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Company profile

Description of the basic characteristics of the internal control and risk management systems in the Company with respect to the process of preparing financial statements and consolidated financial statements


KGHM Polska Miedź S.A. has an internal control and risk management system. The Management Board is responsible for the appropriate and effective functioning of those systems in the process of preparing stand-alone financial statements of KGHM Polska Miedź S.A. and consolidated financial statements of the Group. The system of internal control and the management of related risks are based on identification and assessment of the risk areas, with simultaneous defining and undertaking actions aimed at their minimization or total elimination.

 

Supervision over the implementation of uniform accounting policies


In order to ensure true and accurate keeping of the accounting records of KGHM Polska Miedź S.A. and the uniformity of the accounting principles applied in preparing the financial statements of the Group subsidiaries, the following document has been implemented:

  • Accounting Policy of KGHM Polska Miedź S.A. and the Group, in accordance with International Financial Reporting Standards, updated to conform with the new regulations on an ongoing basis,

and in addition, for KGHM Polska Miedź S.A.

  • Principles of Finance Management and the Economic System,
  • Documentation of the IT system for the processing of accounting data,
  • Sector Principles of Balance Sheet Depreciation of Property, Plant and Equipment and Amortisation of Intangible Assets, and
  • Sector Chart of Accounts in accordance with IFRS,

as well as a number of internal procedures in the scope of control and evaluation of risk arising from the activities of KGHM Polska Miedź S.A. and the Group, along with the established scope and principles of financial reporting.

 

IT systems


KGHM Polska Miedź S.A. keeps books of accounts in an integrated IT system. The modular structure of this system ensures transparent segregation of processes and duties, consistency of the accounting records and conformance of all the ledgers: the special purpose ledger, general ledger and sub-ledgers. Data are available at various levels and in various formats thanks to a well-developed reporting system. KGHM Polska Miedź S.A. continuously adapts the IT information system to satisfy the requirements of the changing accounting principles or other legal standards, which is possible owing to a high degree of operational flexibility of the IT system modules. Pursuant to Article 10 of the Accounting Act of 29 September 1994, documentation of the IT accounting systems is subject to periodical verification and updates, approved in each case by the heads of the units, i.e. the Management Board of KGHM Polska Miedź S.A. and the management boards of the subsidiaries.

 

Access to the resources of the financial and accounting system and stand-alone and consolidated financial statements is restricted by a system of user rights assigned to authorised employees, based exclusively on the scope of their job duties. The user authorization profiles are subject to regular audits. Access control is implemented at each stage of financial statements preparation, beginning with entry of the source data, through the processing of data, to the generation of output information.

 

Audit Committee


The Audit Committee, appointed by the Supervisory Board of KGHM Polska Miedź S.A., is the authority which supervises the process of financial reporting in KGHM Polska Miedź S.A. and which cooperates with the independent auditor. In accordance with its duties set forth in the Act dated 7 May 2009 on Certified Auditors and Their Self Government, Entities Authorized to Audit Financial Statements and on Public Supervision (Journal of Laws 2009.77.649), The Audit Committee, is in particular responsible for:

  • monitoring the process of financial reporting in terms of compliance with the Accounting Policy approved by KGHM Polska Miedź S.A. and the applicable legal requirements;
  • monitoring the effectiveness of the internal control systems, internal audit and risk management;
  • monitoring the independence of the certified auditor and of the entity authorized to audit financial statements; and
  • recommending to the Supervisory Board the entity authorized to audit financial statements.

 

Monitoring of the process of financial reporting and assessment of the financial statements by the Supervisory Board is the final step of review and control carried out by an independent body, ensuring the truthfulness and accuracy of the data presented in the stand-alone and consolidated financial statements of KGHM Polska Miedź S.A.

 

Internal audit


A fundamental risk management activity with respect to the process of preparing financial statements of KGHM Polska Miedź S.A. is examination of the performance of control mechanisms and identification of risks in the operations of KGHM Polska Miedź S.A., carried out by internal audit. The tasks performed by the internal audit are based on the annual ”Integrated Audit Plan of KGHM Polska Miedź S.A.” for a particular calendar year, approved by the Management Board of KGHM Polska Miedź S.A. The purpose of internal audit is to provide the Company’s Management Board and Supervisory Board with independent and objective information, evaluation of the risk management and internal control system effectiveness and analysis of the business processes implemented in KGHM Polska Miedź S.A., selected domestic companies from the KGHM Polska Miedź S.A. Group and, as of 2013, also in the foreign subsidiaries of the Group. In 2012, the audited processes included management of: materials, raw materials and service supplies; overhaul and rehabilitation activities; information technology; and current assets. The recommended corrective actions are implemented on an ongoing basis by the Management Board of KGHM Polska Miedź S.A. and are monitored by the Management Board and by the Audit Committee of the Supervisory Board of KGHM Polska Miedź S.A.

 

Internal control


The internal control system in KGHM Polska Miedź S.A. encompasses all processes implemented in the Company, including the areas with direct or indirect impact on the correctness of the financial statements. Internal (institutional) control is exercised by a dedicated unit in the organisational structure which is responsible for identification and investigation of situations which indicate the probability of irregularities and fraud. Apart from institutional control, all management levels of the Company are obliged to exercise functional control as part of their coordination and supervision responsibilities.

 

Audit and review of the stand-alone and consolidated financial statements by a certified auditor


The annual financial statements of KGHM Polska Miedź S.A. and the annual consolidated financial statements of the KGHM Polska Miedź S.A. Group are audited by an independent certified auditor. The half-year financial statements of KGHM Polska Miedź S.A. and the half-year consolidated financial statements of the KGHM Polska Miedź S.A. Group are subject to review by a certified auditor. The financial statements of the key companies of the KGHM Polska Miedź S.A. Group are audited and reviewed by the same entity which audits and reviews the stand-alone financial statements of KGHM Polska Miedź S.A. and the consolidated financial statements of the KGHM Polska Miedź S.A. Group.

 

Process of review and approval of the stand-alone and consolidated financial statements


The Management Board of KGHM Polska Miedź S.A. approves the quarterly, half-year and annual financial statements of KGHM Polska Miedź S.A. and the consolidated financial statements of the KGHM Polska Miedź S.A. Group prior to their publication. The half-year and annual financial statements of KGHM Polska Miedź S.A. and the consolidated financial statements of the KGHM Polska Miedź S.A. Group are also subject to the process of review by the Supervisory Board prior to publication, in terms of their compliance with IFRS, in accordance with the competences provided for in the Act on certified auditors and their self-governing body, entities entitled to audit financial statements and on public supervision.

 

The process of preparation of the financial statements of KGHM Polska Miedź S.A. and the consolidated financial statements of the KGHM Polska Miedź S.A. Group is subject to supervision by the First Vice President (Finance) of KGHM Polska Miedź S.A., while the responsibility for the preparation of data for the consolidated financial statements of the KGHM Polska Miedź S.A. Group rests with the management boards of the companies subject to consolidation.

 

Many years of experience in the identification, documentation, recording and controlling business operations and the implemented audit and inspection procedures, combined with state-of-the-art information technology supporting the registration, processing and presentation of business and financial data guarantee the effectiveness of the systems of internal control and risk management in the process of preparing financial statements in KGHM Polska Miedź S.A. In recognition of the high quality of provided information, the statements of KGHM Polska Miedź S.A. have for many years received top assessments in the competition for the “Best Annual Report”.

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