Implemented solutions regarding the internal control system protect to a significant extent the Bank from financial reporting errors and provide the Bank’s Management with information which helps evaluate the correctness, efficiency and security of the process of preparing financial reports, also in order to ensure the highest possible effectiveness in managing identified types of risks accompanying the process.
The internal control system, introduced by the Management Board of the Bank and incorporating the financial report preparation process, has been designed to facilitate the control of process risk while maintaining appropriate supervision over the correctness of gathering, processing and presentation of data necessary for the preparation of financial reports in keeping with effective laws.
An important element of the internal control system in the process of preparing financial reports is the cooperation of the Audit Committee of the Bank’s Supervisory Board with an audit firm providing financial audit services. The Bank prepared the policy of selecting an audit firm for carrying out an audit and policy for providing by an audit firm carrying out an audit, by entities connected with such audit firm and by a member of an audit firm network – permitted services not being an audit. The above-mentioned scope of information is captured in the document „Policy of Selecting and Cooperation with Audit Firms”, which was approved by the Audit Committee on 26 October 2017. The policy specifies:
1. The principles of selecting the audit firm to conduct:
a. statutory audit, i.e. annual audit of the consolidated financial report of the Bank’s Capital Group or annual audit of the Bank’s financial report whose duty to conduct results from art. 64 of the Accounting Act of 29 September 1994 (Dz. U. of 2016, i.e. item 1047 and 2255 and of 2017, item 61, 245, 791 and 1089) (hereinafter „the Accounting Act”), provisions of other acts or provisions of the EU law,
b. voluntary audit, i.e. annual audit of the financial report which is conducted pursuant to the Bank’s decision, and not on the basis of art. 64 of the Accounting Act of 29 September 1994, provisions of other acts or provisions of the European Union law, conducted in accordance with national or other audit standards, as well as auditing the consolidated annual financial report of the Bank’s Capital Group conducted in accordance with standards other than national audit standards;
2. Principles of providing permitted services not being a statutory or voluntary audit by:
c. audit firm conducting a statutory audit or voluntary audit at the Bank or at Millennium BCP,
d. entities connected with the audit company conducting a statutory or voluntary audit at the Bank or at Millennium BCP, and
e. member of an audit firm network conducting a statutory or voluntary audit at the Bank or at Millennium BCP.
3. Principles of the Bank’s communication with audit firms, entities connected with an audit firm or members of an audit firm network with respect to conducting statutory or voluntary audits and providing permitted services.
The External Auditor is selected by the Supervisory Board on the basis of a recommendation issued by the Audit Committee of the Supervisory Board. In addition, in the interest of the quality of financial data presented in the remaining published quarterly reports, the Bank, together with the External Auditor, has implemented cooperation procedures ensuring – on an on-going basis – the consultation of important issues connected with the recognition of economic events in the Bank accounts and financial reports. At the meetings of the Audit Committee of the Supervisory Board the External Auditor presents key findings relative to financial reporting, consults with the Audit Committee draft reports and proposes an approach to the audit of the annual financial statement.
Pursuant to the Supervisory Board decision of October 2017 PricewaterhouseCoopers Sp. z o.o. was the audit firm auditing the financial report of the Bank and the Bank’s Group for 2018. The audit was carried out on the basis of the agreement extended for the last fifth year of cooperation. Bearing in mind the mandatory rotation of audit firms resulting from legal regulations and the five-year period of cooperation with PwC, coming to an end, in 2018 the Bank conducted the process of selecting a new audit firm. The process was conducted in accordance with the „Policy of Selecting and Cooperation with Audit Firms” adopted by the Audit Committee on 26 October 2017. At the meeting of 25 October 2018, the Audit Committee familiarised itself with the report of the Task Force running for the Bank the process of selecting the audit firm containing the conclusions from the selection procedure and indicating the audit firm recommended for conducting the statutory audit. Based on the Report the Audit Committee recommended to the Supervisory Board the selection of Deloitte Sp. Z o.o. Sp. k. as the Statutory Auditor of Bank Millennium S.A. and the Bank Millennium Group for the years 2019-20. This recommendation was formulated on the basis of the selection procedure organised by the Bank meeting the binding criteria. The Supervisory Board on 26 October 2018 approved the selection of Deloitte Sp. Z o.o. Sp. k. as the Statutory Auditor of Bank Millennium S.A. and the Bank Millennium Group for the years 2019-20.
The Bank is covered by the consolidated financial statement of the BCP Group. Therefore, the annual review of the Bank’s internal control system supporting the process of preparing and disclosure of financial information is also subject to the terms and requirements of consolidated supervision, which is performed by the Bank of Portugal and the European Central Bank. The BCP Group External Auditor participated in 2018 in the review of adequacy and effectiveness of the part of the Bank’s internal control system supporting the process of preparing and disclosure of financial information (financial reporting) and issued an appropriate opinion in this respect.