captured, analysed, and distributed in accord-
ance with existing processes and procedures.
The group has a common reporting and con-
solidation system that facilitates compliance
with a set of common control requirements.
The monthly accounting entries of the most
significant subsidiaries are transferred to the
Group’s reporting system on an entry-by-entry
level. The other subsidiaries submit their fig-
ures either monthly or quarterly to the group
accounting to be inserted to the group report-
ing system for consolidation. The reported
figures are reviewed in subsidiaries as well
as in group accounting. Group accounting
also monitors the balance sheet and income
statement items by analytically reviewing
the figures. The consolidated accounts of
CapMan are prepared in compliance with
International Financial Reporting Standards
(IFRS) as adopted by the EU.
9.2 Control and risk management
of the financial reporting process
The Board has the overall responsibility for
the proper arrangement of internal control
and risk management over financial reporting.
The Board has appointed the Audit Commit-
tee to undertake the more specific tasks in
relation to financial reporting process control
such as monitoring the financial statements
reporting process, the supervision of the fi-
nancial reporting process and monitoring the
efficiency of the company’s internal control.
The Audit Committee also reviews regularly
the main features of the internal control and
risk management systems pertaining to the
financial reporting process.
The management of the group is responsi-
ble for the implementation of internal control
and risk management processes and for as-
certaining their operational effectiveness. The
management is also responsible for ensuring
that the company’s accounting practices
comply with laws and regulations and that the
company’s financial matters are managed in a
reliable and consistent manner.
The CEO leads the risk management
process by defining and allocating respon-
sibility areas. The CEO has nominated the
group’s CFO as risk manager to be in charge
of coordinating the overall risk management
process. The risk manager reports to the
Audit Committee on matters concerning
internal control and risk management. The
management has allocated responsibility for
establishing more specific internal control pol-
icies and procedures to personnel in charge
of different functions. The group’s manage-
ment and accounting departments possess
appropriate levels of authority and responsi-
bility to facilitate effective internal control over
financial reporting.
9.3 Risk assessment and control
activities
Risks related to the financial reporting
process are identified through the objectives
of financial reporting. The risk assessment
process is designed to identify financial
reporting risks and to determine how these
risks should be managed. Control activities
based on risk assessments are determined for
all levels of the organisation. These activities
include guidelines and instructions, approvals,
authorisations, verifications, reconciliations,
analytical reviews, and segregation of duties.
In the annual strategy process of the
group, the identified risks are reviewed, the
risk management control activities are audit-
ed and effects of potential new identified risks
on the strategy are evaluated. The objectives
and responsibilities of the risk management
process as well as the determination of the
risk-appetite were updated during 2020.
9.4 Information and
communication pertaining to the
financial reporting
CapMan has defined the roles and responsi-
bilities pertaining to financial reporting as a
part of the group’s information and com-
munication practices. External and internal
information regarding financial reporting and
its internal control is gathered systematical-
ly, and relevant information on the group’s
transactions is provided to the management.
Up-to-date information relevant for the finan-
cial reporting is presented in a timely manner
to the relevant functions such as the Board
and management group. All external commu-
nications are carried out in accordance with
the group disclosure policy, which is available
on the company’s website: www.capman.com/
shareholders/statements-policies/ disclosure/
9.5 The organisation and
monitoring of internal control
activities
To ensure the effectiveness of internal control
pertaining to financial reporting, monitoring
activities are conducted at all levels of the
organisation. Monitoring is performed through
ongoing follow-up activities, separate evalua-
tions or a combination of the two. Separate
internal audit assignments are initiated by
the Board or management. The scope and
frequency of separate evaluations depend
primarily on the assessment of risks and the
effectiveness of ongoing monitoring proce-
dures. Internal control deficiencies are report-
ed to the management, and serious matters
to the Audit Committee and the Board.
Group accounting performs monthly
consistency checks of income statement
and balance sheet for subsidiaries and
business areas. The group accounting team
also conducts management fee and cost
analysis, quarterly fair value change checks,
impairment and cash flow checks as well as
control of IFRS changes. The Audit Commit-
tee and the Board regularly review group-level
financial reports, including comparison of
actual figures with prior periods and budgets,
other forecasts, monthly cash flow estimates
and covenant levels. In addition, the Audit
Committee monitors in more detail, among
others, the reporting process (including the
management’s discretionary evaluations), risk
management, internal control and audit.
The monitoring team, which is independent
from the investment teams, is responsible for
the quarterly valuation process, monitoring
and forecasting fair value movements and
preparing the models for and calculating
carried interest income for the funds under
the management of the Group.
CapMan’s subsidiaries holding a license to
act as alternative investment fund manager
or investment firm granted by the Finnish
Financial Supervisory Authority, have separate
risk management and internal audit functions
as required by applicable laws.
The compliance function oversees that the
operations of the CapMan Group comply with
regulation and that the group companies will
adopt the relevant new regulations promptly.
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
25
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE