
Our focus on fraud and non-compliance with laws and regulations
Our responsibility
Although we are not responsible for preventing fraud or non-compliance and we cannot be expected to
detect non-compliance with all laws and regulations, it is our responsibility to obtain reasonable
assurance that the financial statements, taken as a whole, are free from material misstatement, whether
caused by fraud or error. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Our audit response related to fraud risks
We identified and assessed the risks of material misstatements of the financial statements due to fraud.
During our audit we obtained an understanding of the company and its environment and the components
of the system of internal control, including the risk assessment process and management’s process for
responding to the risks of fraud and monitoring the system of internal control and how the supervisory
board exercises oversight, as well as the outcomes.
We refer to Section Risks of the management board report for the management board’s risk assessment.
We evaluated the design and relevant aspects of the system of internal control and in particular the fraud
risk assessment, as well as the VWAG’s code of conduct and whistle blower procedures. We evaluated the
design and the implementation and, where considered appropriate, tested the operating effectiveness, of
internal controls designed to mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial
reporting fraud, misappropriation of assets. We evaluated whether these factors indicate that a risk of
material misstatement due to fraud is present.
We incorporated elements of unpredictability in our audit. We also considered the outcome of our other
audit procedures and evaluated whether any findings were indicative of fraud or non-compliance.
We addressed the risks related to management override of controls, as this risk is present in
all organizations. For these risks we have performed procedures among other things to evaluate
key accounting estimates for management bias that may represent a risk of material misstatement due
to fraud, in particular relating to important judgment areas and significant accounting estimates
as disclosed in Note 2(e) Use of estimates and judgements to the financial statements, including
impairment losses on financial assets.
Furthermore, we have also used data analysis to identify and address high-risk journal entries and
evaluated the business rationale (or the lack thereof) of significant extraordinary transactions and
transactions with related parties. We also evaluated whether transactions with related parties were
accounted for at-arm’s length and in accordance with transfer pricing documentation and contractual
agreements.
We did not identify a risk of fraud in revenue recognition, other than the forementioned risks related to
management override of controls.
We considered available information and made enquiries of relevant directors,
legal, the group auditor of VWAG and the supervisory board.
The fraud risks we identified, enquiries and other available information did not lead to specific
indications for fraud or suspected fraud potentially materially impacting the view of the financial
statements.