The system adopted by Salini Impregilo is based on the approach set out in the ERM model and comprises the following main phases:
- Identification of financial disclosure risks: for Salini Impregilo, this phase involved, initially, an analysis of company processes of key importance in terms of potential impact on the parent company’s financial disclosures and, second, the identification of specific processes, which, though potentially not operational within the parent company, are nonetheless significant in connection with the entities included in the scope of consolidation, in view of the specific features of the business sectors in which they operate.
- Assessment of financial disclosure risks: the intrinsic risk (inherent risk assessed independently of related controls) for each item in the financial statements is assessed by analysing:
(i) the significance of the above-mentioned control objectives item by item;
(ii) the weight of each item within its financial-statement class (e.g., balance sheet assets or liabilities; revenue, production costs, result of financial operations, income tax), in order to identify its significance;
(iii) the materiality of the item in relation to profit before tax and equity.
- Identification of controls in relation to identified risks: the intrinsic risk (inherent) associated with each financial-statement item, as specified above, is subsequently analysed in relation to the control system operating in the individual Group entities.
- Assessment of controls in relation to identified risks: at regular intervals a special monitoring process is implemented to assess the mitigation effectiveness of controls and their effective operation with the analysed process.
During development and initial implementation of the system, facilitated by the presence of an already efficient and practical control environment in the Salini Impregilo Group, the company was assisted by independent experts, both during the risk assessment phase and during assessment of the effectiveness of the control model.
A corporate “Compliancy control” function has been set up, as part of the staff of the Manager responsible for drafting the accounting documents, to verify at regular intervals the effectiveness of the system relating to the financial disclosure process. Every six months, based on the outcome of its checks, the “Compliancy control” function draws up the related documentation and a report for the Manager responsible for drafting the accounting documents.