Saab 2015 Annual Report Download - page 57

Group functions and are based on Saab’s minimum requirements for
good internal control in the nancial reporting processes.
Information, communication and control activities
Internal control within Saab is based on clearly dened areas of respon-
sibility and authority, issued Group guidelines, processes and controls.
Uniform handling of nancial reporting is assured by adopting and
issuing Group guidelines approved by the President or by function
managers appointed by the President. All Group directives are updated
on an ongoing basis, are clearly communicated and are available
through Saab’s internal enterprise management system, which is availa-
ble on the internal website.
e control activities are both manual and automated. Examples of
key control activities are the approval and control of various types of
accounting transactions, key indicators, log lists, account reconcilia-
tions, checklists and application controls of nancial information in the
IT systems that support the nancial reporting.
Monitoring and evaluation
All operating units report monthly and quarterly according to a stand-
ardised routine. Quarterly reports are the basis of Saab’s external nan-
cial reporting. In the operating reporting, each business area is meas-
ured in terms of protability and nancial position and consolidated to
track the Group’s total protability and nancial position. Accounting
managers 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 the previ-
ously mentioned self-assessments to identify and test key control func-
tions in each business process.
e Internal Audit department, part of the internal control structure,
is a dedicated resource for independent review of the eectiveness
of the internal control processes. At the same time, Internal Audit
supports the locally applied internal control process and the central
controller sta. Together they serve as a resource for monitoring
nancial reporting routines.
Internal Audit’s tasks are initiated by the Audit Committee or on its
own initiative and then reported to the Committee. From time to time,
Group Management and its members can also submit assignments to
Internal Audit. e Audit Committee reports on the status of the nan-
cial controls and the self-assessment to the Board of Directors
Activities in 2015
e focus in 2015 was to clarify the governance model for internal control.
A clearer framework for Saab’s internal control process has been created
through changes in the governance model and by establishing updated
Group guidelines for internal control. e focus in clarifying the
governance model was on the line organisation’s mandate in the
internal control process. is resulted in greater transparency and an
increased emphasis on internal control in the entire Group.
e updated Group guidelines on internal control require the same
controls to be introduced in every part of the Group, i.e., a uniform con-
trol environment and higher degree of standardisation in control activi-
ties. e processes receiving special attention during the year were
nancial closing, procurement and investment, as well as the processes
for tenders and project implementation.
Two self-assessments were performed in late June and late Septem-
ber 2015 in all the business areas as well as in the sta functions central
accounts, treasury, Group accounting, tax and ICT units. e results
were then followed up and reviewed by the business areas together with
Group Finance and reported to the Group Management and Audit
Committee.
Saab's internal control process was implemented in the business unit
Saab Kockums, which was acquired in 2014.
Training in internal control and the self-assessment process was
available to management and personnel around Sweden during the
year.
e Group’s Internal Audit unit provided support for the self-
assessment process.
Focus in 2016
e focus on internal control and the self-assessment process will con-
tinue in 2016. Special emphasis will be placed on further enhancing and
optimising the current internal control process. Based on what was
learned in 2015, the Group guidelines for the internal control process
will be adjusted and comparisons will be made internally between busi-
ness units to establish best practices within the company. Furthermore,
Saab will establish and follow up action plans to improve the internal
control process in units where it was decided in 2015 to increase focus
on internal control.
Integration of the Group’s subsidiaries outside Sweden in the internal
control process will continue during the year together with the business
areas.
e processes monitored within the framework of internal control
will be expanded in 2016 to include human resources. In addition,
opportunities to automate and expand system support in the current
internal control process will be reviewed.
Self-assessments will be implemented on at least two occasions and
comprise all business areas and certain sta functions. e Internal
Audit department will take an active role in monitoring the self-
assessments and perform independent controls.
THE ANNUAL ASSESSMENT PROCESS OF INTERNAL FINANCIAL CONTROLS
Preparation of Corporate
Governance report
Q1 risk self-
assessment
Remediation of issues identified during
Q1 risk self-assessment
Q3 risk self-
assessment
Independent review
of risk self-assessment
results
Continuous Risk Assessment
Status of financial controls reported to Group Management on monthly basis.
Self-Assessments are communicated to the Audit Committee, Internal Audit and External Auditors.
Q1 Q2 Q3 Q4
SAAB ANNUAL REPORT 2015 – 53