2 months ago

Annual report and accounts 2016

198 Spanish corporate

198 Spanish corporate governance report continued The Company consolidation process involves a critical review of Aer Lingus, Avios, British Airways, Iberia and Vueling group submissions. For specialist areas, such as treasury, consolidated information is reviewed by subject specialists to identify anomalies, inconsistencies with management accounting information, and any inconsistent interpretation of instructions within the Group. The final accounts are reviewed by the Group Head of Reporting together with the Chief Financial Officer. A peer review is also carried out by an experienced finance manager that has not been involved in the latter stages of the consolidation process. Critical judgements, estimates, evaluations and projections are, as far as possible reviewed in advance of the year-end close process. Where appropriate, management obtains the support of internal or external specialists to conclude on any of these matters. The scope of ICFR in the Group has been based on the material subsidiaries being Aer Lingus, Avios, British Airways, Iberia and Vueling. The scope of ICFR also includes the Company for Entity Level Controls and the Financial Statement Consolidation Process. The Group ICFR model contains a Finance Risk & Control Matrix that includes entity level controls, IT general controls and 19 main business processes considered relevant to the preparation of the financial statements. The controls and processes are listed below. a. Cargo Sales b. Payroll c. Passenger Sales – Ticket Sales d. Passenger Sales – Travel e. Passenger Sales – Billing/Interline Billing f. Fixed Assets – Aircraft g. Fixed Assets – Ground Assets h. Fixed Assets – Engines and Engine Parts i. Fixed & Current Asset Inventory – Engineering j. Debtors & Invoicing k. Fuel l. Buying Goods and Services m. User charges n. Avios o. Treasury p. Financial Statement Closing Process q. Alliance Partner Arrangements r. Tax s. Other Revenue The design, implementation and maintenance of appropriate systems of ICFR is primarily the responsibility of management with process ownership identified and communicated to the operating companies via the IAG ICFR Policy. Business process owners with the support of the Internal Control team, are also responsible for the documentation of processes and sub processes. ICFR controls including 587 key controls have been defined across the 19 business processes and IT general controls in order to provide reasonable assurance as to the reliability of the financial information disclosed to the markets. Such controls can only provide reasonable and not absolute assurance against material misstatement, errors, losses or fraud. As a result of differences in business processes across the material subsidiaries not all controls are required in all material subsidiaries. INTERNATIONAL AIRLINES GROUP Annual Report and Accounts 2016

199 F.3.2 Internal control policies and procedures for IT systems (including secure access, control of changes, system operation, continuity and segregation of duties) giving support to key company processes regarding the preparation and publication of financial information. The Company has established the Baseline Information Security Standard which applies to all operating companies within the Group. IAG GBS Group IT Security is responsible for leading, managing and coordinating the dissemination and implementation of information security practice within IAG. Information is protected based on its value, confidentiality, criticality to the company, and the risk of loss or compromise. The Standard requires that all personnel working for the Group shall be organised in such a way as to minimise the risk of unauthorised changes to information, error, theft or fraud. No personnel shall be allowed to both instigate an action and to approve that action. IAG Global Business Services (GBS) manage and support IT systems for British Airways and Iberia. IT systems used by Vueling, Avios and Aer Lingus are managed by those operating companies in accordance with the IAG Information Security Standard which is grouped under the following areas: a. Organisation of Information Security b. Information Security Awareness and Training c. Risk Management d. Segregation of Duties e. Access Control and Privilege Management f. Physical Security g. Password Management h. Logging and Monitoring i. Network and Infrastructure j. Security Patching and Virus Protection k. System Developments and Change Management l. Systems and Security Operations m. Compliance The Group IT General Controls (ITGCs) are aligned with the IAG Information Security Standard. There are 21 key and 16 non-key ITGCs supporting the financial reporting processes. All systems used by the Group including those related to financial reporting must comply with the IAG Information Security Standard as it provides clear direction concerning expectations for internal controls that are required to cover the inherent risks over the following four IT system management areas: a. IT environment I. The IT organisational structure and description of responsibilities II. III. IT systems architecture and infrastructure Environmental protection against physical damage, loss, theft, or abuse of IT systems and equipment b. Secure access I. Access to system is managed via clear segregation of duties II. III. IV. Application owners are responsible to keep their systems free of unauthorised and inappropriate users and access Users will only have access to data and functionality required to carry out the tasks assigned to them by the Group Logical access controls include procedures for adding, changing and deleting users V. Restriction of privileged access rights to application support teams VI. VII. VIII. Requirement to have personalised credentials for each user accessing the application Password settings are configured appropriate to prevent unauthorized access to systems Physical access control including restricting access to computer facilities to authorised individuals Strategic Report Corporate Governance Financial Statements Additional Information

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