The objective of YIT’s internal control and risk management related to financial reporting is to ensure that the company’s financial reporting provides an accurate picture of YIT’s financial performance and position, as well as assurance that the company operates in accordance with internal guidelines and that YIT complies with the relevant laws and regulations as well as other obligations set out for listed companies. YIT’s consolidated financial statements are drawn up in accordance with the International Financial Reporting Standards (IFRS). A further objective of risk management is to support the achievement of the company’s strategic and business objectives by anticipating and managing potential threats and opportunities.
Main characteristics of internal control
YIT’s financial reporting, planning and control are based on the operating model specified by the Group, policies approved by the Board of Directors, and financial reporting manuals and instructions that need to be adhered to throughout the Group. In accordance with the operating model, the reporting and evaluation of financial results is performed at multiple levels of monitoring, performed by the Group’s businesses, the persons responsible for the finances for each company, and group functions. The lowest levels of monitoring are the project level and the unit level. The highest levels of monitoring are the company level, business segment level and group level.
Responsibilities for the performance and control of financial reporting have been assigned in accordance with YIT’s operating model to the businesses and the centralised group-level financial functions. The businesses are responsible for project-related financial reporting and the measurement of assets used in each business, for example. The centralised group-level financial functions engage in planning, guidance, training and coordination related to reporting, make key interpretations concerning accounting principles concerning financial reporting, and prepare financial reporting for review by YIT’s Audit Committee and Board of Directors.
Monthly financial reporting to business-level and group-level management is a key control process for monitoring the achievement of financial targets. This internal financial reporting is prepared in accordance with the same IFRS accounting principles used for external group reporting. Monthly repeated controls, including both automatic and manual controls, are used to ensure the accuracy of reporting. The business segments and group functions monitor and evaluate the monthly reported actual figures and projections. Self-developed projects and contracting projects constitute a key component of YIT’s financial reporting as a whole. Changes to the project portfolio are reported on a monthly basis, and any material changes are analysed on a project- specific basis as necessary. The project-level financial reporting performed by the businesses is supported and supervised by the centralised group-level Business Controlling function.
The strategies of the Group and its businesses are evaluated annually and updated as necessary. Annual plans based on the strategy and the budget for the next year are typically drawn up during the second half of the year. The strategy and annual plans are approved by YIT’s Board of Directors.
The group-level investment, risk management and corporate security function coordinates and develops the systematic assessment of risks and opportunities as part of business planning and core decision-making processes. The function coordinates the assessment of risks and opportunities related to the business environment, operational activities, assets and financial position in order to limit unnecessary or excessive risk- taking. The business segments are responsible for the identification, assessment and management of risks in their respective areas of operation. Business-related risks and strategic risks are reported to the group management on a regular basis. The group management supervises and monitors the implementation of measures related to the risks. YIT’s Board of Directors regularly reviews the risk portfolio based on the group management’s assessment. More information on risk management principles is presented in the “Risks and risk management” section of the Annual Review.