38•GOVERNANCEANDMANAGEMENT
PANDORAANNUAL REPORT2014
INTERNALCONTROLSANDRISKMANAGEMENT
SYSTEMS INRELATIONTOTHE FINANCIAL
REPORTINGPROCESS
Responsibility for PANDORA’s internal controls and risk
management systems in relation to thefinancial reporting
process restswith theBoardofDirectors and the Executive
Board.
Thepurposeof PANDORA’s internal controls and risk
management systems in relation to thefinancial reporting
process is to ensure that thefinancial statements give a
true and fair view, free frommaterialmisstatements, and
to ensure that thefinancial statements arepresented in
accordancewith IFRS as adoptedby the EU and additional
Danishdisclosure requirements for annual reports of listed
companies.While the internal controls and riskmanagement
systems aredesigned and aim to ensure thatmaterial
misrepresentationof assets, losses and/or significant errors
or irregularities andomission in thefinancial reporting are
avoided, it provides no absolute assurance that all errors
aredetected and corrected. Internal controls and risk
management systems areunder continuous development.
Control environment
TheBoardofDirectors has established anAudit Committee
that assists theBoardofDirectors in supervising thefinancial
reportingprocess and the efficiencyof PANDORA’s internal
controls and riskmanagement systems.TheAudit Committee
reviews significant risks related toPANDORA’s business,
activities andoperations aswell as risks related tofinancial
reporting.TheAudit Committee seeks to ensure that such
risks aremanagedproactively, efficiently and systematically.
The ExecutiveBoard is responsible formaintaining
controls and an effective riskmanagement system and it has
taken thenecessary steps to address the risks identified in
relation tofinancial reporting.
Risk assessment
TheBoardofDirectors and ExecutiveBoard assess risks
on anongoingbasis, including risks related tofinancial
reporting and an assessment ofmeasures tomanageor
eliminate and/or reduce the identified risk.TheAudit
Committee reviews certainhigh-risk areas quarterly,
including significant accounting estimates andmaterial
changes to accountingpolicies.
At least once a year, theAudit Committee oversees a
review of the current internal controls to consider whether
they are effective in relation to the risks identified in the
financial reporting process.
Control activities
PANDORAoperateswith a global FinanceManagement
Forum thatmeets three to four times a year.This forum sets
the Finance Strategy for theGroup. In addition, PANDORA
FinanceManager conferences areheld inorder todiscuss
the latest developments in significant accountingmatters and
best practice regarding internal controls.
Controlling functions in the corporatefinance function,
reporting to theChief FinancialOfficer, are responsible for
controlling thefinancial reporting from theParent Company
and the subsidiaries, andmonitor compliancewith relevant
legislationon anongoingbasis.
TheGrouphas adopted anddefined an internal control
framework that identifies keyprocesses, inherent risks and
control procedures, inorder to secure accountingprocesses.
The control procedures include a varietyof processes in
order toprevent anymisrepresentation, significant errors,
omission and fraudulent behaviours.The control procedures
are testedbi-annually and reported to theAudit Committee
annually.
Information and communication
TheBoardofDirectors has adopted an IRpolicy that
prescribes that all communication, includingfinancial
reporting, to stakeholdersmust be conducted adequately,
timely, openly internally aswell as externally andmust be
conducted factually and truthfully andwith consideration to
legislation and applicable regulations.
Monitoring
PANDORA’s internal controls and riskmanagement systems
are continuouslymonitored, tested, documented and subject
toquality control.TheAudit Committeemonitors the internal
controls and riskmanagement systems to ensure that any
weaknesses are eliminated and that anymaterial errors are
corrected, including controls or procedures implemented to
prevent such errors.
PANDORA’s external auditors are appointed for a
termof one year at theAnnualGeneralMeetingupon
recommendationby theBoard. Prior to recommendation,
theBoardofDirectors assesses, in consultationwith the
ExecutiveBoard, the independence and competencies and
othermatters pertaining to the auditors.
The framework for the auditors’ duties, including their
remuneration, audit andnon-audit tasks, is agreed annually
between theBoardofDirectors and the auditors upon
recommendationby theAudit Committee.
