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THE IIA IN SPAIN. IMPLEMENTING AN EFFICIENT AND EFFECTIVE INTERNAL AUDIT FUNCTION

MFIA Malta Forum for Internal Auditors. THE IIA IN SPAIN. IMPLEMENTING AN EFFICIENT AND EFFECTIVE INTERNAL AUDIT FUNCTION. Malta – October 26 th , 2011. The IIA in Spain. Key factor for implementing an efficient and effective Internal Audit function. 2. The IIA in Spain. 3. 4.

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THE IIA IN SPAIN. IMPLEMENTING AN EFFICIENT AND EFFECTIVE INTERNAL AUDIT FUNCTION

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  1. MFIA Malta Forumfor InternalAuditors THE IIA IN SPAIN. IMPLEMENTING AN EFFICIENT AND EFFECTIVE INTERNAL AUDIT FUNCTION Malta – October 26th , 2011

  2. The IIA in Spain Key factor forimplementinganefficient and effectiveInternalAuditfunction 2

  3. The IIA in Spain 3

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  9. 2011…IIA SPAIN AT A GLANCE Founded in 1983 Members: • - 2.500 members • - 185 corporatemembers Integrated and alignedwith IIA Global: - 9th Institute in theworld - 5th Institute in Europe - OneSpanishmemberon IIA Board 9

  10. OUR MEMBERS OUR CORE VALUE PharmaceuticalQuemicals 3% Others 11% ConsultancyServices8% Public Sector 5% Banking & FinancialServices26% Transports 11% Telecom 7% Insurance 15% Construction & Infraestructures8% Energy & Utilities 8% Retail & Consumer6% 10

  11. HOW WE WORK – OUR STRATEGIC PLAN Service tomembers 11

  12. Ourservices OUR SERVICES Certifications TechnicalPublications Web Site Seminars AnnualConference ChiefAuditExecutivesMeetings IndustriesMeetings BreakfastMeetings 12

  13. KNOW HOW Certificacionstoimprovetheprofession: - CertifiedInternal Auditor CIA 500CIAs in Spain - Qualityassesment QA 40 IA departments in Spain 13

  14. PUBLICATIONS PureKnowHowhelpsKnowwho. Weuse ittoenhancenetworkingamongmembersthroughspecialmeetingsat whichweintroduce thenew publications. 14

  15. OUR SERVICES • One of ourmainmissions, toimproveprofessionalism • Helpsto share values • Helpsmembers in theirethicalcommitment of keepingupdated. • More than 50 seminars of 5 to37 hours • Meetthetwoexpectations: • knowhow& knowwho 15

  16. Events Meetthetwoexpectations: knowhow& knowwho 16

  17. ADVOCACY EFFORTS • May 2006: UnifiedCode, issuedbytheSpanishMarketRegulator • Complyorexplain • Existance of aninternalauditfunction • Internal auditor defined as Top Management • SinceMay 2009, IIA membersparticipateactively in theTASK FORCE crreatedbytheSpanishMarketRegulatorforinternal control overfinantialreporting • IIA SpainreceivedbyHisMajestytheking of Spain Juan Carlos I • IIA SpaintoorganizeEuropeanConference 2011 17

  18. Key factor forimplementinganefficient and effectiveInternalAuditfunction 18

  19. INTERNATIONAL PRESENCE SPAIN OTHER COUNTRIES TOTAL NUMBER OF COUNTRIES EMPLOYEES MAPFRE NETWORK BANK BRANCHES DISTRIBUTION AGREEMENTS(1) BROKERS 43 1 42 36,744 16,680 20,064 3,226 2,125 5,351 6,124 4,923 1,201 819 1,876 1,057 47,649 69,975 22,326 (1) Non financial entities (car dealerships, retail chains, etc,) 19

  20. KEY FIGURES 2010 2009 CONSOLIDATED REVENUES 20,470,8 18,830,4 FUNDS UNDER MANAGEMENT (1) 28,118,6 24,130,5 GROSS RESULT 1,431,0 1,446,2 NET RESULT 933,5 926,8 TOTAL EQUITY (2) 7,795,8 7,093,8 TOTAL ASSETS 48,672,3 43,105,8 S&P RATING AA AA • Includes: Life technical reserves, mutual and pension funds • Includes minority interests Million Euros 20

  21. HISTORIC EVOLUTION 1986-2010 ASSETS REVENUES EMPLOYEES GROSSRESULT YEAR 1986 434 706 25 2,323 1989 1,214 1,989 49 3,869 1992 2,419 3,769 37 5,528 1995 3,249 6,879 203 11,292 1998 4,546 9,669 178 15,219 2001 8,933 19,276 316 16,756 2004 10,756 31,482 847 19,920 2007 14,866 37,627 1,366 30,615 2010 20,471 48,672 1,431 36,744 Million Euros 21

  22. GOVERNANCE FRAMEWORK: structure BOARD OF DIRECTORS Highest-ranking management and supervisorybody Executive Committee Coordination and supervision of strategic, operational and businessaffairs of MAPFRE AUDIT Delegate committees APPOINTMENTS & REMUNERATION COMPLIANCE 22

