Amer Sports' internal control framework
There are five principle components:
- Control Environment,
- Risk Assessment,
- Control Activities,
- Information and Communication, and
- Monitoring.
Control Environment
Amer Sports’ Values and Code of Conduct support and guide the company’s operations around the world, providing a foundation for the control environment. The Board of Directors has overall responsibility for ensuring that an effective system of internal control and risk management is established. The Audit Committee oversees that risk-management activities are in line with the company’s Risk Management Policy. The responsibility for maintaining the internal control and risk management system is delegated to the President and CEO and to the Executive Board.
Risk Assessment
As part of Amer Sports’ risk management process, risks related to the business environment and operational and financial risks are identified, assessed and prioritized on an annual basis. Financial reporting priorities are defined by the Amer Sports Finance function to enable the identification and adequate management of risks.
Control Activities
Amer Sports’ business segments/areas, sales and supply chain organizations and support functions are responsible for aligning the Group’s risk management priorities and strategies with Amer management processes. Amer Sports’ support functions issue policies and guidelines for specific areas such as finance, accounting, purchasing, sales, IT, HR and legal compliance. Business segments/areas and sales and supply chain organizations and support functions are responsible for applying these policies and guidelines to achieve efficient and appropriate controls on the basis of their individual circumstances and operational contexts. Risk management and control activities are designed to mitigate identified risks while giving due consideration to the cost and potential effectiveness of control activities.
The Amer Sports’ Treasury function monitors implementation of the company’s Financial Risk Management Policy within business segments/areas and subsidiaries.
The Amer Sports Corporate Manual and Internal Control Policy set standards for financial procedures. Financial control activities are designed to prevent, detect, and correct errors and irregularities and include a range of activities such as reporting, authorizations, approvals, reconciliations, and the segregation of duties.
The Amer Sports Internal Control Policy harmonizes and clarifies rules and procedures by setting and communicating the expected minimum requirements that fall within the remit of internal controls.
Property, loss-of-profits and liability risks arising out of the operations of Amer Sports companies are covered by taking out appropriate insurance policies. In addition to worldwide insurance programs, local policies are used when special legislation-related needs exist.
2011
During 2011 the specific internal control policy for retail was implemented in support of the growing own retail business. The development of a more automated and efficient control environment utilizing built in system controls in the ERP system continued.
Information and Communication
The components of Amer Sports’ risk-management and internal control system are described in different manuals, instructions and policies. These are communicated throughout the Group and are stored on the Amer Sports intranet, which is accessible to all employees.
The Amer Sports Corporate Manual defines, among other items, the planning and control process, reporting and accounting policies, and the role of the Amer Sports Treasury function. Taxation issues are covered in a range of instruction documents and guidelines. The Amer Sports Internal Control Policy provides further clarity and establishes the expected minimum requirements regarding, among others, the authorization matrix, capital expenditure, and credit control policy.
Business segments/areas, sales and supply chain organizations and subsidiaries regularly provide Amer Sports’ management with financial and management reports, including analyses of financial performance and potential risks and opportunities.
Monitoring
The performance of Amer Sports’ companies is reviewed regularly at different organizational levels.. Representatives of Amer Sports’ Finance function regularly visit the company’s businesses to carry out operational reviews and monitor internal control procedures.
Risk reporting is integrated into both the Operational Planning and Control Cycle and the Strategic Review Cycle management processes. Amer Sports’ business segments/areas, sales and supply chain organizations and support functions report regularly on risk exposures and related mitigation efforts to the relevant management board.
The Board of Directors oversees significant risks connected with Amer Sports’ operations and evaluates the effectiveness of risk management activities.
The Risk Management Steering Team is responsible for overall development of the risk management process within Amer Sports, including the facilitation of Group-level risk mapping.
2011
The Audit Committee approved the Internal Control Charter which stipulates the mission and scope of work of the new Group Internal Control function. The Group Internal Control function, according to an agreed plan, visits the company’s businesses to perform operational reviews and monitor compliance with internal control procedures, policies and guidelines.
Internal Audit
Amer Sports does not have a separate internal audit function. The Audit Committee and Amer Sports’ Finance function define one or more audit themes over and above the statutory auditing requirements. Such themes are agreed for each year and findings reported to the Audit Committee and Amer Sports’ management.
2011
Amer Sports’ Group Internal Control function analyzed the efficiency and adequacy of internal controls in the Group’s operations and evaluated the governance, internal control and risk management processes in the company’s businesses. The Group Internal Control periodically report to the Audit Committee and CFO.
External Audit
According to the company’s Articles of Association, Amer Sports has one auditor, which must be a public accounting firm certified by Finland’s Central Chamber of Commerce.
The independent public accountant engaged by Amer Sports is responsible for directing and coordinating audit work within all Amer Sports’ companies. The Audit Committee prepares a recommendation for the Annual General Meeting regarding the election of the auditor. The Annual General Meeting elects the auditor annually and for a period of one year.
Amer Sports’ auditor, the presidents of the company’s business segments and areas, finance directors, the general manager and the finance managers of selected subsidiaries meet at least once a year. Subsidiary companies’ auditors present their audit observations annually to the company in question, to Amer Sports’ auditor, and to representatives of Amer Sports’ Finance function.
Amer Sports’ auditor submits a written report on the audit to the Audit Committee and the Board of Directors at least once a year. The principal auditor presents a summary of the annual audit in person in the Board of Directors meeting at which the financial statements for the fiscal year are discussed. . Auditors are invited to each of the Audit Committee’s meetings and provide updates on how the Group audit is progressing and other findings.
2011
In 2011, PricewaterhouseCoopers Oy continued to be Amer Sports’ auditor. The principal auditor was Jouko Malinen, who has been the company’s principal auditor since 2007.