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Internal control

The Board of Directors is ultimately responsible for ensuring that the Group has an effective system for risk management and internal control.

According to the Swedish Companies Act, the Board is responsible for ensuring that the Company’s organization is designed in such way so as to ensure satisfactory control of the bookkeeping, treasury management and of the Company’s financial conditions in general. The Swedish Corporate Governance Code (the Code) clarifies this and prescribes that the Board is responsible for internal control. This description is limited to internal control over financial reporting in accordance with point 7.4 of the Code. Neither the documented organization of internal control nor the content in the respective areas is to be viewed as being static; rather, these are continuously adapted to Axfood’s operations and external environment. The report has been reviewed by the Company’s auditor.

Axfood’s Chief Financial Officer has ultimate responsibility for ensuring that monitoring and work with Axfood’s internal control are conducted in accordance with the method decided on by the Board. A steering committee under the direction of the Chief Financial Officer leads the Group’s work with internal control over financial reporting. This steering committee reports
its conclusions to the Board on a regular basis. Major emphasis is put on adapting the work with internal control to changes in Axfood’s business.

Axfood’s internal control structure is based on the COSO model, whose framework has been applied to Axfood’s business and conditions. According to the COSO model, a review and assessment are performed in the areas of the control environment, risk assessment, control activities, information and
communication, and monitoring activities. Based on this review, certain development areas are identified and assigned priority in the ongoing internal control activities.

Control environment

The control environment is the foundation of internal control over financial reporting. An important part of the control environment entails ensuring that decision-making channels, authorizations and responsibilities are clearly defined and communicated between the various levels of the organization and that governing documents such as internal policies, handbooks, guidelines and manuals are on hand. Axfood’s board has established clear work processes and Rules of Procedure for its work and the work of its committees. Specifically for financial reporting, the Board has established an Audit Committee. An important part of the Board’s work involves drawing up and approving various fundamental policies, guidelines and frameworks. These include the Board’s Rules of Procedure, the CEO’s instruction, the investment policy, the finance and credit policy, and the communication policy. In addition to these, Axfood applies other policies and guidelines, such as the Group’s decision-making process, the information security policy, the Code of Conduct, ethical guidelines, the employee manual and the sustainability programme. The aim of these policies is to create a foundation for good internal control and to achieve and maintain a high standard of ethics in the Group. In addition, the Board has ensured that the organizational structure lays out clear roles, responsibility and processes that promote the effective management of risks in the business and enable goal achievement. As part of the responsibility structure, the Board evaluates business performance and results using a specially designed report package covering outcomes, forecasts, business plans, strategic plans, monitoring of financial risks and analyses of important key performance indicators.

As part of the work on strengthening internal control, Axfood compiles governance documents in an electronic financial manual (Axekon), which is accessible for all employees within the Group. The financial manual provides an overview of existing policies, rules and routines that affect the content and quality of financial reporting. Axekon also includes links to other areas, such as security/insurance, HR/personnel and IT.

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