in order for the board to continuously monitor the company’s development. Every month, the board is provided with a report on the company’s results and financial position, to which the CEO’s comments on development are attached. The board examines both interim reports and the annual report before these are published. The quality of the company’s financial reporting is evaluated primarily through the audit committee. The audit committee meets regularly with the CFO and the company’s independent auditors to discuss matters of significance in the accounting area. The audit committee reviews interim reports before these are submitted to the entire board in order to take up items of material significance with the independent auditors. EXTERNAL FINANCIAL INFORMATION In accordance with the Investor Relations policy adopted by the board, the company provides continuous information on its financial position in the form of quarterly, year-end and annual reports, as well as press releases in connection with major orders and other significant events. When the interim and year-end reports are published, the company also holds presentations for analysts, investors and the media. During the year, the executive management regularly meets with analysts and investors at several locations around the world. In connection with trade fairs and seminars, the media is given opportunities to meet with the company’s representatives. Every year, the board adopts a corporate communications policy to establish the rules and procedures for communication and specify which individuals may speak on behalf of the company in various contexts. All information that is distributed via press releases is also posted on the company’s website, together with other information of value to various stakeholders, such as a description of Micronic’s application of the Code. THE BOARD OF DIRECTORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING IN 2008 INTRODUCTION As stated in the Swedish Companies Act and the Swedish Code of Corporate Governance (the Code), the board of directors is responsible for internal control. This report has been prepared by the board in accordance with the Code and the guide lines issued by FAR SRS (the Institute for the Accountancy Profession in Sweden) and Svenskt Näringsliv (the Confederation of Swedish Enterprise), and is accordingly limited to internal control over financial reporting. The report has not been reviewed by the company’s auditors. Micronic’s internal control is structured according to the established Internal Control – Integrated Framework, “COSO”*, which divides internal control into five components: Control environment, Risk assessment, Control activities, Information & Communication, and Monitoring. COSO defines internal control as follows: Internal control is a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives regarding the effectiveness and efficiency of operations, the reliability of financial reporting and compliance with applicable laws and regulations. The following description deals primarily with those aspects of internal control that are related to the category of financial reporting. DESCRIPTION AND CONTROL ENVIRONMENT The basis for internal control over financial reporting is the control environment, which includes the organizational structure, decision-making channels, powers and responsibilities, management philosophy and operating style as documented and communicated in the form of normative documents such as internal policies, manuals and guidelines. The management is working systematically to establish the values adopted in .... throughout the Group in order to create a common ap proach and strengthen the organization, and thereby improve efficiency and internal control. Micronic’s business activities are conducted primarily in a single location and are therefore judged to be of manageable complexity. This, in turn, means that the structure of the organization is simple and clear. Normative documents have been established in the form of procedural plans for the board and the board’s audit committee and instructions for the CEO. The board has also adopted guidelines for external reporting of financial information. Instructions for authorization of business transactions are established by the board, while instructions for financial accounting and reporting are established by the executive management. The board and management have determined the importance of timely and accurate reporting, and therefore also of maintaining an effective accounting function. The level of staffing and expertise in the accounting function is continuously monitored by the executive management. A strong controller function in the accounting organization also ensures that all business activities are evaluated and their efficiency optimized. In .... the board initiated a special project to support and develop the company’s internal control activities. These efforts have continued in .... and .... and will remain part of the company’s administration in the future. Responsibility for creating processes with a high degree of internal control is assigned to the respective departmental managers. Personnel from each area of operation take part in process reviews supervised by the accounting function as a step in documenting and evaluating significant processes. RISK ASSESSMENT The company has processes for risk assessment and control to ensure that the risks to which the company is exposed are managed within the limits established by the board. 28 MICRONIC 2008
