External auditors, accounting and internal audit
Financial statements are prepared in accordance with law and International Financial Reporting Standards (IFRS) accounting standards. But it is not only the financial results that determine a company's success, which is why Atlas Copco also integrates sustainability and social responsibility in the business reporting.
The task of the external auditor is to examine Atlas Copco’s Annual accounts and accounting practices, as well as to review the Board and the CEO’s management of the company. At the AGM 2010 the audit firm Deloitte AB, Sweden was elected external auditor until the AGM 2014 in compliance with a proposal from the Nomination Committee. The principal auditor is Jan Berntsson, Authorized Public Accountant at Deloitte AB.
Atlas Copco places great emphasis on environmental, social and governance performance, which are measured regularly and reported in the financial statements under "Sustainability Notes". Since 2001, the financial statements are prepared annually in accordance with the Global Reporting Initiative (GRI) guidelines.
Internal control of financial reporting
This section includes a description of Atlas Copco’s system of internal controls over financial reporting in accordance with the requirements set forth in the Swedish Code of Corporate Governance and as stipulated by the Swedish Companies Act.
The internal control process is based on a control environment that creates discipline and provides structure for the other four components of the process – risk assessment, control activities, information and communication as well as monitoring. The starting point for the process is the regulatory framework for internal control issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The basis for the internal control is defined by the overall control environment. The Board of Directors is responsible for establishing an effi-cient system for internal control and governs the work through the CEO. Group Management sets the tone for the organization, influencing the control consciousness of the people. One key success factor for a strong control environment lies in ensuring that the organizational structure, decision hierarchy, corporate values in terms of ethics and integrity as well as authority to act, are clearly defined and communicated through guiding documents such as internal policies, guidelines, manuals, and codes. All employees must follow these policies and guidelines.
The company applies different processes to assess and identify the main risks relating to financial reporting misstatements. The risk assessment process is regularly performed to identify new risks and follow up that internal control is improved over previously identified risks.
Identified risks are managed through the control activities in the company, which are documented in processes and internal control descrip-tions on the Company, Division, Business area, and Group levels. These aim to prevent, detect and correct errors and non-compliances and include for example instructions for attests and authority to pay, controls in business systems as well as accounting and business reporting processes.
The company has information and communication channels designed to ensure that information is identified, captured and communicated in a form and timeframe that enable employees and managers to carry out their responsibilities. Reporting instructions and accounting guidelines are communicated to personnel concerned in the internal database The Way We Do Things, supported by, for example, training programs for dif-ferent categories of employees.
The company continuously monitors the adherence to internal policies, guidelines, manuals, and codes as well as efficiency in the control ac-tivities. Internal control is continuously evaluated and followed up on in the operations, including regular management reviews and supervisory activities as well as through internal audits, and control self assessments. The Audit Committee has an important role in supporting the Board of Directors to monitor whether the internal control processes facilitate adequate internal control over financial reporting.
Read more about these processes in the annual report under “Corporate Governance”.