Key audit matter +RZRXUDXGLWDGGUHVVHGWKH.H\DXGLWPDWWHU
Other information than the annual accounts and consolidated
accounts
This document also contains other information than the annual
accounts and consolidated accounts and is found on pages I–III,
1–36, 81–85 and 90–92. The Board of Directors and the Managing
Director are responsible for this other information.
Our opinion on the annual accounts and consolidated accounts
does not cover this other information and we do not express any form
of assurance conclusion regarding this other information.
In connection with our audit of the annual accounts and consolidated
88
accounts, our responsibility is to read the information identified
above and consider whether the information is materially inconsistent
with the annual accounts and consolidated accounts. In this procedure
we also take into account our knowledge otherwise obtained in
the audit and assess whether the information otherwise appears to be
materially misstated.
If we, based on the work performed concerning this information,
conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in
this regard.
Responsibilities of the Board of Directors and the
Managing Director
The Board of Directors and the Managing Director are responsible
for the preparation of the annual accounts and consolidated accounts
and that they give a fair presentation in accordance with the Annual
Accounts Act and, concerning the consolidated accounts, in accordance
with IFRS as adopted by the EU. The Board of Directors and
the Managing Director are also responsible for such internal control
as they determine is necessary to enable the preparation of annual
accounts and consolidated accounts that are free from material misstatement,
whether due to fraud or error.
In preparing the annual accounts and consolidated accounts, the
Board of Directors and the Managing Director are responsible for the
assessment of the company’s and the group’s ability to continue as a
going concern. They disclose, as applicable, matters related to going
concern and using the going concern basis of accounting. The going
concern basis of accounting is however not applied if the Board of
Directors and the Managing Director intend to liquidate the company,
to cease operations, or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board of Director’s
responsibilities and tasks in general, among other things oversee
the company’s financial reporting process.
Revenue recognition
– accounting of entered sales contracts
7KHDFFRXQWLQJRIUHYHQXHVFRPSULVHVDVLJQL¿FDQWULVNEDVHGRQ
WKHLULPSRUWDQFHLQWKH¿QDQFLDOLQIRUPDWLRQDQGWKHFRPSOHLW\LQ
the valuation of entered sales contracts.
As seen on page 24 and Note 3 of the annual report, AAK
applies active risk management. The value of the sales contracts
entered, are reported in accordance with IAS 39 which implies that
all of these are valued and reported at market value as at balance
sheet date.
The market value is determined, as appropriate, on the basis
of liquid market prices in an open market and on stock exchange
prices. Any possible error in the applied market price has a direct
impact on the reported revenues and results.
Any possible omission in the reporting of entered contracts, or
WKHULVNRI¿FWLWLRXVDJUHHPHQWVEHLQJUHSRUWHGZRXOGLPSO\DQ
impact on reported revenues and would limit AAK’s possibility to
achieve appropriate risk management measures.
In order to verify that revenues are complete, correctly reported and valued,
and that they comprise of existing sales contracts, our audit has included,
DPRQJVWRWKHUWKLQJVDFRPELQDWLRQRI
- a review and testing of AAK’s internal controls
- tests of detail through, amongst other measures, random sampling
- analytical procedures, amongst other things, with the help of data
analyses
The audit activities described above refer to the sales process in its entirety
(registration of sales contracts, delivery to the customer, inventory transactions,
invoicing, receipt of payments and valuation).
In order to ensure the completeness and correctness of the reporting
UHJDUGLQJVLJQHGFRQWUDFWVZHKDYHDPRQJVWRWKHUWKLQJV
- created an understanding for, and tested, the controls intended to identify
un-allowed activities linked to the signing and valuation of sales contracts,
- tested confirmations from counterparties regarding established sales
contracts.
No deviations have been noted in the reporting of established sales
contracts based on the executed audit, as described above.
Valuation of purchase contracts regarding raw materials and
inventory on hand
AAK has a purchase process implying that as soon as a sales contract
has been signed, the equivalent currency and raw material
price is hedged.
The active risk management applied by AAK is described on
page 24 and in Note 3 in the annual report. Entered purchase
contracts (physical contracts and derivative instruments), including
inventory on hand, are reported according to IAS 39, which implies
that all of these items are valued and reported at market value as
at balance sheet date.
7KHUHSRUWLQJRIUDZPDWHULDOVSXUFKDVHVLVFRPSOHDQGÀXF-
WXDWLRQVLQUDZPDWHULDOVSULFHVFDQKDYHDVLJQL¿FDQWLPSDFWRQ
WKH¿QDQFLDOLQIRUPDWLRQZKLFKLVWKHUHDVRQDQLQFRUUHFWYDOXDWLRQ
of purchase contracts and inventories can have a direct impact on
costs and results.
A possible omission in reporting entered contracts or the risk
WKDWD¿FWLYHFRQWUDFWLVUHSRUWHGZRXOGLPSO\DQLPSDFWRQ
reported costs and would limit AAK’s possibilities to achieve an
appropriate risk management.
In order to verify that raw material costs are complete, correctly reported
and valued, and that they are comprised of existing purchase contracts, our
DXGLWKDVLQFOXGHGDPRQJVWRWKHUWKLQJV
- a review and testing of AAK’s internal controls regarding the updating and
registration of market prices,
- data analyses, tests of detail through random sampling and other analytical
procedures in order to ensure the registration of signed contracts,
received deliveries, inventory transactions, received invoices, payments
and registered market prices.
In order to ensure the completeness and correctness of the accounts
UHJDUGLQJVLJQHGSXUFKDVHFRQWUDFWVZHKDYHDPRQJVWRWKHUWKLQJV
- obtained an understanding of, and tested, the controls referring to the
identification of un-allowed activities associated with the subscription and
valuation of purchase contracts,
- tested the confirmations received from counter parties regarding
established purchase contracts.
No deviations have been noted based on the audit activities described
above.