Internal control

The board of directors’ responsibility for the internal control is governed by the Swedish Companies Act, the Swedish Annual Reports Act – which requires that information about the main features of the company’s system for internal control and risk management related to financial reporting each year must be included in the corporate governance report – and the Swedish Code for Corporate Governance.

The board of directors shall, inter alia, see to that Instalco has sufficient internal control and formalised routines to ensure that established principles for financial reporting and internal control are adhered to and that there are effective systems to monitor and control the company’s operations and the risks associated with the company and its operations.

The overall purpose of the internal control is to, to a reasonable degree, ensure that the company’s operating strategies and targets are monitored and that the owners’ investment is protected. Furthermore, the internal control shall ensure that the external financial reporting, with reasonable certainty, is reliable and prepared in accordance with GAAP, that applicable laws and regulations are followed, and that the requirements imposed on listed companies are complied with.

The control environment forms the basis for the internal control, which also includes risk assessment, control activities, information and communication as well as monitoring.

Control environment
The board of directors has the overall responsibility for the internal control in relation to financial reporting. In order to create and maintain a functioning control environment, the board of directors has adopted a number of policies and steering documents governing financial reporting. These documents primarily comprise the rules of procedure for the board of directors, instructions for the CEO, instructions for committees established by the board of directors and instructions for financial reporting. The board of directors has also adopted special attestation instructions and a finance policy. The company also has a financial manual which contains principles, guidelines and process descriptions for accounting and financial reporting. Furthermore, the board of directors has established an audit committee whose main task is to monitor the company’s financial  reporting, to monitor the effectiveness of the company’s internal control, internal audit (if such function is established) and risk management as well as to review and monitor the auditor’s impartiality and independence.

The responsibility for the ongoing work of maintaining the control environment rests primarily with the company’s CEO, who regularly reports to the board of directors in accordance with established instructions.

Each local unit is organised as a subsidiary with its own board of directors and CEO with responsibility for control of the local business according to guidelines and instructions from group level. Each local unit has its own administration which handles bookkeeping and financial reporting. The local units primarily reports to the company’s CEO and CFO.

In addition to internal monitoring and reporting, the company’s external auditors report to the CEO and the board of directors throughout the year. The auditor’s reporting provides the board of directors with a good understanding and a reliable basis regarding the financial reporting in the annual report.

Risk assessment and control activities
Risk assessment includes identifying and evaluating the risk of material errors in the accounting and reporting at group and subsidiary level. Risk assessment is made regularly and in accordance with established guidelines with a focus on individual projects. Within the board of directors, the audit committee is primarily responsible to continuously assess the company’s risk situation, after which the board of directors performs an annual review of the risk situation.

Control activities aim to identify and limit risks. The board of directors is responsible for the internal control and monitoring of the management. This is carried out through both internal and external control activities as well as through examination and monitoring of the company’s policies and steering documents. The group guidelines for internal control are monitored throughout the year in all operating companies.

Uniform accounting and reporting instructions apply to all units within the group. The local units’ financial development is continuously monitored through monthly reporting focused mainly on revenues, earnings trend and order book but also includes legal and operational follow-up, focusing on the status of individual projects. Other key components of the internal control are the annual business planning process and budget and forecast processes. Forecasts are followed up in the group’s monthly reporting.

Through the launch of the internal program IFOKUS and the Instalco Academy, a framework  for carrying out continuous improvements within the Group, including basic processes regarding internal control, has been created.

Information and communication
The company has information and communication channels to promote the correctness of the financial reporting and to facilitate reporting and feedback from the operations to the board of directors and management, for example by making corporate governance documents such as internal policies, guidelines and instructions regarding the financial reporting available and known to the employees concerned. Financial reporting is made in a common group system with predefined report templates.

The company’s financial reporting complies with Swedish laws and regulations and the local rules in each country where operations are conducted. The Company’s information to shareholders and other stakeholders is provided through the annual report and will henceforth also be provided through interim reports and press releases.

Monitoring
The compliance and effectiveness of the internal controls are constantly monitored. The CEO ensures that the board of directors continuously receives reports on the development of the Company’s activities, including the development of the Company’s results and financial position, as well as information on important events, such as the development of specific projects. The CEO also reports on these matters at every board meeting. The board of directors and the audit committee examines the annual report and quarterly reports and conduct financial evaluations in accordance with an established plan. The audit committee monitor the financial reporting and other related matters and regularly discusses these matters with the external auditors.