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Overview of control environment
Control Environment
The control environment of VALIC consists of a combination of oversight and monitoring control activities,
in addition to control activities incorporated within operational and administrative functions. The control
environment reflects the overall attitude, awareness, and actions of VALIC management and employees
concerning the importance of controls and its emphasis in the organization. Further, the organizational structure
of VALIC provides a foundation for planning, directing, and controlling its operations. VALIC is committed to
maintaining an organizational structure that supports an effective control environment, including the proper
segregation of job responsibilities and assignment of job functions commensurate with skill.
To address business ethics, VALIC has stated its intent to achieve a high level of legal and ethical standards in the
conduct of its business activities in its corporate policy. Human Resources distributes a copy of the AIG Code of
Conduct annually to all officers and employees. All employees are required to acknowledge receipt of the Code of
Conduct in writing. Accompanying the Code of Conduct for officers is a questionnaire requiring signed disclosure
by the officer concerning their knowledge of any business or ethical conflicts. The distribution of the Code of
Conduct and the monitoring of any business ethics issues are managed by Corporate Legal Compliance. Corporate
Legal Counsel provides VALIC with legal analysis, as required, manages relationships with outside counsel, and has
a primary role in ensuring the adequacy, from a legal standpoint, of plan sponsors' and participants’ contractual
documentation and contracts with vendors.
Human Resources maintains policies and procedures covering critical aspects of employment services including
hiring, training, performance, appraisals, and termination. Personnel policies are documented in an electronic format
accessible on each employee’s desktop computer via the intranet. Hiring practices are designed to helpmake sure
that new employees are qualified for their job responsibilities. Education and experience standards are established
for each position. Department management and a human resources representative interview candidates for
employment with VALIC. Offers of employment are contingent upon a background check, which is performed
before a new hire begins employment. These background investigations (performed through a third party) include a
social security number trace and criminal history check and verification of previous employment, highest education,
and credit history. Supervisors formally appraise employees’ performance on an annual basis, although performance
of employees can be reviewedmore frequently. VALIC offers in-house training programs for employee development,
client service enhancement, diversity, and industry-specific technical topics. In addition, VALIC utilizes computer-
based and onsite one-on-one training to teach employees the technical and empirical aspects of their jobs.
Risk Assessment Process
To help create a foundation for risk management at VALIC, the corporate Operational Risk Management (ORM)
Department has implemented a comprehensive, global Risk and Control Self-Assessment (RCSA) process. The
RCSA process supports the identification, analysis, and reporting of key risks, controls and issues across VALIC,
and facilitates the sharing of operational risk management best practices. The success of the RCSA process
requires strong partnerships with Internal Audit, Compliance, Legal, Sarbanes-Oxley (SOX) Compliance, other
corporate and risk management groups, and the businesses. In addition, the RCSA process will incorporate the
SOX program controls and related control assessments as appropriate. The SOX 404 program controls are outside
the scope of this report.
VALICmaintains insurance coverage against various risks, including errors and omissions, general liability, and
other insurance, as required by law. VALICmaintains coverage at levels that its management considers reasonable,
given its size and scope.
III. Description of the VALIC Defined Contribution Plan Administration System
This report is intended for use by the management of the Variable Annuity Life Insurance Company ("VALIC") and its subsidiaries.
VALIC Retirement Services Company ("VRSCO") and VALIC Financial Advisors, Inc. ("VFA"), its user entities, and the independent
auditors of its user entities, and is not intended and should not be used by anyone other than these specified parties.