Audit and financial reporting
Financial statements are prepared in accordance with law and International Financial Reporting Standards (IFRS).
The task of the external auditor is to examine Atlas Copco’s annual accounts and accounting practices, as well as to review the Board and the CEO’s management of the company. The auditing firm Ernst & Young AB was elected external auditor at the AGM 2023 in compliance with a proposal from the Nomination Committee. The principal auditor is Erik Sandström, Authorized Public Accountant at Ernst & Young. Atlas Copco puts a lot of emphasis on environmental, social and governance performance, all of which are measured regularly and reported in the financial statements under Sustainability Notes. Since 2001, the financial statements are prepared annually in accordance with Global Reporting Initiative (GRI) guidelines.
Internal controls over financial reporting
Internal controls over financial reporting are prepared in accordance with the Swedish Code of Corporate Governance as stipulated by the Swedish Companies Act. The internal control process comprises four internal control components: risk assessment, control activities, information and communication, and monitoring. The starting point for the process is the regulatory framework for internal control issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The basis for the internal control process is defined by the overall control environment. The Board of Directors is responsible for establishing an efficient internal controls system led by the CEO. Group Management sets the tone for the organization, influencing the control consciousness of employees. A key factor for a strong control environment lies in making sure that the organizational structure, decision hierarchy, corporate values – in terms of ethics and integrity – as well as authority to act are clearly defined and communicated through internal policies, guidelines, manuals, and codes. All employees must follow these policies and guidelines. Atlas Copco applies different processes to assess and identify the main risks related to financial reporting misstatements. The risk assessment process is performed regularly to identify new risks and follow up actions made in response to previously identified risks. The identified risks are managed through control activities, which are documented in processes and internal control descriptions at Company, Division, Business area, and Group level. These aim to prevent, detect and correct errors and non-compliance and include, for example, instructions for attests and authority to pay, controls in business systems, as well as accounting and business reporting processes. Information and communication channels are designed to make sure that information is identified, captured and communicated in a form and time frame that enables employees and managers to carry out their responsibilities. Reporting instructions and accounting guidelines are communicated to the personnel concerned in the internal database The Way We Do Things and supported by, for example, training programs for different categories of employees. We continuously monitor adherence to internal policies, guidelines, manuals, and codes, as well as the efficiency of control activities. The internal controls system is continuously evaluated and followed up in our operations, including regular management reviews and supervisory processes, as well as through internal audits and control self-assessments. The Audit Committee has an important role in supporting the Board of Directors in monitoring whether internal control processes facilitate adequate internal controls over financial reporting.
Read more about these processes in the Atlas Copco Annual Report under Corporate Governance.