Table of contents
1 Objective and Scope
1.1 Objective of this Procedure
1.2 Scope
2 Abbreviations
3 Definitions
4 Investment / Divestment:
4.1 Control evidence:
5 Major Repairs
5.1 Process:

Objective and Scope

Objective of this Procedure

This procedure describes the Group requirements for I&D – Internal Controls for PF1 and WP1:

• Modification in the assets books (IFA.01.01)
• Divestment for each maintenance shutdown (IFA.01.02)

Scope

This operating procedure (OP) applies to PF1 and WP1 within the Solvay Business Services scope of entities.

Abbreviations

Definitions

The process to assuring achievement of an organization's objectives in operational effectiveness and efficiency, which aim is to ensure the compliance with laws, regulations and Group policies and procedures.
The I&D internal control under SU MAC are:

• Investment / Divestment: Modification in the assets books (IFA.01.01)
• Major Repair: Divestment for each maintenance shutdown (IFA.01.02)

Investment / Divestment:

Modification in the assets books (IFA.01.01)


The Capitalizations/Divestments above 50k need to be tracked

• Minimum frequency:  At each change/until D-3 of each month
• Control owner function: Service Centre Management Accounting Service Unit
  Technical controllers (GBU) for some PF1 sites

• Application level: Group - All assets (tangible & intangible) - Period of controls: each Month.

• Process description:  SBS RTR I&D Service Center establish a list of all assets above 50 KEUR put into service and commissioned, which should match with project manager requests.

• Control description:  SU MAC I&D Key user or technical controllers (depending on organization) need a proof of authorization from Project Managers (commissioning) or Plant Manager or delegate (other modifications: retirement…) to make modifications > 50k€ to the assets register.
  For control in the scope of SBS, it is executed by SU MAC and monitored by SU MAC I&D Key User (SBS)

• Risk description:

Misstatement of financial reporting (including non-compliance to IFRS rules): financial statements do not reflect the true value of the company's assets.
Fraud

Control evidence:

Each investment/divestment > 50 KEUR should have a proof of authorization from project managers.
The control can be performed by extracting the information from the system and then checking if there is any proof for each investment/divestment above 50 K Eur.

The defined threshold for both commissioning and disposals is 50K EUR. If the company uses another reporting currency, use transaction ZRATE to convert the threshold to the company's reporting currency, filling the following fields:

• Date: last day of the month of the report;
• From currency: EUR;
• To currency: currency code of the company;
• Exchange rate: M;

Fixed assets commissioning

For fixed assets movements regarding commissioning, that increases related to assets under construction (AUC) being transferred to the fixed asset (FXA) category. To check this kind of movement, use transaction S_ALR_87012054, filling the following fields:

• Company code;
• Asset number: "2*", as the results should only include capitalized fixed assets;
• Report date: Last day of the month of the report;
• Depreciation area: Group (50 for PF1 companies, 01 for WP1 companies);
• Sort variant: 0001;
• List assets;
• Posting date: From the first to last day of the month of the report.

After the report is executed, filter the "Transfer" amounts above the threshold (50K euro) and extract the result to Excel.

Fixed assets disposals

For fixed assets movements regarding retirement and disposals, that being decreases related to fixed assets being sold, scrapped or retired. To check this kind of movement, use transaction S_ALR_87012052, filling the following fields:

• Company code;
• Asset number: "2*", as the results should only include capitalized fixed assets;
• Report date: Last day of the month of the report;
• Depreciation area: Group (50 for PF1 companies, 01 for WP1 companies);
• Sort variant: 0001;
• List assets;
• Posting date: From the first to last day of the month of the report.

After the report is executed, filter the "Retirement" amounts above the threshold (50K euro) and extract the result to Excel.

Listing of acquisitions

This report includes listing of acquisitions in certain time period. To check these movements, use transaction S_ALR_87012050 and fill in following fields:

• Company code
• Report date
• Sort variant: 0001
• Choose list assets
• Transaction type 331 to 336

After the report is executed, filter the "Acquisition" amounts above the threshold (50K euro) and filter only capitalized assets (2*), because most of the movements are coming from AUC. In the end extract the result to Excel.

Asset Master Data Attachment Note

All the information regarding to assets should be received via FreshDesk ticketing tool. To ensure transparency – when asset is created, appropriate ticket number should be added as a note.

To check if it is done for all assets in period, transaction Z1A_ASSET_NOTE can be used.

Two filters should be set – first one in asset column (2*) to show only created assets and second in amount field, where we put that the amount should be larger than 50K EUR.

In the note field according ticket number can be seen – information can be found in FreshDesk. If there is no note, it should be added by trying to find it.

Gathering Support Documents

After the assets that are above the threshold are listed, the support documentation for the movements should be gathered to justify the variances. Support documents can be: project managers' reports, local requests by ticket, asset on completion forms, among others.

Major Repairs

Divestment for each maintenance shutdown (IFA.01.02)
The aim of major maintenance work is to verify that the asset is being kept in good condition without modifying its life. The costs should be recognized as major maintenance costs. These costs should be considered as a capitalized component if: - They belong to a multi-annual recurring major maintenance operation,- Total costs reach a minimum threshold of 500 kEUR.
Every quarter this process should be performed in order to identify the fixed-asset for Major Repair which should to be removed.

• Minimum frequency: At each quarterly
• Control owner function: Service Center Management Accounting Service Unit

• Application level: Group - All assets (tangible & intangible) - Period of controls: each quarterly.

• Control description:  SU MAC extracts before the 15th of each quarterly closing month the list of shutdowns (based on asset class) capitalized and checks for each case that a divestment was booked concerning the previous shutdown. If it is not the case, SU MAC alerts the SU MAC I&D Key User who will take corrective actions.

• Risk description:

Misstatement of financial reporting (including non-compliance to IFRS rules): financial statements do not reflect the true value of the company's assets

Process:

Go to AR01
Using variant: /I.D MAJOR R(WP1)   ,  /MAJOR REPAIR(PF1)
You will obtain the following screen

• Check the company code list
• Update the reporting date (last day of the quarter)

Execute the transaction

• Extract the result to excel file

• Then the analysis is done by company code and plant and if we have may assets by plant we also check it by cost center

In this case:
Company code : ZFR9
Plant: 7866
CC: 7866-1201
We can see that we have two situation where the fixed assets have the same description.
In yellow we can see cases where are potential major repairs.
The project manager received our reports (by plant) and decides if they should be removed from the company.



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