Control and risk analysis systems in connection with the
presentation of financial statements
The board/auditor committee and the management have the overall responsibility for the risk management of the group and for internal controls in connection with the financial reporting, including compliance with relevant legislation and other regulations as regards to financial reporting.
Scandinavian Brake Systems A/S has established internal control and risk management systems to secure financial reporting according to IFRS and other legislation valid for listed Danish companies. Furthermore, the risk management system must increase assurance that the internal and external financial reporting gives a true picture without significant misinformation.
The board/auditor committee continuously monitors the control and risk management systems of the group. In this connection they evaluate risks that may be of importance for the accounting. The evaluation of risks is based on the most important accounting entries as well as other aspects that may be critical for the business operation and development. In this connection, control activities are made regularly.
The board regularly evaluates the group's organizational structure and staff in essential areas including areas related to the financial reporting. The board and the management establish and approve the general policies, procedures and controls in essential areas related to the financial reporting - including a reporting manual, an IT strategy and an IT security policy. The basis for this is a clear organizational structure, clear reporting procedures, authorization and certification procedures as well as personal separation.
The board annually evaluates the need for establishing an internal audit. Based on the size and the complexity of the company and the group, the board has found no basis for establishing an internal audit at present. Instead some of the tasks, which naturally belong under an internal audit, are being handled by the group's central controller function in cooperation with the external auditors of the company. The central controller function performs controlling of the financial reporting for the parent company and its subsidiaries which report to the board and the management.
The board and the management make an annual overall assessment of risks in connection with the financial reporting and determine the measures to control, respectively eliminate or reduce the risks.
As part of the risk assessment, the board and the management decide about the risk of fraud and the measures to be taken to reduce or eliminate such risks.
The main business risks are described in the management's review.
The group's control activities are based on the risk assessment. The purpose of the control activities is to ensure that the agreed objectives, policies and procedures etc. are observed and if this would not happen, to identify and correct errors, deviations, deficiencies etc.
The control activities include manual and physical controls and also overall IT controls and automated application controls of the IT systems.
A formal, corporate reporting procedure has been established, which includes monthly reporting including deviation reports with quarterly updated estimates for the year. Besides the income statement, the reporting also includes additional specifications and information.
Recommendations for good company
The board of Scandinavian Brake Systems A/S continuously observes the "Recommendations for good company management" introduced by NASDAQ OMX Copenhagen in "Rules for issuers of shares" as well as the Danish annual accounts legislation § 107b. The recommendations of April 2010 contain 78 recommendations valid for the financial year beginning as at 1 January 2010 or later. The board must make a statement describing how the company relates to the 78 recommendations and the company must apply the "follow or explain" principle. This means that the company must either follow the recommendations for good company management or explain why the recommendations are not followed, partly or completely. It also means that the company must state which recommendations are not followed and the reason why. If relevant, the company also has to explain which arrangements have been put instead. It is underlined that it is up to each company to decide to which extent the recommendations are followed as long as there is adequate transparency concerning management matters.
GOALS AND POLICIES FOR THE GENDER QUOTATION ON THE
MANAGEMENT BOARD OF SCANDINAVIAN BRAKE SYSTEMS A/S
Under section 139a of the Danish Companies Act, the Board of Directors of Scandinavian Brake Systems A/S has laid down goals and policies for how to increase the shares of the underrepresented gender in Scandinavian Brake Systems A/S and on Group Management in general.
Goals for the Board of Directors
In 2016, all members of the Board of Directors elected by the general meeting were men.
Policy for other levels of management
Scandinavian Brake Systems A/S will strive at a more equal representation of the sexes at management level, as Management acknowledges the advantages of having a broad spectrum of managers at all levels as regards experience, specialised knowledge, culture and sex, etc.
Managers of the Company should generally be elected/employed based on their overall qualifications, and it is essential that the managers have the right qualifications irrespective of their sex. In addition, the Company will strive at increasing the number of women in executive positions. This could be encouraged by making it more attractive for women to seek jobs in industries such as those in which SBS operates in, that are characterised by male predominance and partly by identifying and developing female management talents among the Company's own employees.
The Board of Directors will regularly follow up on the issue and once a year examine the gender quotation in Management, and in that connection consider any initiatives necessary in relation to the goals laid and policies laid down by the Board of Directors.
Reporting on gender quotation
At the end of 2014, the Board of Directors had no female members elected by the general meeting. Employee representatives accounted for one woman. As to board level and divisional management level, one female manager was represented, whereas underlying functional management levels were represented by more female managers.