AAK Annual Report 2017

88 Other information than the annual accounts and consolidated accounts This document also contains other information than the annual accounts and consolidated accounts and is found on pages I–III, 1–36, 81–85 and 90–92. The Board of Directors and the Managing Director are responsible for this other information. Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information. In connection with our audit of the annual accounts and consoli- dated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this proce- dure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated. If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other informa- tion, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accor- dance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material mis- statement, whether due to fraud or error. In preparing the annual accounts and consolidated accounts, the Board of Directors and the Managing Director are responsible for the assessment of the company’s and the group’s ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intend to liquidate the company, to cease operations, or has no realistic alternative but to do so. The Audit Committee shall, without prejudice to the Board of Direc- tor’s responsibilities and tasks in general, among other things oversee the company’s financial reporting process. Key audit matter +RZ RXU DXGLW DGGUHVVHG WKH .H\ DXGLW PDWWHU Revenue recognition – accounting of entered sales contracts 7KH DFFRXQWLQJ RI UHYHQXHV FRPSULVHV D VLJQL¿FDQW ULVN EDVHG RQ WKHLU LPSRUWDQFH LQ WKH ¿QDQFLDO LQIRUPDWLRQ DQG WKH FRPSOH[LW\ LQ the valuation of entered sales contracts. As seen on page 24 and Note 3 of the annual report, AAK applies active risk management. The value of the sales contracts entered, are reported in accordance with IAS 39 which implies that all of these are valued and reported at market value as at balance sheet date. The market value is determined, as appropriate, on the basis of liquid market prices in an open market and on stock exchange prices. Any possible error in the applied market price has a direct impact on the reported revenues and results. Any possible omission in the reporting of entered contracts, or WKH ULVN RI ¿FWLWLRXV DJUHHPHQWV EHLQJ UHSRUWHG ZRXOG LPSO\ DQ impact on reported revenues and would limit AAK’s possibility to achieve appropriate risk management measures. In order to verify that revenues are complete, correctly reported and valued, and that they comprise of existing sales contracts, our audit has included, DPRQJVW RWKHU WKLQJV D FRPELQDWLRQ RI - a review and testing of AAK’s internal controls - tests of detail through, amongst other measures, random sampling - analytical procedures, amongst other things, with the help of data analyses The audit activities described above refer to the sales process in its entirety (registration of sales contracts, delivery to the customer, inventory transac- tions, invoicing, receipt of payments and valuation). In order to ensure the completeness and correctness of the reporting UHJDUGLQJ VLJQHG FRQWUDFWV ZH KDYH DPRQJVW RWKHU WKLQJV - created an understanding for, and tested, the controls intended to identify un-allowed activities linked to the signing and valuation of sales contracts, - tested confirmations from counterparties regarding established sales contracts. No deviations have been noted in the reporting of established sales contracts based on the executed audit, as described above. Valuation of purchase contracts regarding raw materials and inventory on hand AAK has a purchase process implying that as soon as a sales con- tract has been signed, the equivalent currency and raw material price is hedged. The active risk management applied by AAK is described on page 24 and in Note 3 in the annual report. Entered purchase contracts (physical contracts and derivative instruments), including inventory on hand, are reported according to IAS 39, which implies that all of these items are valued and reported at market value as at balance sheet date. 7KH UHSRUWLQJ RI UDZ PDWHULDOV SXUFKDVHV LV FRPSOH[ DQG ÀXF - WXDWLRQV LQ UDZ PDWHULDOV SULFHV FDQ KDYH D VLJQL¿FDQW LPSDFW RQ WKH ¿QDQFLDO LQIRUPDWLRQ ZKLFK LV WKH UHDVRQ DQ LQFRUUHFW YDOXDWLRQ of purchase contracts and inventories can have a direct impact on costs and results. A possible omission in reporting entered contracts or the risk WKDW D ¿FWLYH FRQWUDFW LV UHSRUWHG ZRXOG LPSO\ DQ LPSDFW RQ reported costs and would limit AAK’s possibilities to achieve an appropriate risk management. In order to verify that raw material costs are complete, correctly reported and valued, and that they are comprised of existing purchase contracts, our DXGLW KDV LQFOXGHG DPRQJVW RWKHU WKLQJV - a review and testing of AAK’s internal controls regarding the updating and registration of market prices, - data analyses, tests of detail through random sampling and other analyti- cal procedures in order to ensure the registration of signed contracts, received deliveries, inventory transactions, received invoices, payments and registered market prices. In order to ensure the completeness and correctness of the accounts UHJDUGLQJ VLJQHG SXUFKDVH FRQWUDFWV ZH KDYH DPRQJVW RWKHU WKLQJV - obtained an understanding of, and tested, the controls referring to the identification of un-allowed activities associated with the subscription and valuation of purchase contracts, - tested the confirmations received from counter parties regarding established purchase contracts. No deviations have been noted based on the audit activities described above.