Saab 2012 Annual Report Download - page 134

Risk assessment
Saab’s operations are mainly characterised by the development, pro-
duction and supply of technologically advanced hardware and soft-
ware for customers around the world. The major part of sales are
generated from countries outside of Sweden. As a rule, projects
entail considerable sums of money, stretch over long periods of time
and involve technological development or renement of products.
Based on Saab’s operations, the material risk areas in nancial
reporting are project accounting, acquisitions and goodwill, develop-
ment costs, hedging and other nancial transactions, leasing opera-
tions, taxes and accounting for pensions. In addition to business
risks, the processes are also assessed on the basis of the risk of
exposure to any improprieties.
Group Finance continuously coordinates an overall risk assess-
ment of nancial reporting. This process involves self-assessments
by Group functions and business areas. The current risk assessment
is reviewed with Saab’s Internal Audit, which adjusts its annual audit
plan accordingly. Information on developments in essential risk areas
as well as a report on planned and executed activities in these areas
are communicated regularly to Saab’s Audit Committee. Saab’s
risk assessment is also communicated regularly to Saab’s external
auditors.
Information, communication and control activities
Internal control within Saab is based on clearly dened areas of
responsibility and authority, issued Group guidelines, processes and
controls.
Uniform handling of nancial reporting is assured by adopting
and issuing Group guidelines approved by the CEO or by function
managers appointed by the CEO. All Group directives are updated
on an ongoing basis, are clearly communicated and are available on
the internal website.
Each business area designs its risk management routines and
structure for internal control based on overall routines and Group
guidelines.
The most signicant risks identied as regards nancial reporting
are managed through control structures within the business areas
and Group functions and are based on Saab’s minimum require-
ments for good internal control in signicant processes.
Monitoring and evaluation
All operating units report monthly and quarterly according to a stand-
ardised routine.
Quarterly reports are the basis of Saab’s external nancial report-
ing. In operating reports, each business area’s measures of protabil-
ity and nancial position are consolidated to measure the Group’s
total protability and nancial position. Accounting managers and
controllers are in regular contact with Group Finance concerning any
questions related to nance and accounting.
To assist in evaluating internal control in each business area,
Saab uses an annual self-assessment. In addition to the processes
that form the basis of nancial reporting, these assessments cover
operating risks, reputational risks and compliance with laws, regula-
tions and internal rules. This is also reported to the Audit Committee.
The Internal Audit department, part of the internal control struc-
ture, is a dedicated resource for independent review of the effective-
ness of internal control processes. At the same time, Internal Audit
supports locally-applied internal controls and the central controller
staff. Together these serve as a resource for monitoring nancial
reporting routines. Internal Audit’s assignments are initiated by the
Audit Committee, Group Management and its members, and on its
own initiative.
Activities in 2012
During 2012, risk self-assessments were conducted on a regular
basis in the Swedish, and Australian operations. One independent
evaluation was conducted on one occasion in both countries. Imple-
mentation of the self-assessment process was concluded in Saab’s
operations in Denmark in 2012 and implementation of this process
was initiated in Saab’s operations in South Africa and in the U.S.
Focus in 2013
In 2013 a minimum of two self-assessments will be performed in all
Saab business areas and the countries where the process has been
introduced. At least one independent evaluation will be conducted.
The self-assessement process will be nalised in the U.S. and
South Africa in 2013. Implementation of this process will also be initi-
ated in Saab’s operations in Germany, the Czech Republic and
Holland.
At the same time, improvements to existing control systems are
continuously being made.
130 SAAB ANNUAL REPORT 2012
CORPORATE GOVERNANCE REPORT