Annual Report 2009/10 Excellence in Retailing - Douglas Holding

The data transferred is then automatically examined for reasonableness. In the event
that warning or error messages should arise, the respective company must resolve the issues
before the data is submitted to corporate accounting. Manual controls with respect
to quality and completeness are performed by corporate accounting.
Another example of a controlling instrument is the financial statement presentation of
the individual subsidiaries. The respective managing directors of all material subsidiaries
present their financial statements according to centralized, standard formats to the Executive
Board, corporate accounting and the Group independent auditors. Furthermore, the
managing directors can be questioned about critical issues by those bodies. In conclusion,
the respective managing directors confirm that all requirements have been complied with
and confirm the completeness of all data relevant to the consolidated financial statements
by submitting an internal letter of representation.
The necessary accounting steps as part of the final consolidation conducted by corporate
accounting are subject to various automated and manual controls and reasonableness
tests. Key controls in this respect include automated reasonableness tests and
manual comparisons of actual-to-budget and current-to-prior year. The preparation
of the cash flow statement and changes in equity is also system-supported just like the
segment reporting.
Valuations in connection with the acquisition of shares (e.g. purchase price allocation)
are generally performed for material acquisitions on the basis of external expert valuations.
The valuation of provisions, namely personnel provisions, is conducted by external
actuaries on a regular basis for the year-end closing.
For purposes of the material processes for the individual and consolidated financial
statement preparation, organization handbooks, instructions and guidelines are available
in German and in English. These are regularly adjusted to conform to current conditions
and are made available to all those employees involved.
As a rule, the principle of dual control is applied, which means that all material transactions
are controlled by at least a second person. The principle of separation of duties is
also applied to all transactions, that is, the rights and access of employees are restricted
to the extent that the principle of dual control will not be defeated. In certain Group companies,
such a separation of duties control is not possible due to the low staff number. In
this respect, compensating control mechanisms are in place that would prevent or detect
possible violations.
The compliance and execution of these controls are regularly reviewed both operationally
and technically by the Group Internal Audit & Risk Management division. Accordingly,
the Group Internal Audit & Risk Management division prepares, together with
the Executive Board and the managing directors of the Group companies, an annual riskoriented
audit plan, which is supplemented during the current year by special audits. The
findings therefrom are presented to the CFO and the Chairman of the Executive Board
as well as the managing directors of the companies audited and actions are resolved to
minimize the risks discovered.
In addition to the contextual and technical risks, risks could arise from failing to
meet deadlines. To prevent such risks, corporate accounting monitors the processes in
place for the individual and consolidated financial statements in conformity with IFRS
Management Report
Key results
Business activities and operating environment
Net assets, financial position and result of operations
DOUGLAS HOLDING AG
Subsequent events
Control system and success factors
Opportunities and risks situation
Statutory disclosures
Forecast and overall assessment
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