The purpose of the Financial Internal Control Policy is to establish standards and guidelines to ensure the integrity, accuracy and confidentiality of the organization’s financial information. It aims to protect assets from loss due to fraud, error or misuse, and ensures compliance with applicable laws and regulations.
This policy covers Arnarlax ehf (hereinafter referred to as “the Company”) and applies to all related companies such as subsidiaries and other that the company has control of. This policy applies to all employees, officers and directors of the company. It covers all aspects of financial management, including but not limited to accounting, auditing, financial reporting and asset management.
The company follows the following principles of internal control:
Segregation of Duties: Duties are divided among different individuals to reduce the risk of error or inappropriate actions. No single individual should control all key aspects of transaction or financial event if that is avoidable. If not avoidable, a monitoring and approval of such actions must be reviewed by second party, documented and approved appropriately.
Authorization and Approval: Transactions must be authorized and approved by designated personnel before being executed, in accordance with the company’s authorization matrix.
Accuracy and Completeness: All financial transactions must be accurately recorded in the company’s accounting records, and financial statements must be prepared in accordance with recognized accounting standards.
Asset Safeguarding: Assets must be protected from loss, damage, or misuse through physical security, access controls, and periodic inventories.
Information Security: Financial information must be kept confidential and secure from unauthorized access. Access to financial systems and records is limited to authorized individuals.
Monitoring and review: Regular monitoring and review of financial activities and internal control systems are conducted to detect and correct any deviations from policy or irregularities.
The company follows the following principles in hierarchy of responsibilities:
Management: Responsible for establishing, implementing, and maintaining effective system of internal controls.
Employee: Required to comply with all internal control procedures and report any suspected deviations.
Finance Controller and/or CFO: Conducts periodic audits to assess the effectiveness of internal control and recommend improvement.
Finance Department: Oversees the financial reporting process, ensures accurate and timely financial information and manages day-to-day financial operations in accordance with internal controls.
Audit Committee: Responsible for monitoring of work and processes made by the financial department in accordance to Audit Committee mandate, prepare the Board’s follow-up of the financial reporting process, monitoring company’s internal controls and routines, as well as to maintain an ongoing dialogue with the Group’s auditors.
The company implements and maintains strict procedures and work methods. Below procedures are essential to follow, maintain and introduce to company’s employees.
Authorization matrix: Describe authorization of the employees within the company. Implementation and documentation of the authorization matrix is on the responsibility of CFO, and Finance department has the responsibility to ensure that the authorization levels are followed where applicable.
Reconciliations: The company is required to maintain regular reconciliations of all aspects of the balance sheet, such as but not limited to assets, debts, equity, bank accounts and biological assets. Company is also required to systematically reconcile all external financial relationships to customer and vendors and maintain all aspects of financials balances up to date. Financial reconciliations are on the responsibilities of Accounting Manager and Financial Controller and should be monitored by CFO.
Access security of financial system: All access to financial systems should be limited to authorized personal’s and access to that system has to be approved by Accounting Manager or CFO. Regular review of access is on the responsibility of Accounting Manager.
Whistleblower: The company has establised a whistleblower program. This program mandates that employees within the finance department, along with their colleagues in other departments, are obligated to disclose any financial irregularities through the whistleblower process in the instance where employees believe that reporting issues directly to their supervisors might affect their possition within the company.
Regular training: Employees are encouraged to seek additional education and training in line with their scope of work or position of their responsibilities.
Introduction of internal controls: All financial department employees shall receive update of any changes or implementation of internal control procedures and should know where to find such procedures. Team leader is responsible to make sure all employees are up to date with current active procedure and make sure that their team follows procedure in place at any given time.
The Company will continuously develop, implement and maintain a set of internal controls aligned with this policy, ensuring all controls are properly documented, reviewed and archived. The evaluation and maintenance of the financial internal control process fall under the Finance Controller or CFO’s responsibilities, including documentation, approval process and necessary checks for each procedure.
This policy will be reviewed annually and modified as necessary to ensure its effectiveness and compliance with applicable laws and regulations. Review of the policy is on the responsibility of CFO and/or Financial controller and is applicable of approval from the CEO of the company.