Internal control

Good internal control and management are of great assistance to achieve the goals relating to the result and profitability and to prevent loss of resources. Clear guidelines together with recurrent follow-up and common sense create the prerequisites for achieving common goals and confidence and trust throughout the whole organisation and among shareholders.

The processes for handling internal control, financial reporting and management within the company are based on the framework for Coso and governed, besides by laws, rules and recommendations, to a large extent by internal policies and guiding documents. Guiding documents as well as policies are continuously revised and evaluated as well as being regularly developed and used as a support in decision-making processes for each individual member of staff.

Control environment
The control environment serves as the basis for internal checks and valuations in the company. The formal decision-making procedure is based on the division of responsibility between the Board and the CEO as well as including the formal work order for the Board, the instructions for the CEO and reporting instructions. Important processes, in addition to financial reporting, such as accounting instructions, project administration and rental administration are established in separate documents, which are evaluated and developed continuously in accordance with changes in laws, recommendations and procedures. These documents provide support and guidance and include both decision-making paths and allocation of responsibility and powers.

Risk assessment
Every organisation meets a lot of risks of external and internal origin which must be identified and evaluated to determine how risks are to be managed and faults in this management to be minimised. It is also very important that Klövern’s IT environment maintains a high level of security, reliability and efficiency.
The extent and assessment of the company’s risk management as a while and financial reporting in particular is made continuously by the Board and the executive management.

Control activities
The Finance Department and the Real Estate Department make continuous follow-ups of business activities at the result, balance and verification level, to ensure compliance with the guidelines. A limited number of people are authorised to sign for the company and attestation rules have been drawn up. The Group’s activities, financial administration and management are inspected twice a year by the company’s auditors who report their observations and any comments directly to the Board. The principles for accounting, reporting and audit comments are reviewed in connection with the ordinary audit of the annual accounts.

Information and communications
The internal communication of the executive management consists mainly of the minuted meetings of the executive management and regular conferences and meetings with those responsible for the respective geographical unit and other managers. Relevant information, internal and external, is provided continuously to the staff concerned. The external information- and IR-policy is taken care of in accordance with an information policy which is partly adapted to the regulatory framework of Nasdaq OMX Stockholm and the Swedish Code of Corporate Governance. Internal information is communicated via the intranet.

Control and follow-up
Financial follow-up shall take place quarterly by all business units and companies and at group level. The follow-up takes place in relation to the budget and forecast. The result is analysed by both the real estate department, the finance department and the market area manager responsible for results. Reporting is made to the executive management, the CEO and the Board.

Internal audit
Klövern has a decentralised and transparent organisation where, among other things, financial activities, economic and rental administration are taken care of by head office. Follow-up of the result and balance is made quarterly by both the separate functions and by the executive management, the CEO and the Board. Management and reporting are examined by the Company´s auditors and the outcome is reported to the Board. Based on the above, it is not considered that there is any need for internal audit.