Volvo 2011 Annual Report Download - page 162

If the Remuneration Committee commissions
external suppliers for its work, it must ensure
that there are no conflicts of interest in relation
to other assignments this supplier may have for
the Group or the Group Executive Team.
At the statutory meeting of the Board follow-
ing the 2011 Annual General Meeting, Louis
Schweitzer, Anders Nyrén and Ying Yeh were
appointed members of the Remuneration Com-
mittee. Louis Schweitzer was named Chairman
of the Remuneration Committee. The Remunera-
tion Committee held four meetings during 2011.
Group Executive Team
An account of their respective age, principal
education, Board memberships, their own and
related parties’ ownership of shares in Volvo as
of February 23, 2012, and year of joining Volvo
for the CEO and each member of the Group
Executive Team is presented in the Group Man-
agement section on page 151.
External auditing
Volvo’s auditors are elected by the Annual General
Meeting. The current auditor is Pricewater-
houseCoopers AB (PwC), which was elected at
the 2010 Annual General Meeting for a period
of four years. Göran Tidström and Johan Rippe
from PwC, are responsible for the audit of Volvo.
Göran Tidström is the Auditor in Charge. Göran
Tidström has announced that he will resign as
Auditor in Charge at the Annual General Meeting
2012. He will be replaced by Peter Clemedtson,
partner of PwC.
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
accounting. The auditors also express an opinion
whether this Corporate Governance Report was
prepared or not and in such respect whether
certain information therein coincides with the
Annual Report and consolidated accounting. The
auditors’ report their findings with regard to the
annual report, consolidated accounting and the
Corporate Governance Report through the audit
reports and a separate opinion regarding the
Corporate Governance Report, which they
present to the Annual General Meeting. In addi-
tion, 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 Executive Vice
President responsible for Corporate Communi-
cation.
Outstanding share and share-price
related incentive programs
An account of outstanding share and share-
price related incentive programs is provided in
Note 27 Personnel in the Group’s notes.
Report on the key aspects of the compa-
ny’s and Group’s system for internal con-
trols and risk management in conjunction
with financial reporting
The Board is responsible for the internal con-
trols 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 princi-
ples introduced by the Committee of Sponsoring
Organizations of the Treadway Commission
(COSO). The COSO principles consist of five
interrelated components. The components are:
control environment, risk assessment, control
activities, information and communication and
follow-up.
Volvo has a specific function for internal control.
The objective of the Internal Control function is
to provide support for management groups
within business areas and Group functions, that
allows them to continuously provide solid 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
conditions for specific control activities in key
processes 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 monitoring
that companies in the Group follow the principles
and rules that are stated in the Group’s direc-
tives, policies and instructions for financial
reporting. The head of the Internal Audit function
reports directly to the CEO, and in the new
organization to the Group’s General Counsel
and the Board’s 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 employees
operate. Volvo works actively on communica-
tions and training regarding the company’s basic
values as described in The Volvo Way, an internal
document concerning Volvo’s business culture,
and the Group’s Code of Conduct, 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 maintain a
satisfactory control environment. The principles
for internal controls and directives and policies
for the financial reporting are contained in Volvo
Financial Policies & Procedures (FPP), an internal
document comprising all important instructions,
rules and principles.
CORPORATE GOVERNANCE REPORT 2011
158