Siemens 2010 Annual Report Download - page 200

6 To our shareholders 21 Corporate Governance 49 Combined management’s discussion and analysis
50 Business and operating environment
78 Fiscal  – Financial summary
81 Results of operations
98 Financial position
110 Net assets position
113 Overall assessment of the economic position
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Our Consolidated Financial Statements are prepared on the
basis of a conceptual framework which primarily consists of
company-wide uniform Financial Reporting Guidelines and a
chart of accounts, both issued by the Corporate Finance de-
partment and to be applied consistently throughout Siemens.
New laws, accounting standards, and other official announce-
ments are analyzed on an ongoing basis with regard to their
relevance and impact on the Consolidated Financial State-
ments and Management’s discussion and analysis. Where
necessary, our Financial Reporting Guidelines and the chart of
accounts are adjusted accordingly. In quarterly closing letters,
accounting departments of Siemens AG and its subsidiaries are
informed about current topics from an accounting and closing
process perspective and any deadlines that must be met for the
respective closing processes. The conceptual framework, the
communicated deadlines, and monitoring of compliance
therewith aim to mitigate the risk of Siemens not being able to
prepare or publish its Consolidated Financial Statements prop-
erly and in accordance with applicable deadlines.
The base data used in preparing the Consolidated Financial
Statements consists of the closing data reported by the opera-
tions of Siemens AG and its subsidiaries, which are derived
from the various accounting records. Accounting is mostly
done at the level of each subsidiary; however, the subsidiaries
may make use of our internal Global Shared Services organiza-
tion. In the field of accounting, this organization provides,
among other things, services related to period-end closing,
general ledger recording, accounts receivable, accounts pay-
able, fixed assets and payroll matters. In addition, for some
areas requiring specialized know-how such as valuations relat-
ing to post-employment benefits support from external service
providers is obtained and used.
The reported closing data is used to prepare the Consolidated
Financial Statements in the consolidation system, including
the preparation of subgroup financial statements at Division,
Sector and Cross-Sector Business level. Employees with the
appropriate level of responsibility in the consolidation depart-
ments at each level and at the group level carry out the con-
solidation activities and monitor compliance with the account-
ing procedural and deadline requirements.
The steps necessary to prepare the Consolidated Financial
Statements are subject to both manual and automated controls
at all levels. In connection with these controls, the data re-
ported is automatically validated to support its coherence and
consistency from an accounting perspective. The cause of any
validation or warning messages must be rectified by the unit
delivering the data before the data is finally released.
The specialist skills required of employees involved in the ac-
counting process are assessed when the employees are ini-
tially selected; thereafter, the employees receive regular train-
ing. As a fundamental principle, at the different levels, items
must be verified by at least one other person (“four eyes prin-
ciple”) and specific procedures must be adhered to for the au-
thorization of the data. Additional control mechanisms include
target-performance comparisons and analyses of the composi-
tion of, and changes in, individual line items, both in the clos-
ing data reported by units and in the Consolidated Financial
Statements.
Accounting-related IT systems provide for defined access rules
in order to ensure that accounting related data is protected
from unauthorized access, use or modification. Every unit in-
cluded in our Consolidated Financial Statements is subject to
the rules and regulations of the Corporate Information Secu-
rity Guide. This is intended to ensure that IT system users only
have access to those systems and information that they need
to carry out their duties.
On a quarterly basis, management of Sectors, Divisions, Cross-
Sector Businesses, Cross-Sector Services, Regional Clusters and
certain Corporate Units, supported by confirmations of man-
agement of entities under their responsibility, confirm the ac-
curacy of the financial data they have reported to Siemens’
corporate headquarters and the effectiveness of the related
control systems.
In addition, we have set up a Disclosure Committee – compris-
ing selected heads of Corporate Units – which is responsible
for reviewing certain financial and non-financial information
prior to publication.
The Supervisory Board, specifically through the Audit Commit-
tee, is also integrated into our control system. In particular, the
Audit Committee oversees the accounting process, the effec-
tiveness of the control system, the risk management system
and the internal audit system, and the independent audit of
financial statements. In addition, it conducts a preliminary re-
view of the documents related to the annual financial state-
ments of Siemens AG and the Consolidated Financial State-
ments and discusses the annual financial statements of
Siemens AG, the Consolidated Financial Statements and Man-
agement’s discussion and analysis of these statements with
the Managing Board and the independent auditors.