02. PRISA, a global group Annual Report 2013 33 In that regard, the Group is exposed to potential variations in the exchange rates of the different currencies in which it holds debt with financial institutions and international suppliers of television content for the acquisition of audiovisual rights. At December 31, 2012 the weight of non-euro currencies with respect to total Group financial debt is not significant. In this context, and with a view to lessening this risk, as far as there are available credit facilities, based on its forecasts and budgets the Group maintains riskcoverage contracts to offset exchange rate variations (basically exchange risk insurance, forwards and currency options). ƒƒ Exposure to risks related to the price of paper The Group is exposed to the possibility of variations in its results due to fluctuations in the price of paper, the essential raw material in printed media and edition of books. The Group has set up a strategic coverage program through which, by means of long-term contracts, it can cover the price of a given percentage of the volume of paper to be consumed in the mid-term. In 2012 paper consumption represented 2.70 % of the Group’s total operational expenditure excluding amortization expenses, provisions and impairments. Control of risks derived from the reliability of financial information During fiscal year 2011 the Group has implemented a system of internal control over financial reporting that meet with the requirements established in the section 404 of the Sarbanes-Oxley, mandatory for the Group since that PRISA shares traded in the New York Stock Exchange. The identification of the risks over financial reporting, control activities, that include those relating to the general controls of information technology, and monitoring of the control system are described in the Annex to the Annual Corporate Governance Report, in paragraph “Description of the main characteristics of internal control and risk management in relation to the process of issuance of the financial information”. Main characteristics of internal control and risk management in relation to the process of issuance of the financial information The system of internal control over financial reporting of the Group is based on the general framework established by COSO. The methodology of the internal control model is to cover the requirements established by section 404 of the Sarbanes-Oxley, mandatory for the Group since that PRISA shares traded in the New York Stock Exchange.PRISA certified for the first time in the fiscal year 2011, according to the Sarbanes- Oxley, the proper functioning of its system of internal control over financial reporting, on which the Group’s external auditors issued an unqualified opinion on the effectiveness. The system of internal control over financial reporting consists of five interrelated components: control environment, risk assessment, control activities, information and communication, and monitoring. Control environment Organs and functions responsible for internal control over financial reporting (ICFR) The Board of Directors of PRISA has assigned one of its functions, as set out in Article 5.3 of Board, preapproval of the policy of control and risk management and periodic monitoring of internal information systems and control. Also, in accordance with the provisions of that article of the regulation, the financial information must be approved by the Board of Directors. In this regard, the Board of Directors is assisted, to the development of these functions, with the Audit Committee of PRISA. Among the basic responsibilities of the Audit Committee, as defined in the Regulations of the Board, are monitoring the effectiveness of internal control systems of the Company, and risk management systems and the preparation and presentation of regulated financial information, in particular the annual accounts and quarterly financial statements that the Board must provide to the markets and their supervisory bodies. In addition to monitoring the system of internal control over financial reporting (hereinafter ICFR), that perform both the Audit Committee and the Board of PRISA, the effective implementation of internal control model is the responsibility of the CEO and the CFO of PRISA, as well as the CEOs and CFOs of the Group’s business units involved in the preparation of financial information which forms the basis for the preparation of financial statements of the Group.
PRISA Annual Report 2013
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