The Groupīs external financial reporting process, internal control and risk management systems are briefly described in this section. The main focus is on financial accounting and related controls.
FINANCIAL REPORTING ORGANIZATION
The Groupīs financial administration is organized so that both Business Segments have their own operative financial organization, and the financial management as well as central expert functions regarding accounting, taxation, financing, and asset management are centralized in the Groupīs parent company.
The financial management of the Business Segments is responsible for organizing the accounting, money transactions and other daily financial operations of the companies belonging to the segment as well as organizing the internal reporting that supports the segmentsī business. The financial management of the business segment controls and supervises the operation of the financial administration organizations of the segment companies, and it reports primarily to the President of the business segment but matrix-wise also to the CFO of the Group.
The tasks of the Groupīs parent companyīs financial administration consist of, inter alia, monthly consolidation of the Group entity, preparation of interim reports and consolidated financial statements, management and investment of monetary assets of the Group, management of liabilities, protection against exchange risk, and transfer pricing. The finance function of the Groupīs parent company implements operative supervision under the Groupīs CFO who reports any supervisory findings to the Finance and Audit Committee. The Groupīs parent companyīs financial administration and financial management of the Wireless Business Segment is located in Finland and the financial management of the Automotive Business Segment in Germany. The Groupīs subsidiaries in China, Germany and the USA have own accounting departments. Accounting functions in smaller subsidiaries in France and Japan are organized in external accounting offices or, as in Austria, in the accounting department of the German subsidiary. The tasks and responsibilities of the accounting function of the parent company and each subsidiary are included in the job descriptions of the teams and employees.
FINANCIAL REPORTING SYSTEMS
Consolidated financial statements are prepared by using the chosen consolidation tool. The accounting of the Groupīs subsidiaries is done by using the local accounting systems from which the actual figures are reported either manually or by automatic transfer to the group consolidation system.
The accounting systems in use include general ledger accounting, accounts payables and accounts receivables. Current assets and payroll accounting is organized through various programs or purchased as an outsourced service. Purchase invoices are circulated through electronic invoice processing system. The same bank application is used in both Finland and Germany, the USA has a similar bank application.
Global forecasts and budgets are prepared by using the same forecast and reporting program maintained by the Group parent company. In some business segment companies, separate programs supporting internal reporting are in use.
INTERNAL CONTROLS
The Groupīs internal control mechanisms are based on policies, instructions, limited process descriptions, authorization matrix, financial reporting review meetings, and segregation of key accounting duties.
COMPLIANCE PROCEDURES
Compliance procedures are in place at all levels of the organization to ensure that all applicable laws, regulations, internal policies and ethical values including sustainability are adhered to. Group functions and businesses are responsible for following up developments in legislation and regulations in their respective areas and communicating them to the organization. Businesses and corporate function directors are responsible for setting up adequate compliance controls and compliance related training in their units.
