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Key audit matter How our audit addressed the Key audit matter
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 34
and in Note 3 in the annual report. Entered purchase contracts (physical
contracts and derivative instruments), including inventory on hand, are reported
according to IFRS 9, which implies that all of these items are valued
and reported at market value as at balance sheet date.
The reporting of raw materials purchases is complex and fluctuations in
raw materials prices can have a significant impact on the financial information,
which is the reason an incorrect valuation of purchase contracts and
inventories can have a direct impact on costs and results.
A possible omission in reporting entered contracts or the risk that a
fictive contract is reported, would imply an impact on 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 audit has included, amongst other things:
- 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 regarding signed purchase contracts,
we have, amongst other things:
- obtained an understanding of, and tested, the controls referring to the identification of unallowed
activities
associated with the subscription and valuation of purchase contracts,
- tested the confirmations received from counterparties regarding established purchase contracts.
No deviations have been noted based on the audit activities described above.
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 1–38, 107–115 and 122–123. The
Board of Directors and the Chief Executive Officer 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 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.