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Allianz Annual Report 2013

Annual Report 2013    Allianz Group 123 C Group Management Report Risk and Opportunity Report and Financial Control 105 Risk and Opportunity Report 123 Controls over Financial Reporting and Risk Capital Controls over Financial Reporting and Risk Capital Statements pursuant to § 289 (5) and § 315 (2) no. 5 of the German Commercial Code (“Handelsgesetzbuch – HGB”) and explanatory report. Internal control system approach ICOFR calculation we also consider qualitative criteria – such as expected increase in business volume – which are provided by different Group Centers, Group Audit and external Audit. −− Then, our local entities identify risks that could lead to material financial misstatements including all relevant root causes (i.e. human processing errors, fraud, system weaknesses, external factors,etc.).Afteridentifyingandanalyzingtherisksthepotential impacts and occurrence probabilities are evaluated. Our approach can be summarized as follows: −− We use a top-down, risk-based approach to determine the accounts and operating entities that should fall under the scope of our internal control system over financial reporting. The meth- odology is described in our ICOFR manual. During the scoping process, materiality and susceptibility to a misstatement are considered simultaneously. The final results are documented in the list of operating entities under the scope of ICOFR as well as in the list of significant accounts. In addition to the quantitative Internal control system approach Process Scoping Identify risks Implement key controls Assessment Determination of significant accounts and operating entities to be covered by system of internal control. Identification of risk scenarios that could result in a material financial misstatement. Implementation of key controls that prevent or detect errors or fraud resulting from risk scenarios. Assessment of the design and operating effectiveness of key controls. Internal controls over financial reporting In line with both our prudent approach to risk governance and com- pliance with regulatory requirements, we have created a structure to identify and mitigate the risk of material errors in our consolidated financial statements. Our internal control system over financial reporting (ICOFR) is based on the framework developed by the Com- mittee of Sponsoring Organizations of the Treadway Commission (COSO) in the year 1992 and is regularly reviewed and updated. Our approach also includes the following five interrelated components: Control Environment, Risk Assessment, Control Activities, Informa- tion and Communication, and Monitoring. These five components are covered by an Entity Level Control Assessment Process (ELCA), IT General Controls (ITGC) and controls at process levels. The ELCA framework contains controls such as a compliance program or com- mitteegovernancestructure.IntheITGCframeworkweimplemented, for example, controls regarding access right management or project and change management controls. Accounting and consolidation processes The accounting and consolidation processes we use to produce con- solidated financial statements are based on a central consolidation and reporting IT solution and local general ledger solutions. The latter are largely harmonized throughout the Group, using standardized processes, master data, posting logics and interfaces for data delivery to the Holding. Access rights to accounting systems are managed according to strict authorization procedures. Accounting rules for the classification, valuation and disclosure of all items in the balance sheet, income statement and related notes of the annual and interim financial statements are primarily defined in our Group accounting manual. Internal controls are embedded in the accounting and consolidation processes to safeguard the accu- racy, completeness and consistency of the information provided in the financial statements.

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