The Group project with the name Implementing Governance following the German Accounting Law Modernisation Act (BilMoG) determined which Group companies and topics are to be included in financial reporting in terms of the documentation and assessment of their internal control systems. The relevance of the Group companies was decided on the basis of statutory requirements and qualifying criteria. They include the German companies that come within the scope of BilMoG as well as foreign companies that pass a certain materiality threshold. The risk-focused selection of topics takes place annually on the basis of qualitative and quantitative criteria for the items in the balance sheet and income statement. In the future, companies and topics will be selected by a central ICS unit.
Centralised target requirements (management controls) have been formulated for the companies’ internal control systems for all identified topics. The existing management and monitoring instruments to cover the target requirements in the selected companies are documented and must be updated every year. The structure, functionality and therefore the effectiveness of the instruments is also assessed annually. This is carried out on a regular basis by the Internal Audit department or by means of self-assessment by the process owner.
This procedure of testing based on centrally defined target requirements serves to standardise the internal control system across the Group for accounting purposes. Each company reports regularly to its supervisory board on the effectiveness of its internal control system. Lufthansa’s Audit Committee also looks regularly at the effectiveness of the internal control system for financial reporting at the overarching level.