Siemens 2011 Annual Report Download - page 240

6 A. To our shareholders
23 B. Corporate Governance 51 C. Combined management’s discussion and analysis
52 C. Business and operating environment
80 C. Fiscal  – Financial summary
83 C. Results of operations
101 C. Financial position
114 C. Net assets position
117 C. Overall assessment of the economic position
118 C. Report on post-balance sheet date events
119 C. Report on expected developments and
associated material opportunities and risks
135 C. Information required pursuant to Section  ()
and Section  () of the German Commercial
Code (HGB) and explanatory report

The overarching objective of our accounting-related internal
control and risk management system is to ensure that finan-
cial reporting is conducted in a proper manner such that the
Consolidated Financial Statements and the Management’s
discussion and analysis are prepared in accordance with all
relevant regulations.
As described in the section C.. Risk management, our
ERM approach is based on the worldwide accepted “Enterprise
Risk Management – Integrated Framework” developed by the
COSO. As one of the objectives of this framework is reliability
of a company ’s financial reporting, it also includes an ac-
counting-related perspective. Furthermore, the framework
connects the ERM process with a company ’s financial report-
ing process and is closely integrated into the internal control
system. The accounting-related internal control system (con-
trol system) implemented by us is based on “Internal Control –
Integrated Framework”, an internationally recognized frame-
work also developed by the COSO. The two systems are com-
plementary as identified risks, for example, may reveal gaps
in the control system that could be closed by implementing
new controls and closely monitoring them. Conversely, moni-
toring the control system could show that certain risks are not
being controlled as effectively as was originally assumed.
We have standardized our procedures for monitoring the effec-
tiveness of the control system on a group level, complying with
the requirements of the U.S. Sarbanes-Oxley Act. Under these
procedures, necessary controls are defined, documented in
accordance with uniform standards, and tested regularly.
Our management is responsible for establishing and main-
taining adequate internal control over financial reporting. At
the end of each fiscal year, our management performs an
evaluation of the effectiveness of its control system, both in
design and operating effectiveness. Our management has
concluded that the Company ’s internal control over financial
reporting was effective as of September , . Neverthe-
less, there are inherent limitations in the effectiveness of any
control system, and no system, including one determined to
be effective, may prevent or detect all misstatements.
Our Consolidated Financial Statements are prepared on the ba-
sis of a conceptual framework which primarily consists of com-
pany-wide uniform Financial Reporting Guidelines and a chart
of accounts, both issued by the Corporate Finance department
and to be applied consistently throughout Siemens. New laws,
accounting standards, and other official announcements are
analyzed on an ongoing basis with regard to their relevance
and impact on the Consolidated Financial Statements and Man-
agement’s discussion and analysis. Where necessary, our Fi-
nancial Reporting Guidelines and the chart of accounts are ad-
justed accordingly. In quarterly closing letters, accounting de-
partments 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 respec-
tive closing processes. The conceptual framework, the commu-
nicated deadlines, and monitoring of compliance therewith
aim to mitigate the risk of Siemens not being able to prepare or
publish its Consolidated Financial Statements properly 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. Our internal Global
Shared Services organization provides services to the individ-
ual subsidiaries. In the field of accounting, this organization
provides, among other things, services related to period-end
closing, general ledger recording, accounts receivable, ac-
counts payable, fixed assets and payroll matters. Most of the
subsidiaries make use of these services as this generally has
been made mandatory by Siemens in the course of fiscal year
. Furthermore, in fiscal year  we also bundled other
accounting activities such as governance and monitoring re-
lated activities on the country and regional Cluster level. In
addition, for some areas requiring specialized know-how such
as valuations relating 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 SFS level. Employees with the appropriate level of
responsibility in the consolidation departments at each level
and at the group level carry out the consolidation activities
and monitor compliance with the accounting procedural and
deadline requirements.
The steps necessary to prepare the Consolidated Financial
Statements are subject to both manual and automated con-
trols at all levels. In connection with these controls, the data
reported 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.
C. Information required pursuant to Section  ()
and Section  () no.  of the German
Commercial Code (HGB) and explanatory report