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Internal control and risk management systems with regard to the process of preparing financial statements of mBank

mBank is equipped with an internal control system which supports bank management by ensuring efficiency and effectiveness of the bank’s operations, reliability of financial reporting, compliance with risk management rules of the bank, as well as compliance of the bank’s operation with the law and internal regulations.

The internal control system encompasses the following:

  • control function whose task is to ensure observance of control mechanisms concerning in particular risk management at the bank and which covers positions, groups of people and organisational units responsible for performance of tasks assigned to the function. The control function is performed on a regular basis by employees of all organisational levels as part of:
    • ongoing monitoring consisting in examining selected operations or activities performed at the bank beforehand and during their execution, and
    • periodical verification – consisting in verifying selected operations or activities already performed in order to check the adequacy and effectiveness of ongoing monitoring.
  • compliance unit, whose task is to identify, asses, control and monitor the risk of non-compliance of the bank’s activities with the law, internal regulations and market standards and report in this respect. Thetasks of the compliance unit are executed by the Compliance Department.
  • independent internal audit unit, whose task is to examine and assess, impartially and objectively, the adequacy and effectiveness of the risk management system and the internal control system. The tasks of the independent internal audit unit are executed by the Internal Audit Department.

On the basis of conducted reviews and assessments of control mechanisms’ effectiveness, the Management Board of the bank, the Audit Committee and the Supervisory Board of the bank are provided with:

  • information on identified major irregularities in the functioning of control mechanisms immediately after their identification and information on the effects of actions taken in order to remove such irregularities, and
  • periodic information concerning the areas of internal control.

On the basis of internal control activities the Management Board of the bank, the Audit Committee and the Supervisory Board of the bank are provided with information on the key areas of operation of the bank in compliance with the requirements arising from applicable laws.

The process of preparing financial data for reporting is automated and based on the accounting data of the bank.

Preparation of data in source systems is subject to formalised operational and acceptance procedures. Creating a collection of accounting balances on the basis of the system of general ledgers of the bank takes place within a process covering respective internal controls. Manual adjustments are subject to special controls.

The bank continuously monitors changes in provisions and external regulations related to the preparation of financial statements and updates internal regulations on an ongoing basis as well as adjusting IT systems where necessary.

The process of monitoring the operational risk which occurs in the preparation of financial statements in the bank includes mechanisms which effectively ensure the security of IT systems. mBank has in place a business continuity plan which covers also the IT systems used in the process of preparing financial statements.

Financial statements of mBank and the Group are prepared by the Financial Reporting Department. Consolidated financial statements are drawn up based on data submitted by Group subsidiaries. The Financial Reporting Department monitors the reporting packages prepared by the subsidiaries in terms of their correctness, completeness and coherence of data.

The responsibility for controlling the coherence and completeness of the bank’s accounting books and administering the model chart of accounts lies with the Accounting Department. Both Departments report to the Vice-President of the Management Board, Chief Financial Officer.

Financial statements are submitted to the Management Board of the bank for verification. The Audit Committee of the Supervisory Board receives quarterly financial statements before they are published. After consultations with the bank’s external auditor and the Members of the Management Board of the Bank, the Audit Committee recommends whether the Supervisory Board should approve or reject annual financial statements.

The annual and semi-annual financial statements of mBank are respectively subject to an independent audit or review by a statutory auditor. The selection of the statutory auditor of the bank requires a resolution of the General Meeting. The Audit Committee of the Supervisory Board issues an opinion on the selection of the statutory auditor. In the subsidiaries, supervisory boards decide on the selection of the statutory auditor.

The procedures of co-operation of mBank and the external auditor ensure that all the important issues related to the recognition of economic events in the books and financial statements are being consulted on an on-going basis.

The aspiration to ensure the highest standards of financial statements is reflected in the high quality of reporting. In “The Best Annual Report 2016” contest organised by the Accounting and Tax Institute (IRiP), the results of which were announced in October 2017, mBank won the title “The Best of the Best” for the best annual report in the category of financial institutions for the fifth time in a row.