Annual Financial Statements 2011 of Bank Austria

Management Report of UniCredit Bank Austria AG
A personnel-intensive service company seeking to increase
efficiency needs to make investments in the buildings it uses. With
the realisation of the Bank Austria Campus project, the head office
functions currently performed in various locations will be
concentrated within a single headquarters complex. Bank Austria
will develop, build and utilise a new business location with
workplaces for about 4,000 employees of the bank by 2016.
Planning permission will probably be granted by the authorities in
2012. Since 2011, UniCredit Bank Austria AG has been building an
innovative basic and ongoing training centre at Kaiserwasser in
Vienna. The training centre – with Turin, UniCredit Group’s second
international centre for management development – will include
sports and leisure facilities, and facilities for events. After
completion, scheduled for the end of 2012, it is envisaged that
about 4,000 employees from all the regions covered by the Group’s
operations will participate in training courses at the centre each
year.
3. Events after the balance sheet date
The guarantee assumed in April 2010 for a second loss position of
a synthetic securitisation issued by the Ukrainian banking
subsidiary ("Ukrsotsbank") expired and was renewed by UniCredit
Bank Austria AG at the end of December 2011. The Ukrainian
central bank gave its approval as at 31 January 2012. At the end of
2011 the transaction amounted to USD 1,125.3 m (guarantee
amount).
4. Report on key features of the internal control and risk
management systems in relation to the financial reporting
process
The Management Board is responsible for establishing and
designing internal control and risk management systems which
meet the company’s requirements in relation to the financial
reporting process. The purpose of this report is to provide an
overview of how internal controls are organised in relation to the
financial reporting process.
The objective of the internal control system is to assist
management in assuring internal controls in relation to financial
reporting which are effective and are improved on an ongoing
basis. The system is geared to complying with rules and
regulations and creating conditions which are conducive to
performing specific controls in key accounting processes.
Following the integration of the Bank Austria Group in UniCredit
Group, the Italian Savings Law, Section 262 (process description
for minimising risk in preparing financial statements) in particular,
must be complied with in addition to the existing internal control
system.
Pursuant to the “262 Savings Law”, the CEO and the CFO
delegated by UniCredit S.p.A. are liable, under civil and criminal
law, for any violation of the legal provisions. They are also
responsible for every subsidiary within the group of consolidated
companies which is covered by financial reporting because the
“262 Savings Law” deals with consolidated financial statements.
Internal Audit performs independent and regular reviews of
compliance with internal rules also in the area of accounting. The
Head of Internal Audit reports directly to the Management Board
and provides the Chairman of the Supervisory Board with quarterly
reports.
Control environment
The basic aspect of the control environment is the corporate
culture in which management and all employees operate.
UniCredit S.p.A., the parent company of UniCredit Bank Austria
AG, works to maintain effective communication and convey the
corporate values defined in the Integrity Charter. The Integrity
Charter embodies the UniCredit Group’s identity and is based on
the following shared values: fairness, transparency, respect,
reciprocity, freedom to act, and trust.
The implementation of the internal control system in relation to the
financial reporting process is also set out in the internal rules and
regulations:
All accounting entries are made within the guidelines established in
the Accounting Policy, and release follows defined instruction and
control criteria. For each general ledger account there is a
responsible person who reconciles the general ledger accounts in
accordance with existing rules. This internal reconciliation process
is interrogated by Financial Accounting and reviewed by Internal
Audit.
Risk assessment
In the course of the “262 Savings Law” project, the persons having
process responsibility identified risks in relation to the financial
reporting process; these risks are monitored on an ongoing basis.
The focus is on those risks which are typically considered to be
material.
To meet the “262 Savings Law” requirements, controls pursuant to
the methodology used by UniCredit S.p.A. are required to be
performed at least on a half-yearly basis (for full-year and half-year
reporting).
Controls
All controls are applied in the current business process to ensure
that potential errors or deviations in financial reporting are
prevented or detected and corrected. Controls range from a
management review of results for the various periods to specific
reconciliation of accounts and the analysis of continuous
accounting processes.
The levels of hierarchy are designed so that an activity and the
control of that activity is not performed by the same person (foureyes
principle). In the course of the preparation of financial reports,
the general ledger accounts are reconciled with business and frontend
systems.
IT security controls are a cornerstone of the internal control
system. IT access authorisation is handled on a very restrictive
basis. The operation of the financial reporting system is also
assured through automated IT controls included in the system.
Bank Austria – Annual Financial Statements 2011 208