Electrolux 2005 Annual Report Download - page 101
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opinion regarding internal control over financial reporting as well as
disclosure controls and procedures, and compliance with other
internal guidelines.
Monitoring
The effectiveness of the process for assessing risks and the execu-
tion of control activities is monitored continuously at four levels:
Group, business sector, unit, and process. Monitoring involves both
formal and informal procedures applied by management and owners
of processes, risks and controls, including reviews of results in
comparison with budgets and plans, analytical procedures, and key
performance indicators.
In addition, various tools including self-assessments are used
within the Group. In order to evaluate information security and the
transactional and reporting processes, units within the Group have
applied these tools since 2002.
In 2005, the Internal Audit function Management Assurance &
Special Assignments created test plans for identified key control
activities based on documented flowcharts and the detailed descrip-
tions of the control activities. These key control activities are tested
for operating effectiveness by employees independent of those
performing the controls. The test results are documented in an IT
system implemented solely for this purpose.
The Internal Audit function is responsible for performing independent
objective assurance activities, in order to systematically evaluate and
propose improvements to the effectiveness of governance, internal
control and risk management processes. In addition, this function
proactively proposes improvements to the control environment. The
head of this function has dual reporting lines, to the President and
CEO and the Audit Committee for assurance activities, while other
activities are reported to the CFO.
The Audit Committee reviews reports regarding internal control
and processes for financial reporting, as well as internal audit reports
submitted by the Internal Audit function. The external auditors report
to the Audit Committee at each ordinary meeting.
Compliance with the Sarbanes-Oxley Act
In 2005, work continued on ensuring that Electrolux complies with
the requirements of the US Sarbanes-Oxley Act of 2002.
Section 404 of the Sarbanes-Oxley Act stipulates that companies
subject to SEC reporting requirements, such as Electrolux, must
submit annual reports in a Form 20-F that include management’s
report on the effectiveness of the company’s internal controls over
financial reporting. The company’s external auditors are required to
issue an attestation report regarding management’s assessment of
the effectiveness of these controls, as well as an auditor’s independ-
ent assessment of the effectiveness of the Group’s internal control
over financial reporting. This attestation report must also be included
in the Form 20-F. Electrolux and its external auditors must comply
with these requirements starting with the Group’s Form 20-F report
for the fiscal year ending December 31, 2006.
In the course of 2004, extensive work was performed to develop a
method within the Group for documenting, evaluating and testing
Electrolux internal controls over financial reporting and the work on
documentation was started. This work also included comprehensive
staff training in order to secure the required competence within the
Group for effective compliance with the requirements of Section 404
of the Sarbanes-Oxley Act. This work is being led by Management
Assurance & Special Assignments, the Group’s Internal Audit func-
tion. In 2005, extensive work was performed to document, evaluate
and test Electrolux internal controls over financial reporting.
Financial reporting and disclosure
Electrolux provides the market with information about the develop-
ment of the Group and its financial position on an ongoing basis.
A disclosure policy in accordance with the Sarbanes-Oxley Act of
2002 was adopted by the Audit Committee in 2003. Electrolux
complies with the requirements for an information policy that were
introduced in 2004 by the Stockholm Stock Exchange in listing
agreements.
Financial information is issued regularly in the form of:
• Interim reports, published as press releases
• The Electrolux Annual Report
• An annual report on Form 20-F and interim reports on Form 6-K,
each of which are filed with the US Securities and Exchange
Commission
• Press releases on all important matters which could materially
affect the share price
• Presentations and telephone conferences for analysts, investors
and media representatives on the day of publication of the quarterly
and full-year results, and in connection with release of important
news
• Meetings with financial analysts and investors worldwide
All reports and press releases are published simultaneously at
www.electrolux.com
Disclosure Committee
A Disclosure Committee was established by Electrolux at the start of
2005. This Committee contributes to considering the materiality of
information relating to Electrolux and ensuring that such information
is properly communicated to the market on a timely basis.
The Disclosure Committee comprises the Head of Group Staff
Legal Affairs, the Chief Financial Officer, the Head of Group Staff
Communications and Branding, and the Head of Investor Relations
and Financial Information.
Corporate Governance Report 2005