Internal monitoring report

Under the Companies Act and the Swedish Code of Corporate Governance (the "Code" below), the board is responsible for internal control of the company. PartnerTech's financial reporting complies with the laws and regulations applicable to companies listed on the NASDAQ OMX Stockholm Exchange, as well as national regulations in its individual geographic markets. This report has been prepared in accordance with the Code and is thereby limited to describing the organization of internal control with respect to financial reporting.
One purpose of good internal control is to provide reasonable assurance that external financial reporting, such as interim, year-end and annual reports are accurate and complete.

Control Structure

The PartnerTech board has overall responsibility for establishing an effective internal control system with respect to both financial reporting and the business in general. The audit committee supports the board and is in charge of matters that concern internal control, external reporting, financial reporting and external audits. Operating responsibility for maintaining effective internal control is delegated to the CEO, who in turn delegates function-specific responsibilities to managers at different levels of the group. Various policy documents, including the formal work plan for the board, instructions for the CEO and the tasks of the audit committee, ensure clear assignment of responsibilities. Overall regulations concerning authorization and authority have been prepared at the group level. The document governs authorization and authority for various transactions among the board, CEO, remaining members of group management and others. The regulations also specify the authority of the managing director of each subsidiary. The subsidiaries have local regulations concerning authorization and authority within the framework of the group regulations. The group financial policy, another important document, was updated in 2010.
The PartnerTech Group uses LINKS to Success, which consists of a number of values shared by all employees in their day-to-day duties. For additional information, refer to the previous section on Human Resources.
Among the contents of the group’s quality and management system (PIMS) are process descriptions, work instructions, valuation principles, policies and regulations for authorization and authority. PIMS documents may be specific either to the group or particular subsidiaries.

Risk Assessment

The assessment of significant risks associated with financial reporting involves the identification, presentation and analysis of risk. Refer to pages 50–51 for a more detailed description of group risks. Risks are identified at both the group and subsidiary level. The audit committee discussed the group's risks during the year.

Control activities

Risk management aims to quantify and either minimize or eliminate financial risks associated with financial reporting. Risk management is built into group processes. Various control activities are conducted to estimate and limit risks, as well as to ensure that the risks to which PartnerTech is subject are handled in accordance with established policies and instructions.
The group has a uniform system for weekly, monthly and yearly reporting. Each subsidiary's reporting is analyzed at the group level with a focus on profitability, capital tied up and key ratios. The budget, the latest forecast and various key ratios are monitored. Monthly reporting is sent to the board.
Implementation of a group-wide business system continued in 2010, and most units had adopted it by the end of the year. Additional resources will be devoted to taking advantage of the benefits offered by the system. The various processes use system-based control mechanisms.
To minimize certain types of risks associated with financial reporting, some functions and transactions are handled exclusively at the group level. The regulations concerning authorization and authority ensure a transparent decision making process for acquisitions, major investments, agreements and other important decisions.

Information and Communication

The group has internal information and communication paths to promote accurate financial reporting. Internal guidelines, policies, manuals and the like that affect financial reporting are continually reviewed and communicated to employees on the intranet. Significant changes to accounting policies and other matters are sent directly to those who are affected. Biannual conferences are held for all financial managers of the group in order to share skills and experience through the discussion of current issues.
The board receives monthly reports that contain analyses and comments comparing the group's financial performance with forecasts, the budget and the previous year. The board also receives reports, to which the CEO, CFO and external auditor contribute, of audit committee meetings. The external auditor reports to the board after each year-end audit. The board meets with representatives of central functions on a regular basis. The CEO and CFO keep the board up to date on the group's financial position and performance, as well as any areas of risk.
PartnerTech's website contains press releases, financial information and other disclosures. External financial reporting complies with relevant internal and external policy documents. For external information, PartnerTech follows the Code, along with guidelines that apply to companies listed in Sweden.

Follow-up

Follow-up to ensure efficient internal control with respect to financial reporting is performed by the board, audit committee, CEO, group management and subsidiaries. Follow-up includes analysis of monthly and quarterly reports as compared to forecasts and the budget.
PartnerTech has no separate internal auditing function. The company has not identified any special circumstances in or outside of the company that would call for such a function. An extensive annual questionnaire is sent to each group company for an evaluation of internal control with respect to inventories, accounts receivable, revenue recognition, division of duties, assignment of responsibilities and other areas. A compilation of the responses from each company forms the basis of an assessment concerning where internal control is working well and where additional resources are needed.