The Board and management attach great importance to the quality of the Company's risk management and control systems. Risk management and internal control systems are important in order for the Group to be able to meet its strategic targets. These systems form an integrated part of management’s decision-making processes and are central elements in the organisation of the Company and the development of its routines.
Risks in Marine Harvest ASA are divided into two main categories:
- Financial risks, which are trading risks based on underlying exposures, e.g. currency risks, credit risks, interest rate risks and liquidity risks
- Operational risks mainly linked to the development of the salmon price, biological risks linked to the salmon farming operations and the development in the salmon feed prices and feed utilization, in addition to regulatory risk
For further discussion of risk a reference is made to the Board of Directors report included in the Annual Report.
An ongoing risk management process, including analyses, management and follow-up of significant risks, is performed to ensure that the Group is managed in accordance with the risk profile and strategies approved by the Board. This process encompasses the Group’s corporate guiding principles and ethical guidelines. The Board reviews the Group’s overall risk profile in relation to strategic, operational and transaction-related issues at least once every year. The status of the overall risk situation is reported and discussed with the Board in connection with the annual budget process.
The management's report on internal control of financial reporting
The Board and the Group management is responsible for establishing and maintaining adequate internal control of financial reporting. The process for this control is developed under the supervision of the chief financial officer. The process is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Group's financial statements for external reporting purposes in accordance with International Financial Reporting Standards and the interpretations issued by the International Accounting Standards Board (IASB) as adopted by the European Union (EU IFRS) and the Norwegian Accounting Law.
The Audit Committee, monitors the financial reporting and the related internal control, including application of accounting principles and judgments in the financial reporting. The Group management and the Audit Committee have regular meetings with the external auditor present to discuss issues related to the financial reporting.
Financial reporting in Marine Harvest is an integrated part of the Groups corporate governance. Distinct roles, responsibilities and duties have been established. Requirements with regards to content and deadlines, including accounting policies, checks and validations have been clearly defined. A key element in the financial reporting process is risk assessment. The risk assessment is performed at least annually, and key controls and control procedures are established to mitigate identified risks. Compliance is reported to the Audit Committee.
The Groups applied accounting principles are described in a web-based accounting manual.
All Group units report their financial statements into a common consolidating system periodically, based on a common chart of accounts. All subsidiaries are responsible for the accuracy of the reported figures and that the financial reporting is in compliance with the Groups accounting principles. In addition, general and analytical controls of the reported figures are performed at corporate level. Disclosures are reported in connection with the quarterly and the annual reporting. Extended controls carried out in the quarterly and the year-end reporting processes.
The Group has sufficient expertise to complete a proper and efficient financial reporting in accordance with IFRS and the Norwegian Accounting Act.
In 2011, Marine Harvest identified certain shortcomings in the internal control procedures and mitigating actions were taken.
At year-end 2011, the Group management, in consultation with the independent auditor, has assessed the effectiveness of the Company's internal control systems relevant to its financial reporting based on the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, the management is of the opinion that Marine Harvest ASA's internal control of financial reporting as of 31 December 2011 was adequate.
Code of Conduct and ethical guidelines
The Code of Conduct describes Marine Harvest ASA's commitment and requirements in connection with ethical issues relevant to business practice and personal conduct. Marine Harvest ASA will, in its business activities, comply with applicable laws and regulation and act in an ethical, sustainable and socially responsible manner. The Code of Conduct has been communicated to all employees and it is expected that a personal commitment to follow the Code of Conduct is made by each employee. It is also expected that business partners will follow ethical standards that are consistent with Marine Harvest ASA's requirements.
During 2011, Marine Harvest uncovered certain unfortunate breaches and potential breaches of the Code of Conduct in the organisation. These cases have been handled firmly by the governing bodies of Marine Harvest and appropriate investigations have been initiated. In cases for which breaches have been confirmed through investigations, appropriate actions have been sanctioned. In these cases, Marine Harvest has chosen a pro-active approach in order to further raise the attention to the Code of Conduct throughout the organisation. As a further response, the Board of Directors resolved an updated policy for conflict of interest during 2011. This policy will strengthen the formal procedures and guidelines relevant for the Code of Conduct.