Porsche 2012 Annual Report Download - page 127

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
Volkswagen group comprises measures that are
intended to ensure the complete, accurate and
timely transmission of the information required for
the preparation of the financial statements of
Volkswagen AG, the consolidated financial state-
ments 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 organized
along decentralized lines. For the most part,
accounting duties are performed by the consoli-
dated companies themselves or entrusted to the
group’s centralized shared service centers. The
financial statements of Volkswagen AG and the
subsidiaries prepared in accordance with IFRSs
and the Volkswagen group accounting manual and
reported on by the auditors are transmitted to the
group in encrypted form. A standard market prod-
uct is used for encryption.
The group accounting manual ensures the ap-
plication of uniform accounting policies based on
the requirements applicable to the parent. In par-
ticular, these include more detailed guidance on
the application of legal requirements and industry-
specific issues. Components of the reporting
packages required to be prepared by the group
companies are also set out in detail and require-
ments established regarding the presentation and
settlement of intra-group transactions and the
balance reconciliation process that builds on that.
Control activities at group level include analyz-
ing and, if necessary, adjusting the data reported
in the financial statements presented by the sub-
sidiaries, taking into account the reports submitted
by the auditors and the outcome of the meetings
on the financial statements with representatives of
the individual companies. These discussions ad-
dress both the reasonableness of the single-entity
financial statements and specific critical issues at
the subsidiaries. Alongside reasonableness re-
views, the clear delineation of areas of responsibil-
ity and the application of the dual control principle
are further control mechanisms applied during the
preparation of the single-entity and consolidated
financial statements of Volkswagen 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 Volkswagen consolidation and corporate
management system (VoKUs) enables the
Volkswagen group to consolidate and analyze both
Financial Reporting’s backward-looking data and
Controlling’s forward-looking data. It offers cen-
tralized master data management, uniform report-
ing and maximum flexibility with regard to changes
to the legal environment, 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 content
plausibility between the balance sheet, the income
statement and the notes.
Risk early warning system in line
with the KonTraG
The company’s risk situation is ascertained, as-
sessed and documented annually in accordance with
the requirements of the German Act on Control and
Transparency in Business (KonTraG). The purpose of
risk management as an operational component of the
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