Internal Control
Internal control and risk management relating to the financial reporting
General
According to the Swedish Companies Act, the Board is responsible for internal control. The aim of internal control is to create a clear structure of responsibility and an effective decision-making process. The Board’s rules of procedure and the instructions for the CEO serve to guarantee a clear allocation of roles and responsibilities, with the aim of operational risks being managed effectively. The Board has also established a number of basic guidelines and policies that are important for ensuring an effective control environment. The basic control documents are annually subject to review and approval by the Board. In addition to these documents, an effective control environment requires an adequate organizational structure and ongoing reviews of this. Company management reports to the Board on a regular basis following defined routines. Company management is responsible for the system of internal controls that is required to deal with significant risks in operating activities. Managers at various levels within the Group have clearly defined authority and responsibilities with regard to internal control.
Risk assessment
New Wave Group has a centralized risk assessment process for both financial and non-financial risks, which occurs in dialogue between the Board and Group management. Risk assessment is also made in all Group companies, in relation to each company’s individual operations. The major risks New Wave Group have identified refer to estimates and assumptions related to valuation of intangible fixed assets and inventory, as well as risks for fraud and similar incidents.
Control environment
The foundations of the internal control in relation to the financial reporting consist of the general control environment with organization, decision-making paths, authority and responsibilities that have been documented and communicated. Within New Wave Group some of the most important constituent parts of the control environment are documented in the form of policies as well as instructions, such as authorization instructions, financial reporting manual and process documentations.
Corporate Governance policy
The different corporate governance aspects of the Group are summarized in the Corporate Governance policy, which is also a governing document for other Group policies.
Finance policy
The Finance policy stipulates guidance for financial and internal control, with the purpose of establishing a well-functioning and efficient control environment. The policy also includes areas such as financial reporting, tax and related party transactions.
Risk policy
The policy describes the Group’s process for risk assessment and risk management, regarding both financial and non-financial risks. The policy also sets out frameworks for how the Group’s operations shall be financed and guidance on how risks such as currency risks and interest rate risks shall be dealt with.
IT policy
The Group’s IT policy describes the Group’s principles for application and safety within IT.
Information policy
The Group’s Information policy is a document that describes the Group’s rules for handling and communication of information, both internally within the Group as well as externally.
Insider policy
The policy sets out rules for handling and communication of insider information.
CSR and environmental policy
The Group’s CSR and environmental policy sets out guidelines for the social and environmental work within the Group and its value chain.
Anti-corruption policy
The Group’s Anti-corruption policy describes the Group’s principles for work against corruption.
Anti-money laundering policy
Stipulate guidance to reduce the risk for money laundering.
Whistleblowing policy
Contains instructions and rules related to the Group’s whistleblowing function.
Control activities
In order to ensure the internal control works, there are both automatic controls in IT systems, which handle authority and authorization rights, as well as manual controls such as reconciliations and physical counts. Detailed economic analyses of the result plus follow-up of forecasts supplement the controls and provide a general confirmation of the quality of the financial reporting.
The Group performs reviews of the companies’ accounting on a monthly basis, which is reported to Group management. CFOs in all Group companies report directly to Group CFO. No CEO for a Group company is permitted to appoint or dismiss a finance manager on their own. The Group’s risks related to the financial reporting lay in the risk that material misstatements may occur when reporting the company’s financial position and results. The Group’s finance policy and financial reporting manual, together with established follow-up routines, serve to minimize these risks.
Follow-up
The most important control documents in the form of policies and instructions are updated regularly and communicated via relevant channels. Any deviations from Group policies shall be regularly reported to each policy owner, and major deviations shall be communicated to the audit committee and the Board. Finance personnel and management at company and Group level analyze the financial reporting in detail every month. New Wave Group’s decentralized corporate structure means that each company's financial department is responsible for ensuring that the financial reporting from each unit is correct, complete and on time. The controls in respect of the various processes and risk elements are evaluated by means of self-assessment, Board meetings and via the company’s external auditors. Several processes are fully or partly centralized at Group level, such as purchasing, payments, financing, IT, consolidation and reporting. The Group’s central finance organization is responsible for implementing, further developing and maintaining the Group’s control routines, and for performing internal controls of business critical matters. The Board receives financial reports on an ongoing basis, and at each Board meeting the financial situation facing the Group and the various companies is discussed. During the year the Board also receives reports from the company’s auditors detailing their observations.
The companies
New Wave Group’s organization is decentralized, with a high degree of independence and self-determination being delegated to company management. The objective is for the companies to be run in an entrepreneurial spirit, while at the same time enjoying the benefits of belonging to a large group of companies. The Group therefore consists of a large number of operational companies, approximately 65 in total. Board meetings are normally held three times a year in each company or sub-group. The composition of the Boards depends on the company’s direction and its stage of development. In addition to Group management, the expertise of CEOs in “mature” companies are utilized in the Boards of local subsidiaries. The organizational model chosen by New Wave Group provides for effective benchmarking of profitability, capital tied up and growth between companies, brands and markets.
Operating segments
The Group divides its operations into three operating segments: Corporate, Sports & Leisure, and Gifts & Home Furnishings. Operating segment managers are included in the Group management, in order to coordinate operations. The products for each brand follow the operating segments, but have separate sales teams for the different sales channels, promo and retail.
Sales channels
The Group’s products are sold via two sales channels: promo and retail.
Concept groups
Within each operating segment there are a number of concept groups responsible for strategic direction, product development and marketing strategy for one or more brands.