Action in response to audit conclusions

Specific corrective action was proposed by Group Internal Audit for the weaknesses it identified in 2015.

In a structured follow-up process, implementation of the corrective action in 2016 was tracked continuously and reported to the relevant bodies. A total of 31 measures were defined by Group Internal Audit and the majority of them were implemented by the end of 2016. The plan is to implement the remaining measures by the middle of 2017.

While the procedural investigations of the Group Internal Audit primarily applied to the processes in connection with the diesel technology in 2015, the findings resulting from the investigations in the reporting period were transformed into general guidelines to shore up governance and compliance. The so-called “Golden Rules” sharpen the focus even more and increase the acceptance for critical process steps. These rules represent minimum requirements in the organization, process and tools & systems categories in the areas of control unit software development, emission classification and escalation management.

Self-assessments were performed in the Volkswagen Passenger Cars, Audi and Porsche brands to ensure structured application of the “Golden Rules” and thus to optimize the internal control system (ICS) within the areas affected. The results were validated as an integral part of an investigation by the audit departments in the relevant brands or by Group Internal Audit. By applying this congruent methodology across the brands, the implementation status of the guidelines in the “Golden Rules” was established and transparency created regarding the degree of maturity of the ICS for the relevant processes, also for the Board of Management.

In addition, a cross-brand project that ensures similar implementation of the “Golden Rules” taking the individual features of the brands into account was initiated under the responsibility of Group Research and Development. As part of this, development departments within the group reviewed their processes. Representatives of the brands work on the optimization of their processes in project groups.

Key elements of the process optimization are:

• Early documentation and interpretation of legislation around the world and alignment of the product portfolio with the legal requirements
• Guidelines for the development of software for drive control units with documentation of the features with relevance for registration
• Introduction of multiple controls for approvals in the product development process
• Reorganization within Development for the purpose of separating the responsibility for the development of drives from official approvals
• Formation of new bodies for cross-brand management and clarification of compliance issues
• Uniform process standards and work instructions that give those involved legal certainty in the work process
• Training programs in which everyone involved in the process is required to participate
• Regular reporting to the Group Board of Management in order to create transparency in relation to the implementation status of this process optimization

Adaptation of the “Golden Rules” to other vehicle development processes and other areas of development is being addressed.