Volvo 2010 Annual Report Download - page 150

Annual General Meeting, Louis Schweitzer,
Anders Nyrén and Ying Yeh were appointed
members of the Remuneration Committee.
Louis Schweitzer was named Chairman of the
Remuneration Committee. The Remuneration
Committee held five meetings during 2010.
Group Executive Committee
An account of their respective age, principal
education, Board memberships, their and
related parties’ ownership of shares in Volvo
as of February 24, 2011, and year of joining
Volvo for the CEO and each member of the
Group Executive Committee is presented in
the Group Management section on page 139.
On December 8, 2010, Leif Johansson noti-
fied AB Volvo’s Board of Directors that he
intends to resign as president of AB Volvo,
also CEO of the Volvo Group, in conjunction
with his 60th birthday in the summer of 2011.
External auditing
Volvo’s auditors are elected by the Annual
General Meeting. The current auditor is Price-
waterhouseCoopers AB (PwC), which was
elected at the 2010 Annual General Meeting
for a period of four years. Two PwC partners,
Göran Tidström and Johan Rippe, are respon-
sible for the audit of Volvo. Göran Tidström is
the Lead Partner.
The external auditors discuss the external
audit plan and risk management with the Audit
Committee. The auditors review the interim
report for the period January 1 to June 30 and
the annual report and the consolidated account-
ing. The auditors also express an opinion whether
this Corporate Governance Report was prepared
or not and in such respect whether certain infor-
mation therein coincides with the annual and
consolidated accounting. The auditors report
their findings with regard to the annual report ,
consolidated accounting and the Corporate Gov-
ernance Report through the audit reports and a
separate opinion regarding the Corporate Gov-
ernance Report, which they present to the
Annual General Meeting. In addition, the auditors
report detailed findings from their reviews to the
Audit Committee twice a year and, once a year,
to the full Board of Directors.
When PwC is retained to provide services
other than the audit, it is done in accordance
with rules decided by the Audit Committee
pertaining to pre-approval of the nature of the
services and the fees.
Disclosure Committee
A Disclosure Committee was established in
2004. The Committee contributes to ensuring
that Volvo fulfills its obligations according to
applicable legislation as well as to listing rules
to timely disclose to the financial market all
share price sensitive information.
The Committee comprises the heads of the
departments Corporate Finance, Internal
Audit, Investor Relations, Corporate Legal,
Business Control and Financial Reporting.
Chairman of the Disclosure Committee is the
company’s Senior Vice President responsible
for Corporate Communications.
Outstanding share and share-price
related incentive programs
An account of outstanding share and share-
price related incentive programs is provided in
Note 34 Employees in the Group’s notes.
Report on the key aspects of the com-
pany’s and Group’s system for internal
controls and risk management in con-
junction with financial reporting
The Board is responsible for the internal controls
according to the Swedish Companies Act and the
Code. The purpose of this report is to provide
shareholders and other interested parties an
understanding of how internal control is organized
at Volvo with regard to financial reporting. The
report has been prepared in accordance with the
Annual Accounts Act. Consequently the report is
limited to internal control over financial reporting.
Introduction
Volvo primarily applies internal control principles
introduced by the Committee of Sponsoring
Organizations of the Treadway Commission
(COSO). The COSO principles consist of five inter-
related components. The components are: control
environment, risk assessment, control activities,
information and communication and follow-up.
Volvo has a specific function for internal con-
trol. The objective of the Internal Control function
is to provide support for management groups
within business areas and business units, that
allows them to continuously provide good and
improved internal controls relating to financial
reporting. Work that is conducted through this
function is based primarily on a methodology,
which aim is to ensure compliance with direc-
tives and policies, as well as to create good con-
ditions for specific control activities in key proc-
esses related to financial reporting. The Audit
Committee is informed of the result of the work
performed by the Internal Control function within
Volvo with regard to risks, control activities and
follow-up on the financial reporting.
Volvo also has an Internal Audit function
with the primary task of independently verify-
ing that companies in the Group follow the
principles and rules that are stated in the
Group’s directives, policies and instructions for
financial reporting. The head of the Internal
Audit function reports directly to the CEO, the
Group’s CFO and the Audit Committee.
Control environment
Fundamental to Volvo’s control environment is
the business culture that is established within
the Group and in which managers and employ-
ees operate. Volvo works actively on communi-
cations and training regarding the company’s
basic values as described in The Volvo Way, an
internal document concerning Volvo’s busi-
ness culture, and the Group’s Code of Con-
duct, to ensure that good morals, ethics and
integrity permeate the organization.
The foundation of the internal control pro-
cess relating to the financial reporting is built
up around the Group’s directives, policies and
instructions, as well as the responsibility and
authority structure that has been adapted to
the Group’s organization to create and main-
tain a satisfactory control environment. The
principles for internal controls and directives
and policies for the financial reporting are con-
tained in Volvo Financial Policies & Proce-
dures (FPP), an internal document comprising
all important instructions, rules and principles.
CORPORATE GOVERNANCE REPORT 2010
146