Risks and Uncertainties

Affecto publishes the most significant risks and uncertainties periodically as a part of its financial reporting.
Please see the ‘Risks and Uncertainties’ section of the latest published financial report for the up-to-date risk assessment.

 

Descriptions of Internal Control Procedures and the Main Features of Risk Management Systems

Affecto prepares consolidated financial statements and interim reports in accordance with the International Financial Reporting Standards, as adopted by the EU, the Finnish Securities Markets Acts as well as the appropriate Finnish Financial Supervision Authority Standards and Nasdaq Helsinki Ltd’s rules. The Report of the Board of Directors of Affecto and parent company financial statements are prepared in accordance with Finnish Accounting Act and the recommendations and guidelines of the Finnish Accounting Board.

Affecto’s financial reporting process consists of external accounting. Internal control and risk management systems and practices as described below are designed to ensure that the financial reports as disclosed by the company give correct information about the company finances in all material respect.

Affecto group has reporting manual which includes an overview of financial reporting process, key outputs, and roles and responsibilities within the process. Essential group policies are part of the guidelines. The up-to-date versions of reporting manual and other internal guidelines for financial reporting can be found at group intranet.

Affecto’s subsidiaries in each country have separate finance organization and also business activities are local. Proper arrangement and monitoring of internal control is the responsibility of the local management in accordance with the group framework.

Affecto group uses a common chart of account and consolidation and reporting application. Subsidiaries submit external financial reporting to the group finance on a monthly basis.

The group finance has defined the significant processes relevant to internal control over financial reporting, e.g. revenue, purchasing, payroll expenses, project management, finance, and related IT systems. Within this process framework, financial reporting risks and control objectives have been defined and group wide common control points have been designed to mitigate financial reporting risks. Common control points include for example authorizations, key accounting reconciliations, project management procedures, segregation of key financial duties and analysis of financial performance and figures in order to identify any irregularities or errors.

Group finance supports subsidiaries by regular monitoring and by providing additional guidance. The subsidiaries together with the group finance conduct annually a self-evaluation of the internal control points, which is then presented to the Audit committee.

Financial reports prepared by the subsidiaries are analyzed by Affecto group finance. Group management and operative segment management have monthly meetings including a review of business operations and financial position for which the segment management prepares a report.

Segment-based financial reports are prepared for the Affecto Board on a monthly basis. According its charter, the Board reviews and approves interim financial reports, financial statement releases and the financial statements.

The group finance and finance managers of the subsidiaries meet semi-annually to evaluate and adjust the procedures related to financial reporting and internal controls.

Overview of the risk management systems

In Affecto’s risk management process, operative segments and the Leadership Team identify, assess and manage business risks on an on-going basis. The most significant risks are reported to the Board of Directors.

The Board informs the market about the most significant risks and uncertainties in the financial statements and in the interim reports.

Overview of the internal control

Internal control aims to ensure that Affecto’s business activities are efficient and proficient, financial reporting is reliable and that applicable laws, regulations and company’s internal policies are followed.

The Board of Directors and the Audit Committee, which is appointed by the Board, supervise internal control and the risk management pertaining to the financial reporting. The Group CEO and CFO are together responsible for implementing the internal control and risk management together with the Leadership Team, subsidiary management teams and finance directors.

Affecto does not have separate internal audit function. The function is generally carried out by group finance department staff. Any audit results are reported by the CFO to the Board’s Audit Committee and to the CEO. If necessary, reports can also be addressed directly to the entire Board of Directors.