CONSOLIDATED FINANCIAL STATEMENTS >
DIRECTORS’ REPORT
76
| 2013 ANNUAL REPORT | PRYSMIAN GROUP
Andreas Bott (Head of Planning & Controlling) and Carlo
Soprano (Head of Financial Statements & Compliance) as
joint managers responsible for preparing corporate accounting
documents. In this role, they certify at least every six months,
the accuracy of the financial information disclosed to the
market, the existence of adequate procedures and internal
controls relating to financial reporting and the consistency of
financial data communicated externally through the financial
statements. The Board of Directors has also appointed the
Head of Internal Audit as responsible for verifying that the
system of internal control over financial reporting is always
operating adequately and effectively. To this end, the Internal
Audit Department draws up an annual audit plan using a
structured approach to risk assessment, in line with the
Group’s ERM model. This plan is first approved by the Control
and Risks Committee and then by the Board of Directors.
The audit planning activity is not only based on the findings
of the ERM process but also takes account of specific risks
identified through interviews with Senior Management, and
also includes any areas for which remediation actions have
been previously recommended. In conducting Internal Audit
activities, internal auditors are given complete access to all
relevant data and information to enable them to perform each
audit. The Head of Internal Audit attends every meeting of the
Control and Risks Committee. The results of internal auditing
activities are reported to the committee along with key
findings and remediation actions. The status of the audit plan
is reported during each meeting and any significant deviations
or anticipated deviations are discussed and confirmed. The
implementation status of previous audit recommendations or
remediation actions is also reported to this committee.
For the purposes of ensuring a reliable system of internal
control over the financial reporting process, Prysmian
Group has adopted a set of administrative and accounting
procedures, as well as a series of operating policies, procedures
and instructions such as to guarantee an effective flow of
information with its Operating Companies. The administrative
and accounting procedures include the Group Accounting
Manual (rules for the use and application of accounting
policies), the Administrative Processes Manual, the procedures
for creating and publishing financial information and other
procedures for the preparation of the Consolidated Financial
Statements and interim financial reports (including the chart
of accounts, the consolidation procedures and procedures
for related party transactions). Prysmian Group Head Office
functions are responsible for distributing this documentation
to Operating Companies, which can be accessed through the
Group’s intranet site. The operating companies also issue local
policies, procedures and rules that comply with the Group’s
guidelines.
The Group has adopted a centrally coordinated evaluation
system and attestation process for the purposes of assessing
the adequacy and effectiveness of the internal control system,
which includes controls over the financial reporting process.
This system has been developed using the “COSO framework
2
”
to identify key risks and thus the required key controls to be
established to mitigate the risks identified and to ensure the
internal control system operates effectively.
A scoping exercise is carried out annually to identify the
companies, processes and sub-processes to be audited. In
fact, the Internal Audit Department, serving in an independent
capacity, tests the operation of the controls previously
identified for each of the Group’s “in-scope” operating
companies and processes. The Chief Executive Officer and
Chief Financial Officer of every Group operating company,
and the Heads of the Relevant Head Office Functions and
Departments, are responsible for maintaining an adequate
system of internal control; this includes periodically testing
the key controls, identified and tested by the Internal
Audit Department during the implementation phase of the
centrally co-ordinated evaluation system, to confirm that
they continue to operate effectively and efficiently. These
officers are required to submit an attestation every six months
confirming that the internal control system is operating
properly. This signed attestation is sent to Prysmian Group’s
Chief Financial Officer, the Managers responsible for preparing
corporate accounting documents, and to the Head of Internal
Audit. To support this attestation the officers must also
confirm that they have specifically tested the operation of
key controls and that evidence supporting their conclusions
has been retained for future independent review. To achieve
this, Prysmian requires each operating company to submit a
detailed “Internal Control Questionnaire” (ICQ). These ICQs
document the key controls for each critical business process
and describe how the control works in that reporting entity
and what type of tests have been performed in the reporting
period to confirm the adequacy of the control. The ICQs are
updated every six months by the owners of each process.
The Internal Audit Department centrally reviews the ICQ
submissions and accordingly will select a number of reporting
entities or processes for detailed follow-up audits to confirm
the integrity of the submission. An action plan is agreed with
each reporting entity to strengthen existing controls or rectify
any specific weaknesses.
The Company believes that the number of processes analysed
and reporting entities incorporated within the evaluation
system is sufficient to satisfy its ongoing Law 262/05
obligations.
(2) COSO Framework - Committee of Sponsoring Organizations of the Treadway Commission.
