Audit Committee's rules of procedure
1. Role and duties of the Audit Committee
The duty of the Audit Committee is to assist the Board of Directors and to improve the efficiency of Board work by preparing matters falling within the competence of the Board of Directors. The Board of Directors remains responsible for the duties it assigns to the Audit Committee. The Committee has no autonomous decision-making power, and the decisions within its competence are taken collectively by the Board. The Committee reports to the Board on the matters addressed and measures taken at least four times a year. The Committee makes proposals to the Board for decision-making as appropriate.
The main duties of the Audit Committee are:
• to monitor the statutory auditing and reporting process of the financial statements and consolidated financial statements as well as overseeing their accuracy and scope;
• to review the report of the Company's financial and tax position quarterly prior to approval by the Company's Board of Directors;
• to supervise the financial reporting process;
• to monitor the efficiency of Stockmann´s internal control, internal audit and risk management systems and to monitor the Group's risks as well as the quality and scope of risk management;
• to approve the internal audit guidelines and review the internal audit plans and reports;
• to review the description of the main features of the internal control and risk management systems in relation to the financial reporting process, which is included in the company's Corporate Governance Statement, and the related policies and principles;
• to evaluate the independence and work of the statutory auditor and propose a resolution on the election of the auditor and his fee;
• to approve, in accordance with the principles approved by the Board of Directors, or authorise the CFO in advance to approve all non-audit services provided by the auditor, which are not forbidden services, including the area covered by them and the estimated fees payable;
• to evaluate compliance with laws, regulations and company policies and monitor significant litigations of Group companies;
• to monitor the transactions of the Company 's management and their related parties and any related conflicts of interest; and
• to execute any other duties bestowed upon it by the Board.
2. Composition and term of the Audit Committee
At its first meeting following the Annual General Meeting, the Board of Directors elects three members to the Audit Committee from amongst its number and appoints one of them as Chairman of the Committee. The members are elected for a term of one year, concluding at the end of the Annual General Meeting following their election.
The Audit Committee is composed of at least three Board members who are independent of the company. In addition, at least one member must be independent of any major shareholders. The members must have sufficient expertise required in matters forming the Audit Committee's duties, and at least one member must have expertise in the accounting function, bookkeeping or auditing, in particular.
The Audit Committee shall convene at least four (4) times a year. The Audit Committee is convened by the Chairman. A meeting of the Audit Committee has a quorum if the Chairman and at least one other member is present. The Audit Committee meetings are attended by the Chief Financial Officer (CFO), the Chief Legal Officer (CLO) and, if necessary, the auditor. The Group’s Chief Financial Officer (CFO) serves as the secretary of the meetings. The members of the company's Board of Directors and the Chief Executive Officer are entitled to attend meetings of the Committee. An internal auditor or other expert employed by the Stockmann Group or an external expert may also be invited to attend meetings in connection with the processing of matters.
The Audit Committee prepares an annual meeting schedule, including the main issues on the agenda.
The aim is to distribute the meeting material three working days prior to a meeting. However, material concerning financial statements and interim reports shall be distributed at least 24 hours before a meeting.
Minutes of the Audit Committee's meetings are drawn up without delay and signed by the Chairman and the secretary. The Committee's meeting minutes are distributed to all members of the Board of Directors. In addition, the Committee Chairman reports separately to the Board on the key observations and measures taken by the Committee at least four times a year.
The Audit Committee shall meet with the auditors and internal auditors as well as other internal experts as appropriate. The Audit Committee may use external experts, if necessary.
4. Assessment of the Committee's work
The Audit Committee performs a self-assessment of its work once a year. The Committee Chairman shall report the results to the Board of Directors.
5. Adoption of the rules of procedure
These rules of procedure were approved at the Board of Directors meeting held on 12 February 2020.
The rules of procedure are reviewed annually at the first meeting held after the organisational meeting of the Board of Directors after the Annual General Meeting.
The rules of procedure are published on the company's website and the main parts are explained in the Corporate Governance Statement and in the annual reporting.