# Financial Statement Closing Process (FSCP)

| No.  | Component                  | Control Area                                                 | Question                                                     | Answer                                                       | Evidences                                                    |
| ---- | -------------------------- | ------------------------------------------------------------ | ------------------------------------------------------------ | ------------------------------------------------------------ | ------------------------------------------------------------ |
| 1    | General closing            | Principle of financial reporting                             | Which basic financial reporting policies do you have?        | The organization follows the German law regarding financial reporting and has various internal reporting policies and guidelines. | Financial laws (i.e. HGB, AO, Ustg, ...)<br />Policies: Accounting<br />Process: Finance |
| 2    | General closing            | Understanding accounting policies                            | Who approves the accounting policies and how are changes implemented? | The company follows the German laws. Internal accounting policies are approved by the CFO. Changes can be implemented by any accounting employee but must be approved by the CFO. | Financial laws (i.e. HGB, AO, Ustg, ...)<br />Policies: Accounting |
| 3    | General closing            | Accounting manual                                            | Which accounting manuals and related documents exist?        | Various accounting policies and a finance process.           | Policies: Accounting<br />Process: Finance                   |
| 4    | General closing            | Seggregation of duties                                       | How are the duties of posting financial data, collecting financial data and approving financial data for the reporting seggregated? | Financial data is posted by accountants, the collection of financial data is handled by controllers and the approval of the reporting data is performed by the CFO. | Process: Finance                                             |
| 5    | General closing            | Management of accounting system                              | What are the accounting systems access control mechanisms and how are they implemented? | The accounting system is username and password protected with access restrictions according to the position and function of every person. | ITGC                                                         |
| 6    | General closing            | Management of accounting system                              | How is the financial data stored and maintained in the accounting system to prevent them from being altered unauthorized? | Accounting data are stored digitally and can only be accessed and modified based on individual user permissions. | ITGC                                                         |
| 7    | General closing            | Management of accounting system                              | What are the accounting systems functions to prevent alterations or modifications after the settlement of the accounts? | Accounting periods can be locked preventing further alterations in the accounting system. | Screenshot                                                   |
| 8    | General closing            | Closing schedule                                             | What is your closing schedule and how do you ensure the completion of the closing in time? | The financial closing is on the 5th business day of the following month. This is ensured through sufficient qualified personnel, reporting tools and monthly closing check lists. | Process: Finance<br />Checklists                             |
| 9    | None-consolidation closing | Information and evidence                                     | Do you keep references for financial statements including evidences such as contracts and invoices of significant transactions and how do you store them? | References are stored digitally for at least 10 years according to the German law. |                                                              |
| 10   | None-consolidation closing | Preparation and approval of non-consolidated financial information | How do you prepare figures of accounts, such as allowances, which need accounting estimates? | Estimates are performed based on historic experiences and risk avoidance. | Guidelines: Provisions                                       |
| 11   | None-consolidation closing | Preparation and approval of non-consolidated financial information | How do you ensure the completeness and correctness of the journal entries? | Completeness is ensured by comparison to historic and budget figures as well as open orders. Correctness is ensured through comparison with historic and budget figures. | Process: Finance                                             |
| 12   | None-consolidation closing | Preparation and approval of non-consolidated financial information | Which financial analysis do you perform (e.g. comparison of actuals and budget/previous year, KPI analysis, ...)? | Actual vs. budget, actual vs. previous year and KPI figures are analyzed. | Process: Finance                                             |
| 13   | Reporting package          | Preparation and approval of reporting package                | How do you ensure the necessary competencies for the employees involved in the creation of the financial closing and financial reporting? | This is done during the HR search and the employee evaluation. | Job description<br />Employee Evaluation Form                |
| 14   | Reporting package          | Preparation and approval of reporting package                | Who approves the reporting package or revisions thereof?     | CFO                                                          |                                                              |

2022-01-01 - Version 1.0
