Volvo 2014 Annual Report Download - page 111

Risk assessment
Risks relating to fi nancial reporting are evaluated and monitored by the Board
through the Audit Committee inter alia through identifying risks that could be
considered as material, and through the mitigating control objectives. The risk
assessment is based on a number of criteria, such as the complexity of the
accounting principles, revaluation principles of assets or liabilities, complex
and/or changing business circumstances, etc. The risks together with miti-
gating control objectives are collected in a framework for internal control over
fi nancial reporting, Volvo Internal Control Standard (VICS).
Control activities
In addition to the Board of AB Volvo and its Audit Committee, the man-
agement groups and other decision-making bodies in the business areas,
Group Functions and Group companies constitute overall supervisory
bodies. Business processes are designed to ensure that potential errors
or deviations in the fi nancial reporting are prevented, discovered and cor-
rected by implementing control activities that correspond to the control
objectives defi ned in the VICS framework. Control activities range from
review of outcome results in management group meetings to specifi c
reconciliation of accounts and analyses of the ongoing processes for
fi nancial reporting.
Information and communication
Policies and instructions relating to the fi nancial reporting are updated
and communicated on a regular basis from management to all affected
employees. The Group’s fi nancial reporting function has direct operating
responsibility for the daily fi nancial reporting and works to ensure a uni-
form application of the Group’s policies, principles and instructions for the
fi nancial reporting and to identify and communicate shortcomings and
areas of improvement in the processes for fi nancial reporting.
Follow-up
Ongoing responsibility for follow-up rests with the Group’s fi nancial report-
ing function. In addition, the Corporate Audit and the Internal Control func-
tions conduct review and follow-up activities in accordance with what is
described in the introduction of this report. More specifi cally, the Internal
Control function runs and coordinates evaluation activities through the
“Volvo Group Internal Control Programme,” with the purpose of systemati-
cally evaluating the quality of the internal control over fi nancial reporting on
an annual basis. An annual evaluation plan is established and presented to
the Audit Committee. This evaluation program comprises three main areas:
1. Group-wide controls: Self-assessment procedure carried out by manage-
ment teams at business area, Group Function and company levels. The main
areas evaluated are compliant with the Group’s fi nancial directives and
policies found in FPP, The Volvo Way and the Group’s Code of Conduct.
2. Process controls at transaction level: Processes related to the fi nancial
reporting are evaluated by testing procedures/controls based on the
framework for internal control over fi nancial reporting, Volvo Internal
Control Standards (VICS).
3. General IT controls: Processes for maintenance, development and
access management of fi nancial applications are evaluated by testing
procedures and controls.
The results of the evaluation activities are reported to Group management
and the Audit Committee.
Göteborg, February 26, 2015
AB Volvo (publ)
The Board of Directors
To the annual meeting of the shareholders of AB Volvo (publ), corporate
identity number 556012-5790
It is the Board of Directors who is responsible for the Corporate Gov-
ernance Report for the year 2014 on pages 90–107 and that it has been
prepared in accordance with the Annual Accounts Act.
We have read the Corporate Governance Report and based on that
reading and our knowledge of the company and the group we believe that
we have a suffi cient basis for our opinions. This means that our statutory
examination of the Corporate Governance Report is different and sub-
stantially less in scope than an audit conducted in accordance with Inter-
national Standards on Auditing and generally accepted auditing stand-
ards in Sweden.
In our opinion, the Corporate Governance Report has been prepared
and its statutory content is consistent with the annual accounts and the
consolidated accounts.
Göteborg, February 26, 2015
PricewaterhouseCoopers AB
Peter Clemedtson
Authorized Public Accountant
Lead Partner
Johan Rippe
Authorized Public Accountant
Partner
Auditor’s report on the Corporate Governance Report
107
CORPORATE GOVERNANCE REPORT 2014 CORPORATE GOVERNANCE