Group Management Report Corporate Governance Environment, Safety, and Corporate Social Responsibility Consolidated Financial Statements 63 Compliant Group Accounting Essential accounting-related risks arise particularly when extraordinary or non-routine issues are handled. These include the first-time consolidation of acquired companies or parts of companies as well as the recording of the sale of Group assets. Accounting of financial instruments is also subject to risks due to the complex evaluation structure. Risks also arise from fraudulent acts. At ALTANA, a separate department of the Group’s holding company coordinates and monitors Group accounting. A core component of the control system are the guidelines, process descriptions, and deadlines that this department defines centrally for all companies, guaranteeing a stan- dardized procedure for preparing the financial statements. For complex issues, the instruments needed for uniform accounting are retained centrally for all Group companies. For recording extraordinary processes and complex spe- cial issues, we regularly obtain external reports, advice, and statements. The financial statements of the individual Group com- panies are prepared decentrally by the local accounting departments. Hence the individual companies are responsible for preparing the financial statements, in keeping with Group guidelines and country-specific statutory accounting requirements. The work steps needed to prepare the fi- nancial statements are defined such that important process controls are already integrated. These include guidelines pertaining to the separation of functions and allocation of responsibilities, to control mechanisms, and to IT system access regulations. The respective management explicitly confirms to the Group’s management that the annual financial statements are correct and complete. In addition, important financial statements are audited by the company or Group auditors in charge. The local accounting statements are recorded and con- solidated via standardized formats and processes in a cen- tral IT system. At the divisional and holding-company levels processes to a large extent and by taking comprehensive quality-control measures. In addition, we continually conduct analyses to assess the hazardous potential of our input materials and products, and we conclude insurances. Changes in political and regulatory framework conditions can lead to restrictions on trade or foreign-exchange trans- actions. Due to political unrest, it can be more difficult or even impossible to access the Group’s assets in the country or countries in question. On account of regulatory adjustments, it might no longer be possible to sell certain products or ingredients, or only with strong restrictions. We continually examine the political environment in the countries impor- tant for us and take current tendencies into account when evaluating business relationships. We only make direct in- vestments in countries in which we assume the political envi- ronment is highly stable. We actively take part in legislative procedures and discussions focusing on changes in the regu- latory environment. As a result, we can anticipate possible new requirements early on. Legal violations (compliance risks) can give rise to liability risks or tarnish our reputation, which can have a signifi- cant effect on the Group’s earnings and asset situation. We counter these risks within the framework of our compli- ance management system, inter alia by regularly informing our employees about legal requirements and providing them with training. An important basis for long-term success are competent and committed employees. Should we no longer be able to recruit or retain suitable specialists or managers in the future, risks could arise for the successful implementation of our strategy (personnel risks). To counter these risks, ALTANA offers a sophisticated work environment and an at- tractive compensation system, which is supplemented by various pension plans and wealth creation schemes. More- over, we regularly offer further education and training programs to budding junior staff members, as well as to spe- cialized and managerial staff.
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