Internal Governance and Control
Klövern is a highly active company with extensive transactions and projects that are initiated, carried out and completed during a financial year. Klövern encounters risks every day that can have an impact on its operations and ability to achieve the set goals. Risk management, good internal governance and control is therefore a high priority for the board and the company.
The Board’s responsibility for financial reporting
According to the Companies Act and the Code, the Board bears ultimate responsibility for ensuring that the Company has sound internal governance and control and that its financial reporting complies with the applicable requirements. Management of internal control, financial management and management processes within the Company are based on the parameters of COSO, the Committee of Sponsoring Organizations of the Treadway Commission. The internal control affects all functions in the Company and includes risk assessment and routines as well as following up goals.
The control environment
The control environment and control measures ensure the effectiveness of the company and serve as the basis for internal control. The control environment provides understanding for the company’s values at the same time as it secures compliance with policies and goal fulfilment. The formal decision-making procedure is based on the division of responsibility between the Board and the CEO and includes the formal work order for the Board and reporting instructions. Overarching policies are continuously updated and confirmed by the Board once a year. During the year, the Board has adopted the following policies:
- Financial policy
- Communication policy
- Labour environment policy
- Code of conduct and Sustainability policy
- Related party policy
- Crisis management and security/safety policy
- IT policy
- Audit policy
Important processes, in addition to financial reporting, such as accounting instructions, project administration and rental administration are laid down in separate documents, which are evaluated and developed continuously in accordance with changes in laws, recommendations, risks and procedures.
Risk assessment and control activities
The extent and assessment of the Company’s risk management as a whole and financial reporting in particular is undertaken continuously by the Executive Management, the Board and the auditors. Through the Company’s ongoing work related to sustainability, risks are identified and action proposed and implemented.
The finance department and the real estate department work alongside one another to ensure compliance with the guidelines.
A limited number of persons are entitled to sign for the Company and attestation rules have been drawn up.
Matters for decision are prepared in the Project Council, the Management Council and the Transaction and Finance Council with the executive management participating. Representatives of the executive management regularly attend board meetings and the Board then follows up current issues and assessments directly with senior executives. The Group’s operations, financial management and administration are reviewed twice a year by the Company’s auditors who report their observations and any points of view directly to the Board.
Principles for accounting, reporting and audit are reviewed at the ordinary audit of the annual accounts and continuously in a dialogue between the Board and auditors.
Information and communications
External information is communicated through press releases and the website and taken care of in accordance with the communication policy adapted in accordance with Nasdaq Stockholm’s rules and the Code.
Internal information is communicated through regular meetings within the organization and also via the Company’s intranet. The main purpose of the Intranet is to provide employees with a structured overall picture of operations and to serve as an easily accessible platform through which current and relevant information can be made available.
Follow-up
Financial follow-up takes place quarterly of all business units and companies and at group level. The follow-up takes place in relation to budgets and forecasts, according to a tried and tested model. Follow-up regarding liquidity and financial ratios take place monthly. The result is analyzed by the business unit, the real estate and finance departments and the regional manager responsible. Reports are submitted to the Executive Management, the Board and the auditors.
Internal audit
Klövern’s Board has made the assessment that no separate function for internal audit need be established. The method of work applied by Klövern for follow-up and control is considered to be sufficient and takes place as follows.
Klövern has a decentralized and transparent organization. The financial operations, accounting and rental administration as well as external information and the major part of internal information are handled mainly by the head offices in Stockholm and Nyköping. The follow-up of profit and balance take place quarterly by both the various functions and by the business units, the executive management and the Board. The head of finance, the head of transactions and regional managers regularly attend board meetings. Clear documentation through policies and instructions together with recurrent follow-up and regular, ongoing and active discussions with auditors, ensure the correctness of the process. Management and reporting are formally scrutinized by the Company’s auditor three times a year and reported to the Board.
Detailed information about Klövern’s risk assessment, exposure and management is available in the section Risk and sensitivity on page 66–69.