In order to prepare the BME Group’s consolidated annual financial statements, accounting policies adopted are
pursuant to the legislative framework applicable to the Company and BME Group companies. These are set forth
in the Code of Commerce and other mercantile legislation, in the Spanish General Chart of Accounts approved by
Royal Decree 1514/2007 and its sector adaptations, in Circular 9/2008, dated 10 December, of the CNMV (amended by
Circular 6/2011 dated 12 December), and in the International Financial Reporting Standards adopted by the European
Union.
4.2. Mechanisms in standard format for the capture and preparation of financial information, which are applied
and used in all units within the entity or group, and support its main financial statements and accompanying
notes as well as disclosures concerning ICFR.
The BME Group has mechanisms for the capture and preparation of financial information based on tools of renowned
prestige. All BME Group companies use the same tools, which guarantees completeness, uniformity and correct func-
tioning, as well as the correct preparation of the required financial information and the applicable disclosures.
These tools are segregated into different interconnected layers and are equipped with applications into which data
on the operations which take place each day via the different channels (internet, in-house services, etc.) are input.
This information is then processed and prepared before being treated by specific back-office systems and segregated
according to market and transaction category. This way reliable and exact information is obtained for accounting
purposes and generating results. The results and calculation of data once the operations have executed on the market
are automatically transferred to reporting and financial consolidation tools which have quality controls to guarantee
these are reconciled.
5.- Monitoring
The existence of at least the following components, describing their main characteristics:
5.1. An internal audit function whose competencies include supporting the audit committee in its role of moni-
toring the internal control system, including ICFR. Describe the scope of the ICFR assessment conducted in the
year and the procedure for the person in charge to communicate its findings. State also whether the company
has an action plan specifying corrective measures for any flaws detected, and whether it has taken stock of their
potential impact on its financial information.
The internal audit function is carried out by the Internal Audit Department which is a staff body within BME. It has no
executive responsibilities in managing the Group’s ordinary businesses and reports directly to the Audit Committee,
a BME board committee.
The remit of the Audit Committee includes the following duty, pursuant to article 35 of the Articles of Association:
“To supervise the Company’s internal audit services which shall be answerable to the Audit Committee, reporting to
the Board of Directors”.
This power is developed in article 17.2.c) of the Board of Directors’ Regulations, which textually states:
“To supervise the Company’s internal audit services which shall depend on the Audit Committee, reporting to the
Board of Directors. To this end, the Committee shall monitor the independence and efficiency of the internal audit
functions, proposing the selection, appointment, re-election and termination of the head of the internal audit
service, as well as the budget for the service, receiving periodical information in regard to its activities and verifying
that senior management takes into consideration the conclusions and recommendations of its reports. It shall also
establish and supervise the arrangements whereby Company personnel may anonymously report any irregularity in
the internal control and risk management systems.”
The Internal Audit Department compiles, at least, the following reports for the Audit Committee:
• Review of processes and activities: arising from the execution of the department’s activities plan. Also, when
requested to do so by the Audit Committee and managers of BME Group companies, with prior consent from the
Risk Committee.
• Review of Internal Control over Financial Reporting: assessment of the effective functioning of the Internal Control
over Financial Reporting System.
• Annual report on the activities of the Internal Audit service: including information on the execution of the review
activities carried out and incidents relating to the risks identified in the department’s processes.
In addition, in accordance with BME’s IRMS Methodology, Business Unit and Corporate Area managers submit half-
yearly information to the Risk Committee, mainly detailing any occurrences of the identified representative risks mate-
rialising, their assessment of these and, if appropriate, the action plans to mitigate them. Among these reports, the
Risk Committee receives a report from the Financial Department which, as it is responsible for the management of
ICFR, includes information regarding occurrences of risk, assessments thereof and action plans relating to ICFR.
In turn, the Director of the Internal Audit Department, who attends Risk Committee meetings at which he may speak
but not vote, proposes recommendations and suggests the most relevant points of reflection on the IRMS, based on
the information provided.
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Appendix to the Annual Corporate Governance Report
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