Internal control

The Board’s report on internal control of financial reporting

This section includes a description of the most important internal control routines regarding Vattenfall’s financial reporting.

Control environment

The formal decision-making structure in the Group is based on the division of responsibility between the Board and CEO, which is stipulated in the Board’s Rules of Procedure. The Board has established Vattenfall’s Group-wide Code of Conduct, which defines the obligation of all employees to adhere to Vattenfall’s company philosophy, core values, and norms for the employees. The Vattenfall Management System (VMS), which has been established by the CEO, contains governing documents including group instructions for authority, governance, risk management and internal control.

Risk analysis

The rules and outcome of the Group’s risk assessment and risk management processes are reviewed by the Board each year. The Group’s risk management and reporting are co-ordinated by a central risk committee. The Board evaluates and monitors risks and the quality of financial reporting via the Audit Committee. The Audit Committee maintains continuous and regular contact with the Group’s internal and external audit functions in order evaluate risk in the financial reporting. The VMS includes a framework for internal control that identifies and defines risks related to financial reporting. The Finance Compliance function within the Group Function Finance performs yearly analyses of risks related to financial reporting and is responsible for updating the internal control framework.

Control activities and monitoring

The Board monitors the Parent Company’s and Group’s financial position and addresses this matter at every ordinary board meeting. The EGM has regular follow-up meetings on the financial outcome with the management and finance functions of Vattenfall’s Business Groups, functions and shared service units.

The VMS contains governing documents for the essential financial reporting processes. The VMS serves as a platform for internal control for all units within the Group. The Finance Compliance function is responsible for monitoring of the self evaluations and for the follow-up, reporting and improvements of the control activities relating to financial reporting. These control activities are designed to prevent, discover and correct errors in the financial reporting. The Finance Compliance function reports quarterly to Vattenfall’s CFO and Audit Committee.  

Internal Audit performs evaluations and reviews of risk management, compliance with policies, rules and instructions, and the effectiveness of internal controls over the financial reporting. Internal Audit reports to the Executive Group Management, to the management teams in the Business Groups and units, and to Vattenfall’s Audit Committee.

Information and communication

Information about the Group’s policies, instructions, guidelines and manuals is available on Vattenfall’s intranet, which is accessible to all employees in the Group. The Group’s accounting and reporting policies are defined in the Group reporting manual. Updates and changes in these are communicated on a continuous basis via Vattenfall’s intranet as well as at meetings with members of Vattenfall’s Business Groups, functions and shared service units.