The Group’s internal audit assesses and ensures the sufficiency and effectiveness of the Group’s internal control. It also assesses the efficiency of the Group’s various business processes, the sufficiency of the Group’s risk management procedures, and compliance with internal guidelines. The company CEO and CFO are responsible for internal audit. Internal audit is part of the Group’s financial organization.

External Audit

In accordance with the Articles of Association, Dovre Group Plc has a minimum of one and a maximum of two auditors accredited by the Central Chamber of Commerce (Authorized Public Accountants). Should the General Meeting appoint only one principal auditor and should this auditor not be an audit corporation or should the General Meeting deem it otherwise necessary, the Meeting may choose to appoint a minimum of one and a maximum of two deputy auditors. The term of the auditors expires at the end of the first Annual General Meeting of Shareholders following their selection. The Board’s proposal for the auditor is disclosed in the notice of the General Meeting.

The primary purpose of an audit is to verify that the Financial Statements give accurate and adequate information concerning the Group’s result and financial position for the financial period. In addition, the auditors report to the Board of Directors on the ongoing auditing of administration and operations. In 2010, Dovre Group’s auditor was Ernst & Young Oy, Authorized Public Accountants, with Ulla Nykky, A.P.A. as the auditor in charge.

Internal Control and Risk Management Systems Associated with Financial Reporting

The ultimate responsibility for accounting and financial administration lies with Group’s Board of Directors. The Board is responsible for internal control, and the CEO is responsible for the day-to-day organization and monitoring of the control system. The steering and monitoring of business operations is based on the reporting and business planning system covering the entire Group. The CEO and CFO report monthly to both the Board and the Executive Team on the Group’s situation and development.

Risk Management and Internal Audit System

The Group’s risk management is guided by legal requirements, business requirements set by the owners of the company, and the expectations of the customers, personnel, and other important stakeholders. The goal of risk management is to identify and to acknowledge systematically and comprehensibly risks involved in the company’s operations and to make sure that these risks are appropriately accounted for when making business decisions.

The company’s risk management supports the achievement of strategic goals and ensures the continuity of business operations. Dovre Group takes risks that are a natural part of its strategy and objectives. The company is not ready to take risks that might endanger the continuity of operations, that are uncontrollable, or that may significantly harm the company’s operations.

In accordance with the Group’s risk management procedures, the Board of Directors receives an annual report of the most significant risks discovered during the assessment. The Board analyses the risks from the point of view of shareholder value. The most significant risks that have come to the Board’s knowledge in 2010 are associated with gaining product leadership and maintaining the company’s competitiveness in the changing competitive situation, global frame agreements, new market openings, growth and profitability of the Group’s operations in Norway, and estimating the effects of currency fluctuations.

Internal control is a process performed by the company’s Board of Directors, operative management, and other employees to obtain a reasonable certainty of the attainment of goals. The Group’s internal control framework is based on an Authorization Matrix that is approved by the Board. The framework specifies the authority and the responsibilities of the management. The highest supervisory body of the Group’s internal control is the Board. The implementation of internal control measures is primarily supervised by the CEO and SVP, Corporate Functions, who report to the Board.

Control Environment

The goal of Dovre Group’s internal control is to support the implementation of the Group strategy and to ensure compliance with official regulations. The company’s operating culture consists of the steering and control of the company’s operations by the Board of Directors, the leadership style of the company’s management, the company's organizational structure and management system, effective utilization of information technology, and the employees’ competences and development.

Risk Assessment

The aim of financial reporting is to ensure that assets and liabilities belong to the company; that all rights and liabilities of the company are presented in the financial statements; that items in the financial statements have been classified, disclosed and described correctly; that assets, liabilities, income, and expenditure are entered in the financial statements at the correct amounts; that all the transactions during the reporting period are included in the accounts; that transactions entered in the accounts are factual transactions; and that the assets have been secured.

The company’s risk management process includes an annual identification and analysis of risks related to financial reporting. In addition, the aim of the process is to be able to analyze and report all new risks immediately as soon as they have been identified. Taking into account the quality and extent of the Group’s business operations, the most significant risks related to the reliability of financial reporting are associated with revenue recognition, processing of bad debt provision, capitalization of product development expenses, and impairment testing of assets (including goodwill and capitalized product development expenses).

Control Functions

The correctness and reliability of financial reporting are ensured through compliance with Group policies and guidelines. Control functions that ensure the correctness of financial reporting include controls related to accounting transactions, the selection of and compliance with the accounting principles, information systems, and fraud controls.

The revenue recognition of the Group is under the supervision of the centralized finance function. The revenue recognition is based on the required sale and delivery documents.

The amount of the Group's bad debt provision is checked quarterly. This calculation is based on the ageing of trade receivables by sales company.

The amount of the Group’s product development expenditure that is to be capitalized is checked quarterly. The capitalization calculation is based on project-specific monitoring of R&D activities. The Group has a Development Board which decides on the capitalization and possible impairment of R&D expenses.

The company’s goodwill is tested for impairment during the last quarter of the financial year. Key variables used in the calculations are the estimated change rates of net sales and costs. In addition, indications of impairment are continuously monitored. If indications of impairment are detected, a separate testing is performed. In calculating the company-specific deferred tax assets, the effective tax rate of each country is applied. Deferred tax assets have not been recognized for Group's losses, as it has been estimated that it may not be possible to utilize the losses in the near future.

The performance of business operations and attainment of annual goals is assessed monthly in Executive Team and Board meetings. Monthly management and Board reporting includes actual and estimated figures and the goals and actual results of previous periods. Financial reports generated for the management are used for monitoring certain key indicators associated with the development of sales, profitability and trade receivables on a monthly basis.

In accordance with its business strategy, Dovre Group has complemented its organic growth with acquisitions. In making acquisitions, the company aims to follow due diligence and utilize its internal and external competence in the planning phase (e.g. due diligence), takeover phase, and when integrating acquired functions into the company's operations.

Communication

The purpose of management reporting is to produce up-to-date, relevant information for decision-making. The Group’s financial administration provides the Group’s separate units with monthly reporting guidelines and is in charge of any special reporting instructions related to budgeting and forecasting. The Group's financial administration distributes, on a regular basis, information on financial reporting-related processes and procedures. Internal control tasks are carried out according to this information. When necessary, financial administration also arranges targeted training for the organization’s personnel on the procedures associated with financial reporting and changes in them. The Group’s investor relations maintains, in cooperation with the Group’s financial administration, the guidelines on the disclosure of financial information, including, for example, the communication responsibilities of a publicly listed company.

Monitoring

Monitoring refers to the process of assessing Dovre Group’s internal control system and its performance in the long term. Dovre Group continuously monitors its operations through various assessments, such as internal audits, external audits, and supplier audits carried out by customers. The Group’s management monitors internal control as part of its day-to-day management. The management is responsible for ensuring that all operations comply with applicable laws and regulations. The Group’s financial administration monitors compliance with the financial reporting processes and control. The financial administration also monitors the correctness of external and internal financial reporting. The Board of Directors assesses and ensures the appropriateness and effectiveness of the Group's internal control and risk management.

Dovre Group’s internal control is also assessed by the company’s auditor. The external auditor verifies the correctness of external annual financial reporting. The most significant observations and recommendations of the process audit according to the auditing plan are reported to the Board of Directors.