial state-
ments. Components of the reporting packages
required to be prepared by the group companies
are also set out in detail and requirements estab-
lished regarding the presentation and settlement of
intra-group transactions and the balance reconcilia-
tion process that builds on that.
Control activities at group level include ana-
lyzing and, if necessary, adjusting the data reported
in the single-entity financial statements presented
by the subsidiaries, taking into account the reports
submitted by the auditors and the outcome of the
meetings on the financial statements with represen-
tatives of the individual companies, at which both
the reasonableness of the single-entity financial
statements and specific critical issues at the sub-
sidiaries are discussed. Alongside reasonableness
reviews, the clear delineation of areas of responsi-
bility and the application of the dual control princi-
ple are further control mechanisms applied during
the preparation of the financial statements of Volks-
wagen AG.
In addition, the financial reporting-related in-
ternal control system is independently reviewed by
group internal audit in Germany and abroad.
Integrated consolidation and planning system
The consolidation and corporate manage-
ment system (VoKUs) employed in the Volkswagen
group can be used to consolidate and analyze both
financial reporting’s backward-looking data and
controlling’s forward-looking data. The system of-
fers centralized master data management, uniform
reporting and maximum flexibility with regard to
changes to the legal environment, thus providing a
future-proof technical platform that benefits group
financial reporting and group controlling in equal
measure. To verify data consistency, VoKUs has a
multi-level validation system that primarily checks
the completeness of the data delivered and carries
out content plausibility checks between the balance
sheet and the income statement. VoKUs supports
further plausibility checks through materiality analy-
ses and data screening for anomalies.
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