Values

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Report Statements Supervisory
Board
Th e ICS for the accounting process consists of the following
areas: Th e Group’s internal rules for accounting and
the preparation of fi nancial statements are made available
without delay to all employees involved in the accounting
process. Th e consolidated fi nancial statements are prepared
in a reporting system that is uniform throughout the Group.
Automatic system controls ensure the consistency of the data
in the fi nancial statements. Systematized processes for coordinating
intercompany business operations serve to prepare
the corresponding consolidation steps. Circumstances that
could lead to signifi cant misinformation in the consolidated
fi nancial statements are monitored centrally by employees of
Bertelsmann AG and by RTL Group then verifi ed by external
experts as required. Central contact persons from Bertelsmann
AG and the divisions are also in continuous contact with the
local subsidiaries to ensure IFRS-compliant representation of
matters that are material to the Group and compliance with
reporting deadlines and obligations. Th ese preventive measures
are rounded off by controls in the form of analyses by
Bertelsmann AG’s Corporate Consolidation department and
RTL Group whose purpose is to quickly uncover Group-level
misrepresentations in the fi nancial statements. Th e further
aim in introducing a globally binding control framework for
the decentralized accounting processes by the end of 2010 is
to achieve a standardized ICS format at the level of the local
accounting departments of all fully consolidated Group companies.
A standardized questionnaire was used throughout the
Group to obtain a snapshot of the quality of the ICS in the key
Group companies as part of a self-assessment conducted at
the time of the 2009 annual fi nancial statements. Th e fi ndings
were discussed in Audit and Finance Committee meetings at
the divisional level.
Corporate Audit evaluates the accounting-related processes
in the course of its auditing activities. As part of their work,
auditors are also required to report to the Audit and Finance
Committee of the Supervisory Board any signifi cant vulnerabilities
of the internal control and risk management system
relating to the accounting process that they identify in the
course of their audit.
Bertelsmann Annual Report 2009
Signifi cant Risks
Th e following signifi cant risks for Bertelsmann were identifi ed
in the course of risk reporting:
Financial Market Risks
Bertelsmann is exposed to various forms of fi nancial risk. Th ese
include interest rate and currency risks in particular. Th ese
risks are largely controlled centrally by Corporate Treasury
on the basis of guidelines established by the Executive Board.
Derivative fi nancial instruments are used solely for hedging
purposes. Bertelsmann uses currency derivatives mainly to
hedge recorded and future transactions involving foreign currency
risk. Some fi rm commitments denominated in foreign
currency are partially hedged when they are made, with the
hedged amount increasing over time. A number of subsidiaries
are based outside the euro zone. Th e resulting translation risk
is managed based on economic debt in relation to operating
EBITDA (leverage factor). Bertelsmann’s long-term focus is on
the maximum leverage factor permitted for the Group. Foreign
currency translation risks arising from net investments in foreign
entities are not hedged. Interest rate derivatives are used
centrally for the balanced management of interest rate risk. Th e
maturity structure of interest-bearing debt is managed on two
levels: by selecting appropriate fi xed interest rate periods for the
originated fi nancial assets and liabilities aff ecting liquidity, and
through the use of interest rate derivatives. Th e liquidity risk
is regularly managed and monitored on the basis of the planning
calculation. Lines of credit at banks as well as appropriate
liquidity provisions form a suffi cient risk buff er for unplanned
payments. Counterparty risks exist in the Group in invested
cash and cash equivalents and in the default of a counterparty
in derivatives transactions. Financial transactions and fi nancial
instruments are restricted to a fi rmly defi ned group of banks
with an excellent credit rating. Against the background of the
economic crisis, Bertelsmann has extended its internal guidelines
on investment of cash and cash equivalents. Some of the
investments are made on a very short-term basis so that the
investment volume can be reduced if the credit rating changes
(see also further explanatory remarks on “Risk Management”
in section 26 of the “Notes”).
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