1. Anders Malmeby Swedish Working Group on Internal Control Partner and Head of Audit at KPMG Sweden Anders Malmeby Swedish Working Group on Internal Control Partner and Head of Audit at KPMG Sweden Developments in Sweden Reporting on internal control FEE – Forum on Risk Management and Internal Control in the EU Brussels, October 25, 2005

2. 2 Extract from the Swedish Code 3.7.1 The board is to ensure that the company has a sound system of internal controls and keep itself informed of and assess how well it functions. 3.7.2 The board is to submit an annual report on how that part of internal control dealing with financial reporting is organized and how well it has functioned during the most recent financial year. The report is to be reviewed by the company’s auditors. 3.7.3 The board in companies that do not have a special internal audit function is annually to evaluate the need of such a function and explain the position that it has taken in its report on internal control.

3. 3 Ref also to Risk Management and Internal Control in the EU, Discussion Paper, March 2005, FEE

4. 4 The Board of Directors´ Report on Internal Control over the Financial Reporting General principles - - - - - - - - - Introduction with reference to the code Description Control environment Risk assessment Control activities Information and communikation MonitoringStatement

5. 5 Basis for the Work The responsibility of the Board as stated in the Swedish Companies Act is the basis (no extended interpretation of 3.7.1 in the code) The reporting on internal control relates to financial reporting Substance, without being a Swedish SOX 404 Must be able to function in an international environment Make use of international experience Make use of an international established framwork for internal control (”COSO”) Principle based (as opposed to cookbook approach) Top-down instead of Bottom-up Transparency ”Process” based perspective at entity level

6. 6 An International Established Framework for Internal Control (”COSO”)

7. 7 Definition of Internal Control (”COSO”) Internal control is a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws and regulations

8. 8 Internal Control, cont´d Effectiveness and efficiency of operations Compliance with applicable laws and regulations Reliability of financial reporting Defined from PCAOB AS 2, March 9, 2004

9. 9 Assurance implications First working assumption for the auditors´ work and reporting *) rejected based on public comments Work in progress. New assumption with reporting level ”review” Time table. No reporting for 2005 with certain confirmation of facts, but no opinion from the auditor *) with certain confirmation of facts, but no opinion from the auditor

10. 10 Contact Information Anders Malmeby KPMG P.O. Box 161 06 S-103 23 Stockholm Sweden E-mail: anders.malmeby@kpmg.se anders.malmeby@kpmg.se Tel: +46 8 723 91 00, +46 70 594 60 48 (mobile)