Internal control
According to the Swedish Companies Act and the Swedish Code of Corporate Governance, the Board of Directors is responsible for the internal control. This responsibility includes annual evaluation of the financial reporting received by the Board of Directors and specifying requirements for its content and presentation so as to ensure quality in the reporting. The financial reporting must thus be suited to its purpose, with the application of the accounting rules in force and other requirements that apply to listed companies. The following description is limited to internal control in B&B TOOLS with respect to financial reporting and has not been examined by the Company’s auditors.
The basis of the internal control of financial reporting comprises the control environment, with the organisation, decision paths, lines of authority and responsibilities that are documented and communicated in control documents, such as policies established by the Board and Group-wide guidelines and manuals.
B&B TOOLS bases and organises its operations on the basis of decentralised accountability for profitability with operating areas in the form of companies. Accordingly, formal work plans for internal Board work and instructions for the division of responsibility between the Board and the President & CEO comprise central control documents.
The Group’s most important control documents are gathered on an intranet for the financial function and include a comprehensive Financial Policy, a reporting manual, a manual for the Group’s internal bank and expanded instructions preceding every closing of the books. The set of financial rules and regulations are updated regularly and the focus during the operating year was on developing practical guidelines for assessing the value of assets and liabilities. On a more general level, all operations in the B&B TOOLS Group shall be conducted in accordance with the Group’s Code of Conduct.
B&B TOOLS has established control structures to handle risks that the Board of Directors and Group management feel are significant for the internal control with respect to financial reporting. Examples are transaction-related controls, such as a body of regulations surrounding attestation and capital expenditures as well as clear payment procedures, but also analytical controls performed by the Group’s controller organisation. Controllers at all levels in the Group have a key role in terms of integrity, competence and ability to create an environment conducive to achieving transparency and true and fair financial reporting.
In conjunction with the implementation of a new business system, a manual was prepared that describes how procedures and controls linked to such activities as invoicing and year-end closing shall be conducted. Furthermore, an important overriding control activity is the monthly earnings follow-up performed via the internal reporting system, and which is analysed and commented upon in the internal Board work. The earnings follow-up includes reconciliation with previously set goals, the most recent forecast and follow-up of adopted key financial ratios. Follow-up of results also functions as an important complement to the controls and reconciliations that are conducted in the actual financial processes.
Follow-up to assure quality of the internal control is performed within B&B TOOLS in various ways. Corporate Assurance, the Group’s internal review function, works proactively through its participation in various projects aimed at developing internal control. Examples of this work include the development of manuals for the business system, process mapping and attendance at various financial conferences. Corporate Assurance also conducts follow-ups to ensure compliance with adopted policies and guidelines. This is performed through internal corporate audits carried out at the businesses’ premises or by conducting an analysis based on various information sources. An annual risk analysis forms the basis for determining which activities are to be prioritised.