Risks of material misstatements in financial reporting may exist in relation to recognition and measurement of assets, liabilities, revenue and cost or insufficient disclosure and documentation.
Items in the balance sheet and the income statement based on estimates, or generated by complex processes, are relatively more exposed to risk of error than other items. Major items, in this respect, include goodwill and other intangible assets, as well as provisions in captive insurance companies and pension provisions.
Each year the Group’s finance function performs a risk assessment regarding the Group’s balance sheet and income statement taking into consideration both qualitative and quantitative risks. The purpose of the risk assessment is to ensure that the internal control is satisfactory regarding financial reporting.