AAK Annual Report 2016

83 7KH EDVLV IRU WKH LQWHUQDO FRQWURO UHODWLQJ WR ¿QDQFLDO UHSRUWLQJ consists of an overall control environment in which the organiza- tion, decision-making routes, authorities and responsibilities have been documented and communicated in management documents, VXFK DV $$.¶V ¿QDQFLDO SROLF\ UDZ PDWHULDO SXUFKDVLQJ SROLF\ WKH PDQXDO RQ ¿QDQFLDO UHSRUWLQJ DQG WKH DXWKRUL]DWLRQ UXOHV VHW E\ WKH &(2 $$.¶V ¿QDQFH IXQFWLRQV DUH LQWHJUDWHG WKURXJK D MRLQW FRQVROLGDWLRQ V\VWHP DQG MRLQW DFFRXQWLQJ LQVWUXFWLRQV 7KH *URXS¶V ¿QDQFH XQLW ZRUNV FORVHO\ DQG HIIHFWLYHO\ ZLWK WKH FRQWUROOHUV RI VXEVLGLDULHV LQ UHODWLRQ WR \HDU HQG ¿QDQFLDO VWDWH - ments and reporting. $V D VXSSOHPHQW WR WKH LQWHUQDO FRQWURO XQGHU D VSHFL¿F SODQ DQ annual audit of some units in the Group is carried out on a rotating basis by the Group’s central Finance Department, in collabora- WLRQ ZLWK DQ LQGHSHQGHQW LQWHUQDWLRQDO DFFRXQWLQJ ¿UP $$. KDV decided not to set up a separate review function (internal audit), DV WKH IXQFWLRQV PHQWLRQHG DERYH IXO¿O WKLV WDVN ZHOO $OO RI $$.¶V subsidiaries report on a monthly basis. These reports form the EDVLV IRU WKH *URXS¶V FRQVROLGDWHG ¿QDQFLDO UHSRUWLQJ (DFK OHJDO XQLW KDV D FRQWUROOHU ZKR LV UHVSRQVLEOH IRU WKH ¿QDQFLDO PDQDJH - PHQW RI HDFK EXVLQHVV DUHD DQG IRU HQVXULQJ WKH ¿QDQFLDO UHSRUWV are correct, complete and delivered in time for consolidated reporting. Risk assessment and risk management Through its international presence, the AAK Group is exposed to a number of different risks. Risk management within the Group is UXQ LQ DFFRUGDQFH ZLWK ¿[HG SROLFLHV DQG SURFHGXUHV ZKLFK DUH reviewed annually by AAK’s Board. Risks relating to commodities are managed using the Group’s raw material purchasing policy. Risks relating to currency, interest and liquidity are mainly JRYHUQHG E\ $$.¶V ¿QDQFH SROLF\ 7KH *URXS¶V FUHGLW SROLF\ directs the management of credit and contract risks. Effective risk management unites operational business development with the requirements of owners and other stakeholders for improvements in control and long-term value. Risk management aims to minimize risks, but also to ensure that opportunities are utilized in the best possible way. Risk management covers the following areas of risk: strategic risks relating to the market and sector, commercial, RSHUDWLRQDO DQG ¿QDQFLDO ULVNV FRPSOLDQFH ZLWK H[WHUQDO DQG LQWHUQDO UHJXODWRU\ IUDPHZRUNV DQG ¿QDQFLDO UHSRUWLQJ 7KH PDLQ FRPSRQHQWV RI ULVN DVVHVVPHQW DQG PDQDJHPHQW DUH LGHQWL¿FD - tion, evaluation, management, reporting, follow-up and control. For further information about AAK’s risk management, please see Note 3. Control activities 7KH ULVNV LGHQWL¿HG UHODWLQJ WR ¿QDQFLDO UHSRUWLQJ DUH KDQGOHG YLD the company’s control activities. These control activities aim to prevent, identify and correct errors and discrepancies. Control activities take the form of manual controls, such as reconciliation and stocktaking, automatic controls via the IT systems and general controls of the underlying IT environment. Detailed ¿QDQFLDO DQDO\VHV RI WKH UHVXOW DQG IROORZ XS DJDLQVW EXGJHWV DQG IRUHFDVWV VXSSOHPHQW WKH RSHUDWLRQ VSHFL¿F FRQWUROV DQG SURYLGH RYHUDOO FRQ¿UPDWLRQ RI WKH TXDOLW\ RI WKH UHSRUWLQJ Information and communication 7R HQVXUH WKH FRPSOHWHQHVV DQG DFFXUDF\ RI LWV ¿QDQFLDO UHSRUWLQJ the Group has adopted guidelines for information and commu- QLFDWLRQ DLPHG DW HQVXULQJ UHOHYDQW DQG VLJQL¿FDQW H[FKDQJH RI information within business operations, both within each unit and to and from management and the Board. Policies, handbooks and ZRUNLQJ SUDFWLFHV UHODWLQJ WR WKH ¿QDQFLDO SURFHVV DUH FRPPXQL - cated between the management and employees, and are available in electronic format and/or printed format. The Board receives regular feedback on internal control from the Audit Committee. To ensure that external information is correct and complete, AAK has an information policy adopted by the Board, which states what is to be communicated, by whom and in what way. Follow-up The effectiveness of the process for risk assessment and execu- tion of control activities is followed up continuously. The follow-up covers both formal and informal procedures, which are used by those responsible at each level. The procedures include follow-up RI UHVXOWV DJDLQVW EXGJHWV DQG SODQV DQDO\VHV DQG NH\ ¿JXUHV 7KH %RDUG UHFHLYHV PRQWKO\ UHSRUWV DERXW WKH *URXS¶V ¿QDQFLDO SRVLWLRQ DQG GHYHORSPHQW 7KH FRPSDQ\¶V ¿QDQFLDO VLWXDWLRQ LV discussed at each Board meeting, and the management team DQDO\VHV WKH ¿QDQFLDO UHSRUWLQJ DW GHWDLOHG OHYHO RQ D PRQWKO\ basis. At Audit Committee meetings, the Committee follows up the ¿QDQFLDO UHSRUWLQJ DQG UHFHLYHV UHSRUWV IURP WKH DXGLWRUV DERXW their observations. Policy documents AAK has a number of policies for the operations of the Group and its employees. These include: Ethics policy Ethical guidelines for the Group have been drawn up with the aim of clarifying the Group’s fundamental approach to ethical issues, both within the Group and externally with regard to customers and suppliers. Finance policy 7KH *URXS¶V ¿QDQFH IXQFWLRQ ZRUNV LQ DFFRUGDQFH ZLWK LQVWUXF - tions adopted by the Board, which provide a framework for how the *URXS¶V RSHUDWLRQV VKDOO EH ¿QDQFHG DQG IRU KRZ IRU H[DPSOH currency and interest risks are to be handled. Information policy The Group’s information policy is a document describing the Group’s general principles for the publication of information. Environmental policy The Group’s environmental policy provides guidelines for environ- mental work within the Group.