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Section 3.2.7 a) expressly states that “transparency of information is a fundamental principle of the conduct of the Group, being a commitment to giving
reliable information to markets, whether financial or of any other kind. In this way, the company’s financial reports, both internal and external, will offer
a true reflection of its financial situation and its assets in accordance with generally accepted accounting principles”.
The aforesaid section stresses that “the individuals responsiblemust transmit truthful, complete and comprehensible financial reports. In no case will they
knowingly provide incorrect, imprecise or inaccurate information. Employees must not:
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keep records of transactions recorded on media other than normal accounting records that are not entered into official books;
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record non-existent expenditure, income, assets or liabilities;
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make entries in accounting books, incorrectly indicating their purpose;
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use fake documents;
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deliberately destroy documents before the end of the legally-required time limit for retaining them“.
Reporting channel for informing the Audit Committee of financial and accounting irregularities, as well as any breaches of the Code of Conduct
and irregular activities in the organisation, noting if this is confidential.
A procedure has been established for lodging complaints about breaches of the principles enshrined in the Code of Conduct, and this enables employees
to provide confidential information about any non-compliance with the principles set out in the Code of Conduct. The procedure for reporting and dealing
with possible non-compliance and reports relating to the Code of Conduct is administered by the manager of the Group’s Internal Audit Department,
who acts independently, giving an account of the most significant incidents over the course the year to the Company’s Audit and Control Committee.
Complaints should preferably by lodged electronically using a channel expressly set up for the purpose on the NH Hoteles intranet (codeofconduct@
nh-hotels.com), through which they are forwarded to the director of the Internal Audit Department, thereby ensuring that they remain confidential. In
addition, they may be sent by ordinary mail to Santa Engracia 120, 28003 Madrid, Spain, addressed to the Director of Internal Audit of NHHoteles, S.A.
The director of the Internal Audit Department is responsible for examining the information submitted, requesting the relevant evidence and reports and,
where appropriate, presenting the files containing all the information in his possession to the Chairman of the Board of Directors of NHHoteles, S.A. All
relevant complaints are presented to the Chairman of the Audit and Control Committee.
Training and periodic skills-updating programmes on, at least, accounting standards, audit, internal control and risk management for staff
involved in preparing and reviewing financial reports and carrying out FICS evaluations.
The Company has put in place two action channels relating to the Internal Financial Reporting Control System:
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Basictrainingprogrammes:OntheaimsandcharacteristicsoftheFinancialReportingControlSystem.Theseprogrammesareaimedattheindividuals
that make up the Financial Reporting Control structure, process managers and business unit directors. The aim is to provide information on the most
important aspects of the Financial Reporting generation process: The Company’s operating processes making up the Control System, the bodies
responsible for maintaining the controls defined for each process, reporting improvements or changes, understanding the established supervision
system, etc. These training programmes were carried out at the start of the assessment project and are held once a year.
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Continuity programmes: The aim of these programmes is to maintain the efficiency and efficacy of the control system through periodic training of all
the people belonging to the implemented control system. These programmes are designed individually, depending on the needs reported by the areas
involved
In parallel, the Finance Department, the personnel of which has the greatest involvement in preparing financial reports, has a specific annual training plan
delivered by external consultants that includes the chief areas of its activity: accounting rules, consolidation rules, specific financial reporting applicable to
the sector and areas considered particularly important to its functions.
F.2 Financial reporting risk assessment
Report at least:
F.2.1. Which are the main characteristics of the risk identification process, including error and fraud, regarding:
Whether the process exists and is documented.
Risks relating to the Financial Reporting Systemare determined and evaluatedwithin the general riskmap produced by theCompany, which is periodically
reviewed and updated.
The risks defined within the Company’s risk map are classified according to COSO criteria, including the following categories:
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Strategic risks: those caused by the uncertainty associated with changes in the competitive, company or industry environment.
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Financial risks: all risks caused by the uncertainty associated with fluctuations in interest rates, foreign exchange rates or difficulties and variations in
the conditions for accessing financing.
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Unforeseen risks: in general, these relate to damage to the company’s own assets and liabilities arising from damages caused to third parties and
damages caused by natural hazards.
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Operational risks: these include risks associated with uncertainty in processes, operations and staff or due to inadequate internal systems.
ANNUAL CORPORATE GOVERNANCE REPORT
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