The different financial management units subordinate to OP Financial Group’s CFO take charge of not only the preparation of interim and annual accounts for OP Financial Group and Group entities, as required by financial accounting, but also of the production of management accounting reports, such as monthly reports on business performance. The Controller function within OP Financial Group also produces earnings forecasts and analyses the actual outcome in comparison with the forecasts and reports on any deviations.
This chapter, Financial reporting process, describes the main features of how OP Corporate Bank Group’s internal control and risk management work with a view to ensuring that the Group’s financial reports give substantially true information on the company’s and its consolidation group’s financial performance and position. Correctly consolidated information using sub-ledger accounting and OP Corporate Bank Group companies’ information forms the basis of reliable financial reporting.
OP Corporate Bank uses Group-wide financial reporting and risk reporting to monitor the achievement of its business goals and financial targets, and these reports are regularly reviewed at executive management and Board of Directors as well as OP Cooperative’s Executive Board meetings. Financial information in financial reports is compared with related plans and any differences are analysed, and the report also describes earnings outlook for the current year and for a longer period of time. The very same principles apply to the monthly financial performance and risk report prepared by the management. When preparing and examining the report, the management ascertains the accuracy and correctness of the financial results and reporting by analysing the performance and risk exposure and any deviations from targets.
External reporting is based, for example, on the International Financial Reporting Standards, the Finnish Limited Liability Companies Act, the Act on Credit Institutions, the Insurance Companies Act, the Accounting Act, and the standards and regulations issued by the Financial Supervisory Authority. OP Financial Group’s shared principles are applied in the accounting, financial statements and consolidated financial statements of all OP Financial Group companies. Responsibility for the interpretation of, guidelines on and advice on standards, other laws governing the preparation of financial statements and official accounting requirements as well as the preparation of and compliance with common accounting policies rests with OP Cooperative, OP Financial Group’s central cooperative. Whenever necessary, the company turns to auditors who give a statement of the selected principles and interpretations.
Organisation of financial reporting
OP Cooperative’s Executive Board is the highest decision-making body in matters associated with business control. The Board of Directors must ensure that supervision of accounting and financial management is duly organised. It decides on reporting, procedures and qualitative and quantitative indicators used to assess operational efficiency and performance in line with principles adopted by OP Cooperative. The Board of Directors discusses and approves the consolidated financial statements and interim reports.
The Board of Directors is tasked with ensuring that the company has a sufficient internal control system covering all of its operations and that the supervision of accounting and financial management is duly organised. It must also evaluate how the company complies with laws, regulations, official instructions and internal instructions. The Board also discusses the most significant changes made to the accounting policies during the financial year, principles governing impairment testing for goodwill and intangible assets and the outcome of this testing, and critical accounting estimates and judgements, as well as control reports and reports prepared by regulators, auditors, Internal Audit and the Compliance organisation.
Under the Limited Liability Companies Act, the President and CEO shall ensure that the Company’s and its consolidation group’s accounting practices comply with the law and that financial management is organised in a reliable manner. OP Cooperative’s Finance and Treasury, independent of business lines/divisions, is responsible for the Group’s financial reporting. This function produces reliable, relevant and up-to-date information on the Group’s performance and finances and keeps the Board of Directors and the President and CEO and other decision-makers informed of the Group’s financial performance and near-term outlook. The President and CEO is also tasked with controlling the quality of outsourced accounting services and services for reports to regulators and other relevant authorities, and developing business control and risk management methods, indicators and the supporting systems.
Compiling financial statements information and interim reports are coordinated at the central cooperative consolidated level. The needs of the management and business lines/divisions as well as applicable legislation guide reporting. Reporting systems and communications are defined so as to enable appropriate monitoring and supervision of objectives, performance, operations and risk at all organisational levels. When reporting OP Corporate Bank Group’s and its business lines’ results and other confidential company information, the Group ensures that information confidentiality has been mentioned in the reports and that confidentiality remains when distributing the reports.
Business control primarily uses OP Financial Group’s shared systems. Operational duties related to financial and management accounting are coordinated at OP Cooperative Consolidated level.
Independent assessment of financial reporting
As provided by law, auditors shall assess the accuracy of external financial reporting. The auditors are tasked with auditing the accounting, financial statements and governance of the company and its consolidation group in order to obtain assurance that the financial statements of the company have been prepared in compliance with the rules and regulations in force and give owners and other stakeholders a true and fair view of the financial position of the company and its consolidation group and its financial performance and cash flows.
In its audits, Internal Audit assesses the effectiveness and adequacy of the company’s and its consolidation group’s financial reporting and reports these audits to the executive management and the Board of Directors.