Internal control is an integral aspect of the SRV Group’s corporate governance. Internal control seeks to ensure that the Company's operations are efficient and productive, financial reporting and other information released to the market is reliable, and applicable laws and regulations are complied with.
The internal control system is the responsibility of SRV's Board of Directors and Audit Committee, the Corporate Executive Team, the executive teams of SRV’s business areas, and Group financial administration. The Group’s entire operative organisation is involved in implementing internal control.
SRV’s operations are guided by the Company’s strategy and values, SRV’s group-wide Code of Conduct, the internal decision-making powers approved by the Board of Directors, and other internal policies, guidelines and procedures. Internal control is also built on a healthy corporate and management culture, clarity in the responsibilities and authority assigned to different functions and roles, and specified reporting and the rationale behind it. In particular, internal control is based on financial reports, management reports, risk reports and internal audit reports.
Operational efficiency and profitability, and the reliability of financial reporting
Management’s monthly financial and business reporting is a key control process in ensuring the efficiency and profitability of operations and the accuracy of the Group’s financial reporting. It also includes analyses of deviations between actual results, budgets and continuously updated forecasts for overall financial performance and individual construction projects. An external auditor audits financial reporting on a regular basis and reports directly to the Board’s Audit Committee.
The internal control system applied to business operations is the responsibility of the executive teams of SRV’s business areas and the Group’s controller function, in accordance with SRV's Group policies and instructions. Financial management and operational control are supported and coordinated by the Group's financial administration and SRV’s controller function.
SRV has drafted Group-level reporting models for standardising the financial reporting of its business functions. Their reports seek to ensure that control covers all the major aspects of SRV’s business operations. This ensures that any deviations from financial objectives are identified, communicated and reacted to efficiently, in a harmonised and timely manner.
An important part of the forecasting process for construction projects is the project-specific identification, assessment and reporting of risks and opportunities, along with action plans to address any issues. These activities are coordinated by the controller organisation.
Business and financial control measures also include management’s continual business control procedures and steering. Financial reports define key control indicators that aim to measure and support strategy implementation, business efficiency and business consistency. They also monitor progress towards the attainment of SRV’s objectives.
The monitoring of financial reporting reliability is based on the principles and guidelines SRV has defined for the financial reporting process. The interpretation and application of financial statement standards, including compliance with these standards, are centralised in the Group's financial administration, which is supervised by the Board’s Audit Committee.
Budgeting and reporting processes are based on SRV's internal instructions. The Group's financial administration is responsible for drafting and maintaining these instructions centrally. These principles are applied consistently throughout the Group.
Legal and other regulatory compliance
The Group has drawn up policies and guidelines for areas such as insider issues, compliance with competition law, the protection of personal data, the identification of business partners, representing the company, business gifts, contract management and related-party transactions. Training and communications help to ensure compliance with Group policies and guidelines. The Group has a compliance function, and internal control also monitors compliance with Group policies.
SRV has an Ethics Channel through which the Group’s employees and other stakeholders can report cases in which people may have acted against the law or contrary to SRV’s values or Code of Conduct.
The internal audit is part of SRV’s internal control framework. The instructions for carrying out the internal audit define the key tasks of the audit, as well as its purpose, position and authority within the Company.
The internal audit involves independent and objective assessment, verification and consulting work that aims to generate added value for the organisation and support the development of the Company’s business.
The internal audit supports the achievement of SRV’s objectives by carrying out audit assignments on the basis of the Company’s strategy and risks, and also promotes the development of good corporate governance, internal controls and risk management.
This function carries out independent audits of SRV’s business functions, Group companies, processes and, in particular, of selected targets to ensure the functionality of internal control.
It operates under the supervision of the Board’s Audit Committee and reports on its observations to the Audit Committee, which in turn reports to the Board of Directors.
An annual plan for internal audits is drawn up for the Audit Committee to verify and approve.