Control and risks committee

The Board has set up a Control and Risks Committee (formerly Internal Audit Committee) within the Board itself, that was formed, at the end of 2012, by the Director Andrea Martin  (independent and non-executive) with the role of Chairman, and by the Directors Leopoldo Conti (non-executive and not independent), Riccardo Preve (independent and non-executive) and Francesca Maderna (independent and non-executive).

During 2012, the Committee met 13 times, as shown in Table 2 enclosed with this Report, with meetings lasting an average of one and a half hour. Five of these were joint meetings with the Board of Statutory Auditors.

The former coordinator Roberto Cravero (independent and non-executive director) who handed in his resignation during the course of 2012, took part in all the six meetings convened while he was in office. Director Andrea Martin took part in 10 meetings (for 3 of which in the capacity of coordinator) whereas the members Leopoldo Conti and Riccardo Preve were absent from 5 meetings and from 1 meeting respectively. The member Francesca Maderna, appointed as member of the Committee on 20 September 2012, participated in all four meetings held after her appointment.

For 2013, the Committee is expected to meet around the same number of times as the previous period.

In 2013, the Committee has already held 3 meetings, one of which was a joint meeting with the Board of Statutory Auditors.

During its meetings the Committee also interacted, based on prior agreement and to address individual topics, with the CEO, the Corporate Accounting Reporting Officer, the Auditing firm and the Head of the Risk Management Function. It systematically interacted with the Internal Audit Officer and Compliance Officer, who normally attend the Committee’s meetings with a view to achieving synergy between the various players in the internal audit system.

The Committee also interacted with the Supervisory Body as per Italian Leg. Decree 231/2001, also due to the existing cross-membership mechanisms.

 

As part of the top-management’s self-assessment performed on 21 February 2013, the Board of Directors ascertained that Andrea Martin, the Committee’s Chairman, has accounting and financial experience, deemed appropriate by the Board.

The Committee provides its preliminary opinion to the Board of Directors with regards to:

  • the guidelines of the internal control and risk management system;
  • the adequacy of the internal control and risk management system with respect to the company’s characteristics and to the assumed risk profile as well as its efficacy;
  • the work plan prepared by the head of the internal audit function;
  • the main characteristics of the internal control and risk management system and its adequacy;
  • the results presented by the external auditor in the letter of recommendations, if any, and in the report on the main issues which came up during the external audit.

In reference to the appointment and revocation of the head of the internal audit function and to the allocation of resources suited to the fulfilment of its responsibilities by the Board of the Directors, the Control and Risks Committee is required to provide its favourable opinion (which is binding).

When aiding the Board of Directors, the Control and Risks Committee:

  • evaluates, together with the Corporate Accounting Reporting Officer, and having heard the opinion of the External Auditor and of the Board of Statutory Auditors, proper application of the accounting standards and their uniformity for the purpose of drawing up the consolidated financial statements;
  • expresses opinions on specific aspects pertaining to the identification of the main corporate risks;
  • examines the periodical reports covering the evaluation of the internal control and risk management system, and the specifically relevant ones prepared by the internal audit function;
  • monitors the autonomy, adequacy, efficacy and efficiency of the internal audit function;
  • may ask the internal audit function to carry out checks on specific operational areas, at the same time notifying the Chairman of the Board of Statutory Auditors;
  • examines the annual plans of the Control Functions and the reports on their implementation.

 

The Control and Risks Committee reports to the Board of Directors, at least once every six months during approval of the annual and interim financial report, on the activities carried out, on the use, if any, of its financial resources as well as on the adequacy of the internal control and risk management system.

On the subject of transactions with related parties and/or affiliated subjects, the Control and Risks Committee (consisting of independent directors only), also performs the functions assigned to it by the Board of Directors, as governed within the scope of the “Procedure” in force.

During 2012, the Committee’s activity regarded the following key guidelines:

  • procedure for transactions with related parties – applications and adaptation to the supervisory regulations on the subject of “affiliated parties”;
  • discussion with the Board of Statutory Auditor, with the Financial Reporting Officer and with the Auditing firm concerning certain balance sheet items for the period ending 31 December 2011, as well as consolidated interim management reports for 2012;
  • discussion with the CEO and with the Head of the Risk Management Function with regards to the push given to securities-related operations, to the new operational limits and to the new system of treasury proxies, later approved by the Board;
  • presentation and implementation of the 2012 audit plan;
  • interaction of the Committee, consisting of independent directors only, with the inspecting representatives of Bank of Italy during the course of the audits carried out by the latter at the Bank’s premises;
  • evolution lines of the internal control system.

 

Upon conclusion of its interim reports to the Board of Directors, the Committee stated that it had not found any inadequacies in the internal audit system.

The Chairman of the Board of Statutory Auditors - or another external auditor appointed by the Chairman from time to time - participates in the doings of the Committee. If deemed appropriate in connection to the issues to be discussed, the Control and Risks Committee and the Board of Statutory Auditors meet jointly.

During the course of the period, the Chairman of the Board of Statutory Auditors took part in 12 meetings.

Committee meetings were properly documented in minutes.

In performing its functions, the Control and Risks Committee can access the information and corporate functions necessary to carry out its tasks.

The Chairman of the Board of Directors and, if invited, the CEO and the General Manager may participate in the activities of the Control and Risks Committee; the Committee can also ask for the presence at its meetings of:

  • experts if the technical content of transactions becomes particularly important, to be identified also among Board members; these experts can be called to take part in meetings on an advisory basis;
  • all members or company staff concerned, who can be called to take part in the meetings on an advisory basis.

With resolution of 19 January 2012 the Board of Directors allocated the Control and Risks Committee (formerly Internal Audit Committee) annual economic resources of 60,000 Euro, to be used autonomously, subject to reporting to the Board concerning the use of funds within the sphere of the already envisaged six-monthly Report.

 

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