Financial disclosure process

Financial reporting plays a pivotal role in establishing and consolidating solid and constructive relationships between companies and the parties they interact with, contributing, together with positive business performances to the creation of value for shareholders. Edison, being aware of the significance of financial reporting, developed an internal control system aimed at ensuring the credibility, accuracy, reliability and timeliness of financial information, with respect both to internal entities and the market.

In order to foster efficient coordination and exchange of information between the Parent Company and the subsidiaries and ensure the correct construction of the separate and consolidated financial statements, the Group adopted, and constantly updates an adequate set of rules and documents. Specifically, this set of rules includes the Group’s accounting principles, administrative and accounting procedures, guidelines, the fast closing procedure, operating instructions, accounting manuals and accounts.

Because Edison is an Italian company with savings shares traded on an Italian regulated market, it is required to appoint a Corporate Accounting Documents Officer (the “Documents Officer”), who, pursuant to law, has specific attributions, responsibilities and certification and declaration obligations. Pursuant to the Bylaws, the Documents Officer must be selected by the Board of Directors, upon a mandatorily required opinion by the Board of Statutory Auditors, among executives with proven multi-year experience in the fields of administration, finance and/or control at companies listed on regulated markets. On October 26, 2012, the Board of Directors decided to entrust this assignment jointly to Roberto Buccelli, in his capacity as Accounting & Tax manager, and Didier Calvez, in his capacity as Chief Financial Officer. The Board of Statutory Auditors expressed a favorable opinion with regard to these appointments. The Chief Executive Officer, being duly authorized by the Board of Directors, provided each one of the abovementioned parties with all necessary operating authority. The respective compensation packages were defined consistent with the compensation policies for Group managers, taking into account the general guidelines reviewed by the Compensation Committee. More specifically, the incentive mechanisms for these managers are consistent with the tasks entrusted to them.

In accordance with statutory requirements, the Documents Officer is responsible for the internal control system insofar as it applies to financial reporting. Consequently, prepares the administrative and accounting procedures needed for periodic financial reporting and any other financial communication relevant for that purpose, and, in a special report on the statutory financial statements, the semiannual financial statements and the consolidated financial statements, certifies, together with the Chief Executive Officer, that the abovementioned procedures were adequate and were effectively applied during the period covered by the accounting documents.

The guidelines that must be followed within the Edison Group in terms of the obligations deriving from art. 154-bis of the TUF with regard to the preparation of corporate accounting documents and the corresponding certification requirements are defined in the Model pursuant to Law No. 262/2005 (the “262 Model”). In particular, the 262 Model, through its own “Accounting Model Regulations,” accomplishes the following:

  • defined the roles and responsibilities of the Organisational Units involved in various capacities. Specifically, the Processes, Compliance and Systems Function of the Accounting & Tax Department is responsible for deploying and concretely implementing, through the Documents Officer, the activities needed to guarantee the effectiveness of the accounting control system;
  • it defined the operating methods that should be used to carry out the activities to comply with the above-mentioned legal obligations;
  • it introduced, in support of the drafting of the certifications and declarations by the Documents Officer and the Chief Executive Officer and requires the managers of the Company’s Operating Units and the CEOs/Chairmen of companies that do not fall within the scope of Edison’s management and coordination to provide an internal certification, through the associated internal communication process, of the completeness of the information and that the correct functioning of the accounting control system established pursuant to Law No. 262/2005;
  • attributed testing activities to the Internal Auditing Department;
  • formally identified specific managers of Divisions/ Departments/Business Units/Functions and specific operational officials who serve as “focal points”, in order to effectively implement the above.

More specifically, the internal accounting control system outlined in the 262 Model rests on the following characterizing elements:

  • a body of corporate procedures governing the preparation and disclosure of financial information including, but not limited to, the Group Accounting Manual, a procedure for the preparation of period reports called “fast-closing” procedure (inspired by best international practices, which is updated monthly and defines in detail the roles and responsibilities of company Divisions/Departments, the support systems, the reporting details and the process deadlines), operating financial statement instructions, reporting procedures, accounting calendars, etc.
  • a process carried out under the supervision of the Documents Officer and in concert with the Chief Executive Officer to map the main risks related to accounting information and the key controls to monitor the identified risks (administrative/accounting risk assessment). The risk assessment process is performed every year.
  • for each relevant area/accounting information, the establishment of accounting processes and flows that are deemed critical and specific control activities through the development of special control matrices that describe for each process (or accounting flow) that has been identified as critical and/or sensitive the standard control activities (key controls) and the relevant operating unit officers responsible for implementing the 262 Model. These controls are validated and, if necessary, updated on a quarterly basis.
  • designation of a specific company function, identified as the Processes, Compliance and Systems Function of the Accounting & Tax Department, responsible, with the support of the organisational units, for reviewing and updating on a regular basis the body of Group accounting procedures;
  • a process involving activities to assess periodically the adequacy and actual implementation of the 262 Model and the identified key controls. The assessment is broken down into two levels: a) self-assessment by the organizational units, carried out by each organizational unit officer with regard to the processes/flows under his jurisdiction; b) independent assessment performed by the Internal Auditing Department. The audit plan is reviewed by the Control and Risk Committee and approved by the Board of Directors.
  • a process of documentation and internal communication, carried out by managers of Divisions/Departments/ Business Units/Corporate Functions and by the Chief Executive Officers/Chairmen of the companies that do not fall within the scope of Edison’s oversight and control or of companies that adopt specific accounting procedures;
  • a process to provide the market with a formal attestation that the accounting control system pursuant to Law No. 262/2005 is functioning correctly.

The 262 Model was subject to systematic update and adjustment. In particular in 2016 it was integrated to take into account the acquisition of control of the Fenice group and in 2017 to include the group TCF, supporting the tax management activity with the aim of managing and controlling tax risks. Last in 2020 the 262/TCF Model was adopted by the Energy & Environmental Services Market Division for those processes which are identified as most relevant (active/passive cycle, provision for risks and changes, M&A).