President and Group Executive Management
The President is accountable for Group decision-making in all areas delegated by the Board. In order to ensure a full Group perspective in these matters, the President has appointed the Group Executive Management as an advisory forum, focusing on how to achieve Group targets, strategies, structure and organization. The Group Executive Management meets each month and its members are accountable for implementing the President's decisions.
In 2017 the Group Executive Management consisted of:
- Björn Rosengren, President and CEO
- Tomas Eliasson, Executive Vice President and CFO
- Klas Forsström, President of Sandvik Machining Solutions, from 1 April 2017
- Lars Engström, President of Sandvik Mining and Rock Technology
- Göran Björkman, President of Sandvik Materials Technology, from 1 November 2017
- Jessica Alm, Executive Vice President and Head of Group Communications
- Johan Kerstell, Executive Vice President and Head of Human Resources
- Åsa Thunman, Executive Vice President and General Counsel
- Jonas Gustavsson, President of Sandvik Machining Solutions, until 31 March 2017
- Petra Einarsson, President of Sandvik Materials Technology, until 31 October 2017
The President and other members of the Group Executive Management are presented further on Group Executive Management.
The Sandvik organization model is based on a decentralized business model with three separate business areas – Sandvik Machining Solutions, Sandvik Mining and Rock Technology and Sandvik Materials Technology – based on distinct product offerings. Each business area has full responsibility and accountability for its respective business results.
Each of the three business areas is organized in a number of product areas based on product offering or brand. The product area is the highest operational level in the Sandvik organizational structure. Where the product area structure is based on the product offering, each product area is organized in business units representing defined parts of the product offering.
Visit home.sandvik for more detailed information relating to the Group’s business activities and product portfolios.
There are currently four Group functions within Sandvik: Communications, Finance, HR and Legal. Group Functions specifically focus on setting the appropriate enabling structures and processes that are common for the Group or cover a specific area for which the Group is responsible.
At the 2017 Annual General Meeting, the audit firm KPMG AB was re-elected auditor of Sandvik AB for the period until the 2018 Annual General Meeting. Joakim Thilstedt is the auditor-in-charge.
The auditors continuously audit and monitor the company’s general accounting and the execution by the Board and the President of their respective responsibilities.
The progress of the audit is reported regularly during the year to the management teams of individual companies and the business areas, to the Group Executive Management, the Audit Committee and to the Board. The auditor meets with the Board at least once a year without the President or any other member of the Group Executive Management attending.
The independence of the external auditor is guaranteed by a requirement that the Audit Committee pre-approves non-audit services to be provided by the auditors.
Audit fees are paid continuously over the period in office on an approved current account basis. For detailed information on fees paid to the auditor, see Note 3.6.
Breach of the Stockholm Stock Exchange’s Rule Book
In December 2017 the Disciplinary Committee of the Stockholm Stock Exchange found that Sandvik had breached the Stockholm Stock Exchange’s Rule Book for Issuers (the "Rule Book”) and imposed a fine on Sandvik amounting to one annual fee, equivalent to an amount of SEK 3,105,000. The Disciplinary Committee found that Sandvik had contravened section 3.1 of the Rule Book by mistakenly publishing its interim report for the second quarter of 2017 on the company’s website before the report was disclosed in a correct manner as stipulated in the Rule Book.
Internal control of Financial Reporting
Sandvik’s finance organization manages a well-established financial reporting process aimed at ensuring a high level of internal control.
The internal control system aligns with the conceptual framework of COSO, which is based on five key components that jointly facilitate good internal control. The five components are Control Environment, Risk Assessment, Control Activities, Information and Communication and Monitoring and Follow-up. The application of the COSO framework is described below.
The Sandvik Way regulates the governance of the Sandvik Group. It includes delegation of responsibilities, including signatory and authorization principles for decision making and cost approvals, and request and approval procedures in respect to investments and acquisitions, among other items.
The Sandvik Financial Reporting Policies and Procedures govern control over financial reporting. These documents contain detailed instructions regarding accounting policies and financial reporting procedures to be applied by all Sandvik reporting entities
A Sandvik Financial Internal Control Framework has been developed and includes key components such as; well-defined roles and responsibilities, internal control policy and the risk and control matrix which defines a mandatory minimum of control activities that contribute to the mitigation of risks to acceptable levels. The process of rolling-out the common framework to the Sandvik entities is well underway.
Risk assessment and risk management
The Enterprise Risk Management (ERM) process at Sandvik encompasses the area of financial reporting. Key risks noted in local assessments and observations made by Internal and External Audit are also taken into consideration to ensure that adequate controls exist to mitigate these risks.
In each legal entity, the finance staff is responsible for accurate accounting and the closing of books. At Group level, Group Control manages the reporting process to ensure the completeness and accuracy of financial reporting and compliance with IFRS requirements. Both statutory and management reporting is conducted in close cooperation with product areas, business areas and specialist functions such as tax, treasury and legal to ensure the correct reporting of the income statement, balance sheet, equity and cash flow.
Controllers in the product and business areas perform analytical reviews and investigations, conduct business trend analyses and update forecasts. They investigate certain issues related to the financial information as and when needed. All business areas present their financial performance in written reports to the Group Executive Management on a monthly and quarterly basis.
Information and communication
Financial reports setting out the Group’s financial position and the earnings trend of operations are submitted regularly to Sandvik's Board. The Board deals with all quarterly interim reports as well as the Annual Report prior to publishing and monitors the audit of internal control and financial statements conducted by Internal Audit and the external auditors.
Quarterly interim reports are published externally and are supplemented by investor meetings attended by the Group Executive Management.
Monitoring and follow-up
Each legal entity manager and their respective finance organization is ultimately responsible for continuously monitoring the financial information of the various entities. The Audit Committee is to ensure that the company's financial reports are produced in accordance with legislation, applicable accounting standards and other requirements for listed companies. The Audit Committee prepares issues and presents them to the Board for resolution.
The external auditors review the third-quarter interim report and study the financial reports prepared for the other quarters. In conjunction with the close of the third quarter, the external auditors perform a more detailed examination of the level of internal control over the financial reporting as part of a hard-close audit, which includes an assessment of the Parent Company’s reporting and internal control over financial reporting in the business areas, subsidiaries and Group functions.
The Internal Audit function audits the corporate governance, internal control and risk-management procedures. Internal Audit is subordinated to the Audit Committee and the head of the unit reports to the Audit Committee.
Internal audits include, as a basis, the Group’s policies for corporate governance, risk management and internal control with regard to areas such as financial reporting, compliance with the Code of Conduct and IT. The outputs of the audits include action plans and programs for improvement.
Findings are reported to the Group Executive Management and the business area management and to the Audit Committee.