Saab 2014 Annual Report Download - page 63

Risk assessment
Saab’s operations are mainly characterised by the development,
production and supply of technologically advanced hardware and
soware for customers around the world. Sales are predominantly
generated outside Sweden. As a rule, projects entail considerable
sums of money, stretch over long periods of time and involve tech-
nological 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
and risks of inaccurate nancial reporting, 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. is process involves self-assessments
by Group functions and business areas. e 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 President or by function
managers appointed by the President. All Group directives are upda-
ted 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.
e 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 requirements
for good internal control in the nancial reporting processes.
Monitoring and evaluation
All operating units report monthly and quarterly according to a
standardised routine.
Quarterly reports are the basis of Saab’s external nancial
reporting. In operating reports, each business area’s measures of
protability 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 to identify and test key control
functions in each business process.
e Internal Audit department, part of the internal control struc-
ture, is a dedicated resource for independent review of the eective-
ness of internal control processes. At the same time, Internal Audit
supports the locally applied internal control process and the central
controller sta. Together they serve as a resource for monitoring
nancial reporting routines. Internal Audit’s tasks are initiated by the
Audit Committee or on its own initiative and then reported to the
Committee. From time to time, Group Management and its members
can also submit assignments to Internal Audit.
Activities in 2014
In 2014, two self-assessments were performed in all business areas
and in the Group’s accounting units, tax and treasury. ey were
performed in late March and late September, aer the close of each
quarter. e self-assessments were followed up and reviewed to
ensure their thoroughness. e results of the reviews were reported
back to each business unit. A training session for management and
personnel involved in the self-assessment process was held in March.
e Group’s Internal Audit unit has supported the self-assessment
process.
All market areas implemented a simplied risk self-assessment
process.
e results and status according to the self-assessment process
were reported to the Finance Board, Group Management and
Audit Committee. Implementation of the self-assessment process
has continued in Saab’s subsidiaries outside Sweden.
Focus in 2015
e focus on internal control and self-assessments will continue in
2015. Eorts to further strengthen key control functions in sensitive
business processes.
e self-assessment will be implemented on at least two occasions
and involve all business areas and Group functions. An independent
evaluation will be made at least once.
e self-assessment process will be implemented at Saab Kockums,
which was acquired in 2014. Implementation of the self-assessment
process will continue in Saab’s subsidiaries outside Sweden.
e Internal Audit department will take an active role in monitoring
Saab’s anti-corruption processes and in the self-assessment process.
THE ANNUAL ASSESSMENT PROCESS OF INTERNAL FINANCIAL CONTROLS
Preparation of Corporate
Governance report
Q1 risk self-
assessment
Remediation of issues identified during
Q1 risk self-assessment
Q3 risk self-
assessment
Independent review
of risk self-assessment
results
Continuous Risk Assessment
Status of financial controls reported to Group Management on monthly basis.
Self-Assessments are communicated to the Audit Committee, Internal Audit and External Auditors.
Q1 Q2 Q3 Q4
SAAB ANNUAL REPORT 2014 – 59