Saab 2013 Annual Report Download - page 131

SAAB ANNUAL REPORT 2013 127
CORPORATE GOVERNANCE > REPORT
Internal control is based on Saab’s organisation, where operating
responsibilities and powers are delegated to business areas and
support units, which are also supported and supervised by Group
functions with specic competencies. ese Group functions issue
Group guidelines that clarify responsibilities and powers and con-
stitute part of the internal control in specic areas such as nance,
accounting, investments and tenders.
Risk assessment
Saab’s operations are mainly characterised by the development, pro-
duction and supply of technologically advanced hardware and so-
ware for customers around the world. e major parts of sales are
generated from countries outside of Sweden. As a rule, projects
entail considerable sums of money, stretch over long periods of time
and involve technological development or renement of products.
Based on Saab’s operations, the material risk areas in nancial
reporting are project accounting, acquisitions and goodwill, devel-
opment costs, hedging and other nancial transactions, leasing
operations, taxes and accounting for pensions. In addition to busi-
ness risks and risks of inaccurate nancial reporting, the processes
are also assessed on the basis of the risk of exposure to any impro-
prieties. Group Finance continuously coordinates an overall risk
assessment of nancial reporting. is process involves self-assess-
ments 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 CEO or
by function managers appointed by the CEO. All Group directives
are updated 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 report-
ing 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 signicant 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 man-
agers 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. In addition to the processes
that form the basis of nancial reporting, these assessments cover
operating risks, reputational risks and compliance with laws, regu-
lations and internal rules. is is also reported to the Audit Com-
mittee.
e Internal Audit department, part of the internal control
structure, is a dedicated resource for independent review of the
eectiveness of internal control processes. At the same time, Inter-
nal Audit supports locally-applied internal controls and the central
controller sta. Together these serve as a resource for monitoring
nancial reporting routines. Internal Audit’s assignments are initi-
ated by the Audit Committee, Group Management and its mem-
bers, and on its own initiative.
Activities in 2013
During , risk self-assessments were conducted on a regular
basis in the Swedish, Danish and Australian operations. One inde-
pendent evaluation was conducted on one occasion in these coun-
tries. Implementation of the self-assessment process was concluded
in Saab’s operations in in South Africa and the US during . e
focus on internal control increased throughout the year since the
Business Areas and Group functions have been reporting the status
of their risk self-assessments on a quarterly basis to Group Finance.
In addition a simplied process of the risk self-assessment has been
implemented in the various Market Areas, i.e. the Nordic region,
Americas, Asia Pacic, India, South Africa, Europe and Middle East
& North Africa.
Focus in 2014
In  a minimum of two self-assessments will be performed in all
Saab business areas and the Group functions. At least one inde-
pendent evaluation will be conducted. e implementation of the
risk self-assessment process will be nalised in Germany, the Czech
Republic and the Netherlands. At the same time, improvements to
existing control systems are continuously being made.
The annual assessment process of internal financial controls
Continuous Risk Assessment
Status of financial controls reported to Group Management on monthly basis.
Self-Assessments communicated to Audit Committee, Internal Audit and External Auditors.
Independent review of
risk self-assessment
results
Preparation of Corporate
Governance report
Q3 risk
self-assessment
Q1 risk
self-assessment
Remediation of issues identified
during Q1 risk self-assessment
Q1 Q3Q2 Q4
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