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Allianz Annual Report 2012

Controls and Procedures Statements pursuant to § 289 (5) and § 315 (2) no. 5 of the German Commercial Code (“Handelsgesetzbuch – HGB”) and explanatory report. Internal controls over financial reporting In line with both our prudent approach to risk governance and compliance with regulatory requirements, we have created a structure to identify and mitigate the risk of mate- rial errors in our consolidated financial statements. Our internal control system over financial reporting is based on the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission and is regu- larly reviewed and updated. Internal control approach Our approach can be summarized as follows: −− We use a top-down, risk-based approach to determine the accounts and operating entities that should fall ­under the scope of our internal control systems. We do so by carrying out an annual, qualitative and quantitative analysis of our consolidated financial statements and disclosures. −− Then, our local entities identify risk scenarios that could lead to material financial misstatements, taking into ­account the likelihood of a risk materializing and the potential impact of any resulting error. −− Key controls over the reporting process are put in place to ensure that if a potential risk materializes, the likeli- hood and potential impact of it resulting in a financial misstatement is reduced. In addition to these focused controls, we also establish controls over the Group as a whole, with an emphasis on the control environment, the effectiveness of information and communication flows, the risk assessment process and the ongoing monitoring of the internal control system. Given the heavy dependence of financial reporting processes upon IT systems, establishing controls over these is also vitally important. −− Finally, we focus on ensuring that controls are appropri- ately designed to mitigate risk, but also that they are ­effectively executed. We have set consistent documenta- tionrequirementsacrossthe ­AllianzGroupforelements such as processes, related key controls and their execu- tion. We conduct an annual assessment of our control system to continuously maintain and enhance its effec- tiveness. Group Audit and local internal audit functions ensure that the overall quality of our control system is kept under constant scrutiny. Internal control approach C 104 Financial misstatement risk assessment Scoping Risks Key controls Assessment Determination of significant accounts and operating entities to be covered by systems of internal control Identification of risk scenarios that could result in a material financial misstatement Identification of key controls that prevent or detect errors or fraud resulting from risk scenarios Assessment of the design and operating effectiveness of key controls Annual Report 2012    Allianz Group214

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