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GOVERNANCE AND MANAGEMENT • 47
INTERNAL CONTROLS AND RISK MANAGEMENT
SYSTEMS IN RELATIONTOTHE FINANCIAL
REPORTING PROCESS
Responsibility for PANDORA’s internal controls and risk
management systems in relation to the financial reporting
process rests with the Board of Directors and the Executive
Management.
The purpose of PANDORA’s internal controls and risk
management systems in relation to the financial reporting
process is to ensure that the financial statements provide
a true and fair view, free from material misstatements,
and that the internal and external financial statements
are presented in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU and
additional Danish disclosure requirements for annual
reports of listed companies. While the internal controls
and risk management systems are designed and aim to
ensure that material misrepresentation of assets, losses and/
or significant errors or irregularities and omissions in the
financial reporting are avoided, they provide no absolute
assurance that all errors are detected and corrected.
Internal control and risk management systems are under
continuous development and comprise:
• control environment
• risk assessment
• control activities
• information and communication
• monitoring
Control environment
The Board of Directors has established an Audit Committee
that assists the Board of Directors in supervising the
financial reporting processes and the efficiency of
PANDORA’s internal controls and risk management
systems. The Audit Committee reviews significant risks
related to PANDORA’s business, activities and operations
as well as risks related to financial reporting. The Audit
Committee seeks to ensure that such risks are managed
proactively, efficiently and systematically.
The Executive Management is responsible for
maintaining controls and an effective risk management
system and has taken the necessary steps to address the risks
identified in relation to financial reporting.
In 2016, the Governance, Risk and Compliance (GRC)
function was established. The GRC function helps PANDORA
accomplish its objectives by bringing a systematic, disciplined
approach to evaluating and improving the effectiveness
of internal controls, risk management, compliance, and
governance processes. The GRC function will assist
PANDORA’s Executive Management and the Audit Committee
in identifying, avoiding and mitigating risks.
The compositions of the Board of Directors, the Audit
Committee and the Executive Management have ensured the
availability of relevant competencies with respect to internal
controls and risk management systems in relation to the
financial reporting by implementing the GRC function.
Risk assessment
The Board of Directors and Executive Management assess
risks on an ongoing basis, including risks related to financial
reporting, and assess measures to manage or eliminate and/
or reduce the identified risk. The Audit Committee reviews
certain high-risk areas quarterly, including:
• significant accounting estimates
• material changes to accounting policies
At least once a year, the Audit Committee oversees a review
of current internal controls to determine whether they are
effective in relation to the risks identified in the financial
reporting process.
Control activities
PANDORA operates with a global Finance Management
Forum that meets three to four times a year. This forum sets
the finance strategy for the Group. In addition, PANDORA
Finance Manager conferences are held in order to discuss
the latest developments in significant accounting matters and
best practice regarding internal controls.
Controlling functions in the corporate finance function,
reporting to the Chief Financial Officer, are responsible for
controlling the financial reporting from the Parent Company
and subsidiaries, and monitoring compliance with relevant
legislation on an ongoing basis.
The Group has adopted and defined an internal control
framework that identifies key processes, inherent risks
and control procedures in order to secure appropriate
accounting processes.