Financial Reporting Control

Financial reporting control

SRV continuously monitors its functions to ensure that the result of its operations is reliable. The objective of internal control is to ensure that the company’s operations are efficient and productive, reporting is reliable and that laws and regulations are complied with. However, the internal control system cannot provide full certainty that risks can be prevented.

SRV’s business operations are guided by consistent Group-wide business principles, decisionmaking authorizations and values. Internal control is founded on a healthy corporate and management culture and specified reporting and the grounds thereof. In particular, internal control is based on financial reports, management reports, risk reports and internal audit reports. The company’s main operations are controlled by means of written internal operating policies and procedures. SRV’s business operations are based on the implementation of construction projects. SRV’s revenue is generated by construction projects, and the company’s result depends on the profitability of individual projects as well as their progress.

Financial control

The internal control system applied to business operations is the responsibility of the executive teams of the business areas and the controller function in accordance with SRV’s Group principles and instructions. In ensuring the effectiveness and efficiency of operations, a key control process is the monthly financial reporting process with analyses of deviations between actual results, budgets and continuously updated forecasts of business performance and construction projects.

The Board of Directors of SRV Group Plc and the Auditing Committee, the Corporate Executive Team and the working committee of the Corporate Executive Team, the management teams of the business areas and the financial administration are responsible for the Group’s internal control system. In ensuring the accuracy of the Group’s financial reporting, a key control process is the monthly management financial reporting process with analyses of deviations between actual results, budgets and continuously updated forecasts.

Financial management and the control of operations are supported and co-ordinated by the Group’s financial administration and the controller organisation of SRV’s business functions. SRV has drafted Grouplevel reporting models for standardising the financial reporting of the business functions. The reports of the business functions seek to ensure that control covers all the major aspects of business operations. This ensures that any deviations from financial objectives are identified, communicated and reacted to efficiently, in a harmonized and timely manner.

Financial control measures also include the ongoing business control procedures of the management. Financial reports define the key control indicators that aim to measure and support business efficiency and consistency and to monitor the achievement of the set objectives.

The Board of Directors has approved the internal approval limits drafted by the Corporate Executive Team.

Reliability of financial reporting

Monitoring of the reliability of financial reporting is based on the principles and guidelines SRV has set for the financial reporting process.

The interpretation and application of financial statement standards are centralized in the Group’s financial administration, which maintains the SRV IFRS Accounting Manual under the supervision of the company’s Audit Committee. The Group’s financial administration oversees compliance with these standards and instructions.

The supervision of budgeting and reporting processes is based on SRV’s budgeting instructions. The Group’s financial administration is responsible for drafting and maintaining these instructions on a centralised basis. The principles are applied consistently throughout the Group.

Internal audit

The internal audit operates under the Board of Directors of SRV Group Plc. The Board of Directors may use an external service provider to attend to the internal audit. The internal audit reports to the Board’s Audit Committee, the president and the senior vice president, financial administration.

The audits are based on the Audit Plan, which is approved annually by the Audit Committee. Reports on the audits carried out are submitted to the Audit Committee and annually to the company’s Board of Directors.