Audit Committee

Duties and responsibilities of the Audit Committee are related to the oversight of the company’s financial reporting processes, accounting, statutory audit, financial reporting, internal control, internal audit and risk management processes. The committee’s work to perform these duties and responsibilities are described below.

Committee work

The Audit Committee reviews the company’s quarterly financial results and interim reports and recommends their approval to the Board. The committee’s results review includes a review of potential significant and unusual transactions, accounting estimates and policies for the period in question. The committee also reviews quarterly reports on assurance and legal matters including status reports on internal control, internal audit, litigations, and other legal proceedings. Other quarterly reports include treasury risk and limits reports and energy risk report.

The lead audit partner attends all committee meetings and provides the committee with a report on the interim procedures and findings as well as an account of the audit and non-audit fees incurred during the quarter. The committee quarterly meets with the internal and statutory auditors without members of the executive management present and holds regular sessions among themselves.

As part of the committee’s compliance review, the committee is provided with a quarterly report by the company’s Ethics Advisory Committee and a report of submissions under the Report Misconduct channel.  With regard to the effectiveness of the company’s risk management, the committee annually reviews the company’s risk management process and is informed of the top 20 risks as well as group-level strategic risks identified in this process including macroeconomic, political, environmental, compliance and business-specific risks. In 2015, the committee also reviewed taxation at UPM and the company’s tax policy and management of tax risks, and the company’s outsourcing arrangements in finance and IT. The committee also agreed to include an annual review of responsible sourcing as a regular item on the committee’s agenda.

The Audit Committee is also responsible for preparing a proposal to the AGM for the election and remuneration of the statutory auditor. In this respect, the committee evaluates together with the corporate management the qualifications and independence of the statutory auditor annually. This evaluation includes the assessment of the effectiveness of the audit process, quality of audit, performance of the lead auditor and the audit team, and co-operation with the auditor’s international audit network. The committee also arranges tendering processes for audit services at regular intervals to ensure the independence and cost efficiency of the statutory audit. The latest tendering process was carried out in 2013 and the previous one in 2007.

The Audit Committee's duties and responsibilities, as defined in the committee charter, are presented below. 

Audit Committee’s duties and responsibilities

​Financial reporting​Monitor the reporting process relating to financial statements

Oversee the financial reporting process

Review the company’s annual financial statements and quarterly financial statements
​Internal control​Monitor the efficiency of the company’s internal control system
​Internal audit​Monitor the efficiency of the company’s internal audit

Review the company's policies with respect to the internal audit function

​Review the organisation, responsibilities and staffing of the internal audit function periodically
​Risk managementMonitor the efficiency of the company’s risk management systems

Review the company's policies with respect to financial risk assessment and risk management

Review the organisation, responsibilities and staffing of the risk management function as to its financial risk management responsibilities periodically
​External audit​Evaluate external auditor’s qualifications, performance and independence

Prepare the proposal for the election or re-election of the external auditor to the general meeting

Approve the external auditor’s annual fees under the guidance given by the Annual General Meeting​

Monitor the statutory audit of the financial statements and consolidated financial statements

​Review the external auditor’s annual audit plan

Assess the external auditor’s provision of audit-related and non-audit related services to the company

Review the experience, qualifications and performance of the senior members of the external audit engagement team

​​​​Ensure the rotation of the leading audit engagement team partner of the external auditor at least every seven years
​ComplianceReview any legal matters including the status of pending litigations that may have a significant impact on the company’s financial position

Review any material reports or inquiries from regulatory or governmental agencies

Review the company’s Code of Conduct and compliance therewith

Oversee procedures for treatment of complaints and concerns submitted to the company anonymously or otherwise

​​Review the company’s corporate governance statement
​​Other​​Perform such other duties and functions as may be assigned by the Board or deemed necessary or appropriate by the committee for the performance of its oversight function