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Internal control

Internal control and risk management for financial reporting

Adapteo applies principles set forth in the COSO Internal Control – Integrated Framework which helps organisations design and implement internal control. Adapteo Internal Control Framework is designed to identify, assess and manage risks through effective internal controls in order to achieve timely and reliable preparation of the financial reports, and to ensure that applicable accounting principles and other requirements as a publicly listed company are applied consistently. Further, the Internal Control Framework assists Adapteo in being efficient in the business operations, and to comply with applicable laws and regulation.

Control environment

In Adapteo, the Board of Directors is responsible for setting the ambitions for and monitoring the adequateness and effectiveness of internal control. In accordance with the Board of Directors’ and its Audit Committee’s charters, the Audit Committee assesses the company’s financial reporting process and the appropriateness of the internal control system and reviews the internal control reports. The duties of the Board of Directors and the Audit Committee are presented in more detail in the Corporate Governance section.

The President and CEO is responsible for implementing practical actions regarding internal controls and to maintain an organisational structure in which responsibility, authority, and reporting relationships are clearly and comprehensively defined. An authorisation matrix is used where the division of authority for each organisational role is specified through approval limits. Adapteo has defined internal controls operating principles which assists personnel, management and the Board of Directors in their respective roles and duties regarding internal controls. Further, Adapteo has established a Risk & Control Steering Committee which convenes on a quarterly basis and reviews e.g. the results of the internal control self-assessments.

Adapteo’s ethical principles and business norms are specified in Adapteo’s Code of Conduct. Compliance with the principles is promoted through internal communication and training. Adapteo strives to ensure that its key business partners also comply with the same or similar principles. The Group's personnel and business partners can report suspected violations of Adapteo’s Code of Conduct on Adapteo’s website.

 Key financial reporting risks Control activities
Group accounting principles are not consistently applied (e.g. IFRS)
  • Group Accounting Manual  and reporting
    instructions are defined and communicated
    within Finance Community
Reporting processes and procedures are not documented, kept up to date or followed
  • Procedures and instructions are defined and
    communicated
  • Closing process task list are in use for monthly closing
  • Closing process controls are defined and monitored
Revenues for rental sales, assembly or other sales are not recognised in the appropriate accounting period
  • Group-wide ERP system provides structures
    for revenue recognition
  • Business Controlling reviews revenue recognition
    on a montly basis
Rental equipment is not appropriately valued in the financial statements
  • Condition of rental equipment is
    evaluated during and after the rental period
  • Process for systematic assessment of the
    rental equipment impairment is implemented
Provision for bad debt is not calculated based on Group’s guidelines
  • Credit policy sets forth principles for credit management
  • Aged receivables are assessed on a monthly basis
    and bad debt provision is calculated in accordance
    with the Group Policy

Adapteo's Group Management Team Management

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