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, Code of Conduct, core values, policies and rules. The Executive Group Management has implemented the Vattenfall Management System (VMS) along with governing documents which specify Group instructions for – among other things – decision-making, delegation, payment authorisation, governance of subsidiaries, 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 risk committee that is headed by Vattenfall’s CFO. The Board evaluates and monitors risks and the quality of financial reporting through the Audit Committee, which maintains continuous and regular contact with the Group’s internal and external audit functions in order to evaluate risk in the financial reporting.

The Vattenfall Management System includes a framework that identifies and defines risks related to financial reporting. The Compliance Office function within the Group’s Accounting and Finance Group function performs yearly analyses of risks related to financial reporting and is responsible for updating this framework.

Control activities and follow-up

The Board receives monthly financial reports, and the parent company’s and Group’s financial position are discussed at every board meeting. The EGM has regular follow-up meetings on the financial outcome with the management and finance functions of the various business areas.

Vattenfall’s management system contains a description of the essential financial reporting processes. The management system serves as a platform for internal control for all units within the Group. The Compliance Office, which reports to the head of Finance and Accounting, Vattenfall’s CFO and the Audit Committee, is responsible for overseeing self evaluations, follow-up, reporting and improvements in the control activities for financial reporting. Internal Audit reports to the Executive Group Management, to the management teams in the various countries and units, and to Vattenfall’s Audit Committee.

Information and communication

Information and communication about the Group’s policies, instructions, guidelines and manuals are available on Vattenfall’s intranet, which is accessible to all employees in the Group.

Updates and changes in accounting and reporting principles are communicated on a continuous basis via regular meetings held by the Group’s finance and control functions.