Internal control and risk management systems connected with the financial reporting process
YIT Corporation’s financial reporting and supervision are based on budgets drafted and ratified annually as well as monthly performance reporting and forecasting. The Group’s financial reporting is based on financial data on the profitability of business provided by each cost centre, combined with segment-level and Group-level data. YIT Corporation’s business is characterised by project-type operations, due to which financial reporting applies the percentage of completion method or recognition of revenue at a point in time. Accurate information on the degree of completion of the project and the final cost estimate are essential for the reliability of financial data in project business. In addition, for projects where revenue is recognised at a point in time, it is essential to understand the project-specific degree of sale.
The aim of the internal control, control environment and risk management related to the financial reporting process is to ensure the harmonised and reliable reporting of the Group’s financial results in a manner compliant with applicable laws and regulations and the reporting principles confirmed in YIT Group. The responsibilities of risk management and internal control are defined in the Group’s risk management policy as well as in the operating models of the Group functions and business segments. The operating models describe the key tasks, operations and responsibilities of the various administrative bodies. The Group’s business reporting process produces information related to project monitoring together with the business controlling function that supports the business, which makes the internal control function part of segment-level operations.
The Group accounting and reporting function, which works under the supervision of the Group’s CFO, defines and communicates the principles related to financial reporting, maintains the tools required for Group accounting and reporting and prepares the interim reports and official financial statements published by the Group. The Business controlling function is responsible for ensuring that reporting within the segments is carried out according to instructions. The Group treasury function issues instructions concerning the reporting of internal and external calculations related to financial transactions and monitors the accuracy of reporting. Based on long-term and short-term cash flow forecasts, the Group treasury function ensures adequate liquidity as well as appropriate and suitable financial instruments. Group treasury also supports the entire financial administration organisation in reporting on financing and the reconciliation of reporting. Group Controlling produces quantitative analyses for the management and prepares a monthly management report. The Taxes function produces the Group’s tax guidelines and practices and ensures that tax-related matters are in compliance with the Group’s corporate governance principles and internal tax policies.
The Investments function prepares and supports decision-making on projects and investments and is responsible for making preparations for the meetings of the Investment and Project Committee.
Identification and assessment of risks related to financial reporting and risk management
The Group’s financial and financing management is responsible for identifying and assessing risks in relation to financial reporting. The processes and systems of financial reporting are developed and their effectiveness analysed continuously. Risks related to financial reporting are managed with the help of the Group’s accounting manual, financing and tax policy, investment guideline, acquisition instructions, control environment and internal audit.
The Group CFO and the Investor Relations (IR) function are responsible for the publication and release of financial information and for the fulfilment of disclosure oblications concerning a listed company. IR is also responsible for the planning and implementation of investor communications and for daily contact with investors and analysts.
The aim of the company's Investor Relations is to support the appropriate valuation of the YIT share by providing all market parties with all essential information concerning YIT in a contiuous and consistent manner.
Corporate Communications maintain YIT's communication policy, published on the Group's website, as well as the internal guidelines for external and financial communication.
YIT’s business segments are responsible for the accuracy of the segment data presented in interim reports and financial statements. The Group’s accounting department is responsible for the accuracy and scope of the Group-level numerical data as well as their compliance with rules and regulations. The Audit Committee reviews information that is to be published and submits them for the Board of Directors’ approval.
The Group’s financial management team convenes on a monthly basis. It is composed of the Business controllers responsible for the business segments, the Group controller, group accounting and reporting, group treasury, the service centre, investments, the Corporate General Counsel and the Vice President, Investor Relations. The financial management team mainly discusses financial administration development projects as well as matters related to risk management and resource allocation.
The Group’s operational financial management team meets weekly and is composed of the Business controllers responsible for the business segments, the Group controller, group accounting and reporting, group treasury and the service centre. The operational financial management team addresses all financial process and development issues concerning the business segments.
YIT Group’s internal audit organisation supports the management in the development and supervision of risk management, internal control and good corporate governance. The internal audit reports to the Audit Committee of the Board of Directors and administratively to YIT’s President and CEO. The targets of the internal audit are selected annually based on risk. The focus of the internal audit has typically been on project risk management, new geographic or functional operating areas and semi-annually defined risk areas.
The internal audit’s work is co-ordinated with other Group functions and financial auditing. The internal audit also works closely together with the Group’s corporate security organisation and, with respect to misconduct risks, participates in the work of the Ethics Committee.