Internal control

Internal control is a process established to provide reasonable assurance regarding the achievement of the strategic and financial objectives of the Group. Internal control in Konecranes Group is a fundamental part of Group’s governance and steering system and it is conducted by the Board, management and the personnel of Konecranes. Konecranes Group management has operational responsibility for arranging the internal control process. Both the Board as well as the Audit Committee monitor and assess the functionality of internal controls and assure that it is organized properly.

Internal controls in Konecranes are based on our company values: trust in people, total service commitment and sustained profitability. The control environment consists of Konecranes’ policies, instructions, processes and operation model with related organizational structures. These will help the management as well as the Board to ensure that the set objectives are achieved and that the business conduct is ethical and in compliance with all applicable laws and regulations. In addition, internal controls aim to assure that the company’s assets are safeguarded properly and that the financial reporting is correct.

The Group has prepared instructions and policies which relate to ethical principles (code of conduct), competition compliance, insider regulations, work safety, quality and environment. The deployment of the Group instructions is facilitated through communicating their content as well as by organizing training sessions.

Business targets, actions to reach the objectives as well as the key performance indicators are set, approved and communicated in the annual planning process. The achievement of the targets is followed monthly in the steering meetings of business areas as well as regional organizations. The individual goals for the personnel are established in annual development discussions.

The identification and assessment of the risks is an essential part of the elements of Internal Control. The risks related to the achievement of the objectives need to be identified and evaluated so that they can be managed. Risks are assessed and managed at different levels, such as Group, business area, company and unit level. The business areas and regional organizations have the responsibility to prepare action plans for the major risks.

Financial control activities are built into the business processes of the Konecranes Group and management’s business supervision and monitoring procedures. All legal entities and business units have their own defined controller functions. Representatives from controller functions participate in planning and evaluating unit performance. They have the responsibility to inform the management if the actual results are deviating from the plans, to analyze the reasons behind the variances and suggest corrective actions. Controllers ensure that monthly and quarterly financial reporting follows the Group’s policies and instructions and that all financial reports are delivered on time in accordance with schedules set by the Group. The interpretation and application of accounting standards is the responsibility of the Global Finance function. Guidelines and instructions for reporting (i.e. Controller’s manual) are updated when necessary and are reviewed at least once a year.

The Konecranes Group has an Internal Audit function to monitor and evaluate the effectiveness of the company’s risk management and internal control system, to monitor the compliance of Group instructions as well as to give recommendations to improve the internal controls. Internal Audit plans its work in cooperation with the Audit Committee, which approves an annual internal audit plan. The personnel have also the possibility to give feed back to the management or directly to Internal Audit and notify of suspected incidents.