Annual Report - EDP

: corporate governance :Systems Department. The committee guaranteesand homogeneously collates the roles of thesedepartments in Spain. On 14 December 2012 theCoordination Committees were abolished, giventhat, from October 2012, the subsidiary becamerepresented on EDP’s committes of Iberian scope:Energy Planning Committee, Prices and VolumesCommittee, Market and Commercial IberianCommittee, Distribution Networks Committee,Iberian Commercial Committee and GenerationCommittee.EDP Energias de Portugal, Sucursalen España, Sociedad AnonimaADMINISTRATION, COORDINATION, MANAGEMENTAND REPRESENTATION STRUCTUREEXECUTIVE COMMITTEEPermanent EDP Representative António Mexia (Chairman)Permanent EDP Representative Nuno Almeida AlvesPermanent EDP Representative João Manso NetoPermanent EDP Representative António Martins da CostaPermanent EDP Representative Miguel Stilwell de AndradeChairman of the Board, HC Energía Manuel Menéndez MenéndezGeneral Corporate - Activities Spain Miguel Ribeiro Ferreira1 st Line Responsible, HC Energía Javier Sáenz de Jubera1 st Line Responsible, NG Energia Massimo Rossini1 st Line Responsible, EDP Renováveis João Paulo CosteiraMANAGEMENT COMMITTEELegal DepartmentEmílio Garcia-CondeFinancial Management Department Nuno GonçalvesTaxation Spain DepartmentRamon Ortea GarciaInformation Systems Department José NegueruelaAudit DepartmentAzucena ViñuelaBusiness Analysis DepartmentJoão NicolauShared Services Department - ShareCorp Félix ArribasShared Services Department - ShareCom Vanda MartinsII.4. Annual Reportof the Generaland Supervisory BoardEvery year, the General and Supervisory Board,Committee on Financial Matters/Audit Committeeand the Remuneration Committee draft a reporton their supervision, organisation, operation andany constraints that they have come across whileperforming their duties. These reports are postedon the EDP website with the Annual Report of theGeneral and Supervisory Board.II.5. Risk managementand internal controlsystemsII.5.1. Internal controlof financial reportingInterning auditing in the EDP Group is a corporatefunction and is performed by the Internal AuditDepartment, which belongs to the Corporate Centreand reports to the Chairman of the Executive Boardof Directors. The department’s work is supervisedby the Committee on Financial Matters/AuditCommittee, which approves the annual internalaudit plan, sent to the Executive Board of Directors.In its management, the EDP Group has an internalcontrol system based on the SCIRF (InternalFinancial Reporting Control System) and designedin line with the best international practices andthe COSO and COBIT reference models.In order to ensure that there are controlmechanisms and procedures to mitigate the riskof fraud or any materially relevant errors in thefinancial statements, EDP has a maintenanceand assessment cycle with pre-establishedactivities and an accountability model that definescompetences and those in charge at corporate leveland in company units and business units (CUs/BUs).The cycle maintenance work in 2012 includedactivities at: (i) corporate and (ii) subgroup andcompany level.116The corporate level activities were as follows:º º Annual planning and monitoring of the cyclewas conducted along with maintenance andreview of the reference models, methodologicaland conceptual assistance to CUs and BUs.º º Identification of the scope of the SCIRF 2012cycle by applying the model to the consolidatedfinancial statements as at 31 December 2012,based on criteria of materiality from a topdown perspective (Corporate IAD) and of risk,which were used to identify the CorporateCentre companies and departments. The SCIRFcovered most of the companies in Portugal,Spain and Brazil and aggregately the units inEDP Renováveis, S.A., EDP Renewables Europe,S.L. and EDP Renewables North America, LLC.º º The scope model helped to identify newsubjects for documentation and controls bylocal managers and pinpointed a numberof processes being redesigned as a resultof organisational, structural, legislative andoperational changes.º º It identified the software used in processescovered by the result of the scope model andselected the associated service organisations.An ISAE 3402 report was requested or as analternative an independent assessment of thecontrol environment used in providing servicesto the EDP Group.º º During the evaluation cycles some relevantmatters and recommendations were alsoidentified and have been specifically monitored bybusinesses and received technical support andsupervision from the Corporate IAD. Considerableprogress was made, thereby reinforcing thequality and soundness of the SCIRF.º º Non-conformities identified in the evaluationcycles were analysed and action to resolvethem was pinpointed. They were thenimplemented by local managers and receivedsupport and monitoring from the IAD,with a positive percentage of resolution.º º The self-certification process, by which theSCIRF managers conduct an assessment oftheir own elements based on processes andtheir controls and groups of processes, endingat company level, was completed successfully.The certificates issued in a chain in an upwardsequence in the control internal hierarchy ofeach CU/BU clearly indicated the sufficiency orinsufficiency of the documentation of processes(appropriate and up-to-date), control activities(performed and with appropriate evidence),resolution of non-conformities and enforcementof the code of ethics (familiarity and compliance).º º In partnership with the Training, Recruitmentand Documentation Department of EDP Valor,a course was organised for SCIRF managers inPortugal to further their knowledge of controlconcepts and practices.º º During the analysis of function incompatibilitymatrices (IT and business) a comparison wasmade between real and theoretic incompatibilities.A real incompatibility ratio of less than 1% showedreasonable comfort in this area.º º The design of controls was assessed to confirmthat their structure was suitable for the timelyprevention of materially relevant errors and/orimproper appropriation of Group resources.º º The operational efficacy of controls wasassessed to confirm that they were beingperformed by qualified professionals incompliance with their design.The activities at subgroup and company levelwere as follows:º º An analysis was conducted of the use of thescope on individual financial statements andA World Full Of Energy