Internal control and risk management system in the accounting process
The preparation of the consolidated financial statements includes all activities to present and discloses the Group’s assets, financial and operating results pursuant to the statutory and/or IFRS regulations. The consolidated financial statements include the balance sheet, the income statement, the statement of comprehensive income, the statement of changes in equity, the consolidated cash flow statement, the segment reporting and the notes to the consolidated financial statements, which contain a presentation of the main accounting methodes and explanations. The process of preparing the financial statements includes the consolidation of all data from the accounting and the upstream processes for the annual financial statements.
The internal control system (ICS) in the accounting process of the Group is in accordance with the five elementary components of the COSCO framework model (Committee of Sponsoring Organisations of the Treadway Commission) for implementing internal controls. The objective of the ICS in the accounting is to guarantee sufficient security by implementation of controls, so that proper financial statements are prepared despite the identified risks.
Control environment
The organisational structure is comprised of the local accounting departments of the companies and the Group Finance & Regulatory Reporting Department at the headquarters of VIG Holding in Vienna. The accounting departments of the VIG companies prepare both a financial statements in accordance with local accounting regulations and an IFRS consolidated report package and transmits these to the Group Finance & Regulatory Reporting Department.
The IFRS consolidated report packages are prepared re prepared in accordance with uniform Group accounting policies. Standardised software with fixed reporting and consolidation regulations is used for the preparation of the consolidated financial statements. The data of the VIG companies are predominantly imported by upload from main ledger and subledgers in the consolidated software. The consolidation of the data (capital consolidation, expenditures and income consolidation, debt consolidation and any elimination of inter-company profits) and the preparation of the consolidated financial statements are prepared by the Group Finance & Regulatory Reporting Department.
Risk assessment
In order to detect risks in the accounting process and subsequently be able to eliminate them as much as possible, documentation for the annual financial statements process was developed. This includes the entire process of collecting data by the employees of the VIG companies through automated controls, manual controls and analysis in the consolidated process to the final financial reports for publication.
Control measures
The appropriate IFRS accounting and valuation requirements applicable across the Group are summarised in the Group accounting manual (IFRS Application) that is binding for all companies included in the consolidated financial statements. The objective is to guarantee unified implementation of IFRS across the Group. This manual is subject to annual review and is and is updated or adapted to the necessary statutory provisions. The manual, together with additional information on the Group-wide reporting requirements is provided to the responsible persons in the local accounting department before the reporting process begins. In addition, we provide information across the Group in timely manner about significant developments and changed in requirements for the consolidated financial reporting. As part of the control systems, the subsidiaries are required to be compliant with accounting and valuation requirements that are applicable for the Group and are responsible for the timely reporting of their accounting-related processes.
The transmitted financial data undergo both automatic (in the form of validation) and manual reviews (development analysis and plausibility checks) by the Group Finance & Regulatory Reporting Department of VIG Holding. The performance of the control calculations and the agreement with the Group internal transactions serves as an additional control in order to detect any differences and where necessary be able to correct or eliminate them.
Additionally, the preparation of the income statement reconciliation, the audit of the accuracy of individual parts of the consolidated financial statements and the plausibility checks of the entire consolidated financial statements ensures that the presentation is complete and correct.
In the course of preparation of the financial statements, there is intensive collaboration with the Planning and Controlling Department especially in regard to development analysis (e.g. target-actual comparison). Also, the data are regularly submitted to the Managing Board for review and control.
In order to guarantee correct and timely completion of the financial statements at the deadline for publication, both the quarterly and the annual financial statements are based on strict deadlines about which the VIG companies are informed at the end of the 3rd quarter at the latest for the coming financial year. The department preparing the consolidated financial statements thus ensures in advance that the VIG companies coordinate their processes to the deadline requirements and thus are able to transmit their data timely.
Information and communication
Based on intensive collaboration with other company departments, in particular Planning, Actuarial Services and Asset Management (incl. Real Estate), there is an extensive flow of information and communication.
In addition to the financial report at the end of each financial year, a half-year financial report was published pursuant to the statutory provisions in accordance with IAS 34.
The Investor Relations Department is responsible for reporting to the shareholders of VIG Holding. This takes place both in personal discussions and through the Company website. There the annual and interim reports are made available to the shareholders and other interested parties as well as regularly updated information on key figures, share price, financial calendar, ad-hoc news and other relevant IR topics.
Monitoring
The Group Finance & Regulatory Reporting Department is responsible for preparing the consolidated financial statements. Regular monitoring of the internal control systems is ensured by quarterly reporting to the Managing Board and the Supervisory Board. The risks are continuously monitored by Group-internal and inter-departmental controls (e.g. Group Finance & Regulatory Reporting Department – Planning and Controlling – Actuarial Services – Asset Management (incl. Real Estate)).
Internal Audit also conducts quality assurance. They perform independent, objective audit measures by which, in addition to the design and effectiveness of the internal controls, the value and optimisation potential in the operational processes is examined. Internal Audit helps the organisation reach the objectives by which it evaluates, by means of a systematic approach, the effectiveness of risk management, control systems and the governance processes including all relevant key functions with the company and improves them by corresponding proposals.
In order to standardise the handling of significant risks throughout the entire Group, there are Group-wide guidelines which also are an instrument of risk monitoring. The local management is responsible for the implementation of these guidelines in the individual companies.
In the context of the audit of the financial statements the auditor takes into consideration the internal control systems to the extent it is important for the preparation of the consolidated financial statements. The auditor of the consolidated financial statements also assess the functional adequacy of the risk management pursuant to rule 83 of the Code of Corporate Governance