Internal control

Internal control is an integral part of management and ensuring the achievement of business objectives. Through efficient internal control, deviations from objectives can be prevented or detected as early as possible, so that corrective measures can be taken. The tools of internal control include policies and principles, work instructions, manual controls and automatic controls built into IT systems, follow-up reports, inspections and audits, among other things.

The objective of internal control in Kesko Group is to ensure the profitability, efficiency, continuity and freedom from disruptions of operations, the reliability of financial and operational reporting both externally and internally, compliance with laws and agreements and Kesko's values and operating principles, as well as the security of assets, expertise and information.

The planning of control measures begins with defining business objectives and identifying and assessing risks that pose a threat to the objectives. The definition of objectives and the assessment of risks should take account of not only operational objectives, but also requirements related to operations' conformity to law and to the accuracy of the information used in decision-making and reporting. Control measures are targeted based on risks, and control measures are selected as appropriate so as to keep the risks under control.

The Board and the President and CEO are responsible for the organisation of internal control. The management of every division, company and unit is responsible for taking care that efficient and effective control procedures are in place. The divisions annually prepare control plans that contain, for example, the focus areas and development targets of control. Every Kesko employee is obliged to comply with the responsible working principles and report on any grievances to their supervisor.

Kesko's common operations guide and support the divisions and subsidiaries with policies, principles and guidelines pertaining to their respective responsibility areas. Kesko Group's internal audit function assesses and verifies the effectiveness and efficiency of Kesko's internal control, reports on it to the President and CEO and the Audit Committee of Kesko Corporations' Board and assists management and the Kesko companies in the development of the internal control system.

The Audit Committee of Kesko's Board has confirmed the principles of Kesko's internal control, which are based on good control principles widely accepted internationally (COSO 2013).

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