Siemens 2012 Annual Report Download - page 218

1 A. To our Shareholders
21 B. Corporate Governance 49 C. Combined Management Report
50 C. Business and economic environment
64 C. Financial performance measures
69 C. Results of operations
82 C. Financial position
93 C. Net assets position
95 C. Overall assessment of the economic position
96 C. Subsequent events
97 C. Sustainability
111 C. Report on expected developments and
associated material opportunities and risks

tion 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 , . Nevertheless, 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 the
Combined Management Report. Where necessary, our Financial
Reporting Guidelines and the chart of accounts are adjusted ac-
cordingly. 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 pro-
cesses. The conceptual framework, the communicated dead-
lines, and monitoring of compliance therewith aim to mitigate
the risk of Siemens not being able to prepare or publish its Con-
solidated 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 individu-
al subsidiaries. In the field of accounting, this organization pro-
vides, among other things, services related to period-end clos-
ing, general ledger recording, accounts receivable, accounts
payable, fixed assets and payroll matters. Most of the subsidiar-
ies make use of these services. Furthermore, other accounting
activities, such as governance and monitoring related activi-
ties, are bundled 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 conceptual framework 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.
The specialist skills required of employees involved in the ac-
counting process are assessed when the employees are initially
selected; thereafter, the employees receive regular training. As
a fundamental principle, at the different levels, items must be
verified by at least one other person (four eyes principle) and
specific procedures must be adhered to for the authorization of
the data. Additional control mechanisms include target-perfor-
mance comparisons and analyses of the composition of, and
changes in, individual line items, both in the closing data re-
ported 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 Securi-
ty 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, SFS,
Cross-Sector Services, regional Clusters and certain Corporate
Units, are supported by confirmations of management of entities
under their responsibility, which confirm the accuracy of the fi-
nancial data they have reported to Siemens’ corporate headquar-
ters 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, through the Audit Committee, is also
integrated into our control system. In particular, the Audit
Committee oversees the accounting process, the effectiveness
of the control system, the risk management system and the in-
ternal audit system, and the independent audit of financial
statements. In addition, it conducts an audit of the documents
related to the Stand-alone Financial Statements of Siemens AG
and the Consolidated Financial Statements and discusses the
Stand-alone Financial Statements of Siemens AG, the Consoli-
dated Financial Statements and Combined Management Re-
port of these statements with the Managing Board and the in-
dependent auditors.