  23. HOW DOES THE INTERNAL AUDIT FUNCTION ADD VALUE TO MAPFRE? SHAREHOLDER STRUCTURE Fundación MAPFRE: 64.65% BFA (CAJA MADRID): 14.99% Free Float: 20.36% MAPFRE S.A. ORGANIZATIONAL CHART • LEGAL DEPARTMENT • INTERNAL AUDIT • FINANCIAL AREA • INVESTMENTS • RESOURCES & PROCUREMENT • TECHNOLOGIES & PROCEDURES DOMESTIC INSURANCE INTERNATIONAL INSURANCE GLOBAL BUSINESSES 100% 88.9% 91.5% MAPFRE FAMILIAR MAPFRE AMÉRICA MAPFRE RE 100% 100% 100% MAPFRE VIDA MAPFRE INTERNACIONAL MAPFRE ASISTENCIA MAPFRE EMPRESAS MAPFRE GLOBAL RISKS 100% 100% 23

  24. Internal Audit Organizational Chart MAPFRE S.A. Board of Directors CEO Audit Committee MAPFRE Internal Audit General Management MAPFRE Internal Audit Vice General Manager Solvency II Deputy General Manager IT Deputy General Manager • Internal Audit Services DIRECT INSURANCE SPAIN IAS INTERNATIONAL DIRECT INSURANCE IAS GLOBAL BUSINESSES IAS IT IAS MAPFRE FAMILIAR IAU MAPFRE EMPRESAS IAU MAPFRE VIDA IAU MAPFRE BRAZIL IAU MAPFRE CHILE IAU MAPFRE COLOMBIA IAU MAPFRE DOMINICAN REPUBLIC IAU MAPFRE ARGENTINA IAU MAPFRE AMERICA CENTRAL IAU MAPFRE MEXICO IAU MAPFRE PUERTO RICO IAU MAPFRE PHILIPPINESIAU MAPFRE VENEZUELA IAU MAPFRE PERU IAU MAPFRE USA IAU MAPFRE PORTUGAL IAU MAPFRE TURKEY IAU MAPFRE MALTA IAU 24

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  26. INTERNAL AUDIT KEYS 1. Training 2. Technology 3. Proximity to business • The IAS’s and IAU’s are located in the Units • The IAU’s Managers abroad are NATIVE • Total of 17,640 hours (average 2008-2010) • 134 Hours a year per auditor (average 2008-2010) • Auditm@p • Auditm@p Report 26

  27. In additiontothe formal aspectssuch as: • properplacement in the chart • havinganAuditCharter • etc… thereis a needfor… 27

  28. INTERNAL AUDIT POLICIES It is advisable that Internal Auditing defines policies that should be approved by the Board of Directors and the Audit Committee, where appropriate. These policies underscore its most important asset, i.e. its human resources. They shall be as follows: • Selection. • Training. • Career Plan. • Remuneration. • Assessment. • Talent Retention. • Investment. 28

  29. graduates • English language proficiency, written and spoken • favorable report from the Psychology Department SELECTION Selection Therequirementsnecessarytobeaninternal auditor mustbestated in writing. Eachorganizationmustestablishitsowncriteria. In MAPFRE 29

  30. TRAINING • Total of 17,640 hours (average 2008-2010) • 134 Hours a year per auditor (average 2008-2010) In orderto produce reliableonhighqualityinternalauditreports, itisessentialthattheInternalAudit has a training policy in place: In MAPFRE 30

  31. CAREER PLAN Internalauditorsshallbeclassifiedbycategories. In ordertohavecertainty in theircareerstheinternalauditorsmustknowwhichisthepromotioncriteriaestablishedbyInternalAuditing. InternalAuditingmightbecome a breedinggroundforfuturedirectors of otherareaswithintheorganization. 31

  32. REMUNERATION Closelyrelatedtothecareer plan policy. Theremuneration of auditorsaccordingtothecategorytheybelongtomustbereportedbywriting. In ordertoimplementthispolicy, theleadershipskills of the CAE willberequiredtoconvincetheorganization of thesustainability and needthereof. Benchmarking researchwillbealsoconvenient. 32

  33. ASSESSMENT • Theinternalauditfunctionevaluates: • theactivities • procedures • processes • controls • systems of governance, etc… butitmustalsobesubjecttoassessmentbytherest: • theauditreports • theinternalauditors • theChiefAuditExecutive 33

  34. TALENT RETENTION • Areafromwhichprofessionals are internallydemandedtotakeonresponsabilities in managementareas In ordernottodecapitalizeInternalAuditing • Atalentretentionpolicyshouldbeestablishedtoavoidimbalanceswhenevertheinternalauditorsrotate InternalAuditing 34

  35. INVESTMENT Investmentpolicy in place in ordertobe at theforefront of TECHNOLOGY. 35

  36. THANK YOU

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