Internal control and risk management system for the group accounting process

We apply numerous measures and internal controls to ensure that our accounting processes and financial reporting are correct and reliable, and that the annual financial statement and management report at Company and Group level comply with the applicable rules. Fresenius Medical Care’s reporting process, which is generally carried out at four levels, guarantees a particularly intensive discussion and control. The financial data and key figures at each level (local entity, region, division, Company) are discussed and compared regularly on a monthly and quarterly basis with the previous year’s figures, budget figures, and the latest projections. In addition, all parameters, assumptions and estimates that are of relevance for the externally reported Group and segment results are discussed in-depth with the departments responsible for preparing the annual and consolidated Group financial statements. These matters are also discussed on a quarterly basis in the Supervisory Board’s Audit and Corporate Governance Committee.

Fresenius Medical Care’s internal control system for financial reporting aims at ensuring compliance with the accounting regulations and contains guidelines as well as instructions, which

1. govern the maintenance of records to ensure that transactions are presented accurately and fairly,
2. govern the maintenance of records to guarantee that the disposition of assets is documented in sufficient detail,
3. provide reasonable assurance that Fresenius Medical Care’s transactions are recorded as necessary to permit the preparation of financial statements in accordance with accounting principles,
4. ensure that earnings and expenses are only recorded after management approval (dual control principle),
5. provide sufficient assurance regarding the avoidance and timely discovery of any unauthorized acquisition, use or sale of Group assets, which could have a significant effect on the Company or Group financial statements.

Other basic factors ensuring reliable financial reporting and the correct recording of transactions in accounting include control mechanisms, such as systematic and manual controls, and the separation of certain personnel functions to prevent conflicts of interest. Furthermore, the assessments carried out by management ensure that risks with a direct impact on financial reporting are identified and that controls are in place to minimize these risks. Moreover, we discuss changes to accounting standards and regularly and extensively train employees responsible for financial reporting.

Fresenius Medical Care has implemented comprehensive quality management systems and a compliance program in all of its regions. Our aim is to ensure that our business activities are in line with recognized standards as well as local laws and regulations. One element of the compliance program is our code of conduct, which we have implemented in every region. It encourages our employees worldwide to conduct themselves in a professional and responsible manner at all times, both within the Company and toward our patients, external partners and the public, and to always respect the local laws and the Company’s standards of conduct. More information on this can be found in the “Compliance” section.