Vaisala aims to be a good corporate citizen, and this is supported by appropriate documented internal control policies. Internal control ensures the effective and profitable operations of the Company, the reliability of information and compliance with the relevant regulations and operating principles. Internal control aims to improve the fulfillment of the Board’s supervision obligation.
Internal control is a process carried out by Vaisala’s Board of Directors, audit Committee, management and employees. It is designed to ensure that:
- operations are effective, efficient and aligned with strategy;
- financial reporting and management information is reliable, complete and timely,
- the Group operates in compliance with applicable laws and regulations, and that it observes Vaisala’s internal policies, ethical values and corporate responsibility.
Vaisala's internal control consists of:
- risk management and corporate governance policies, and principles set by the Board of Directors;
- the management which oversees the implementation and application of the policies and principles;
- the finance department and business controllers which monitor the efficiency and effectiveness of the operations and reliability of financial and management reporting;
- the enterprise risk management process which identifies, assesses and mitigates risks threatening the realization of Vaisala’s objectives;
- compliance procedures which ensure that all applicable laws, regulations, internal policies and ethical values, including sustainability, are adhered to;
- an effective control environment at all organizational levels, including control activities tailored for each process and specified minimum requirements for business and geographical areas;
- shared ethical values and the employees’ internal control culture; and
- internal audit assignments to review the effectiveness of the internal control as needed.
Vaisala's financial reporting processes and internal control procedures
Vaisala Group's external accounting and financial reporting are based on IFRS reporting standards approved by the EU. The Board's report and the financial statements of the Group parent Company are prepared in accordance with the Finnish Accounting Act and the guidelines and statements of the Accounting Board. The Vaisala Accounting Principles maintained by Group financial administrations provide the subsidiaries with detailed guidelines on the application of the Vaisala's accounting policies.
The Group financial administration draws up the reporting timetables. Vaisala's financial reporting also involves several practical guidelines, such as approving rights, expense processing and recording and directives on each financial administration process. The Company is in the process of implementing a global enterprise resource management system, and, in conjunction with this, descriptions of financial administration processes have been revised to conform to the new processes.
Each foreign subsidiary of Vaisala has a country-specific financial administration organization, which observes the issued guidelines and reports actual figures and business information for each month using the Group's common reporting application. Controls included in the subsidiaries accounting and reporting processes include balancing, itemizations, analytic controls, system controls and segregation of duties. Vaisala applies the percentage-of-completion method in long-term projects. The critical control points of such projects include updating and analyzing the cost forecasts of projects and project reviews.
The control points of Group accounting deal with the analysis, elimination and reconciliation of figures reported by subsidiaries. Vaisala has automated some of the functions and control points of its Group accounting application, which improves the reliability of the reporting process. Control points also cover information included in stock exchange releases and financial statements. Audit Committee reviews interim reports and financial statements. The Vaisala Board reviews interim reports and financial statements and approves them.
Internal control roles and responsibilities
The Vaisala Board of Directors has ultimate responsibility for the administration and the proper organization of the operations of the Company. The Board also ensures that the Company duly endorses the corporate values applied to its operations, approves the internal control, risk management and corporate governance policies and can assign internal audit assignments to Vaisala’s external auditors or other external service providers as needed.
The President and CEO is in charge of the day-to-day management of the Company in accordance with the instructions and orders given by the Board. The President and CEO establishes the basis for internal control by providing leadership and direction to senior managers and supervising the way they control the business they are in charge of and by ensuring that the accounting practices of the Company comply with the law and that financial matters are handled in a reliable manner.
The Management Group is responsible for creating detailed internal control policies and procedures in each unit. Financial officers and their staffs are of particular significance because their control activities cover all operating and other units of the Company.
The Group financial administration helps units and functions to set up adequate control activities. The head of risk management steers the enterprise risk management process and reports on it to the management and follows up the adequacy and effectiveness of control activities on the operative level.
The General Counsel and business area and corporate function directors are responsible for making sure that all units and employees under their responsibility comply with applicable laws, regulations and internal policies.
Vaisala does not have a separate internal audit function. The Board may engage external specialists to carry out separate evaluations of the control environment or operations. The audit plan of Vaisala's external auditor takes into account the fact that the Company has no internal audit.