Why the audit committee is responsible for overseeing the internal audit function?

AUDIT COMMITTEE

The audit committee is established to ensure the proper functioning of corporate governance, in particular to ensure the overseeing of the accounting and financial reporting, the Company’s internal control systems and work of external auditors.

In addition, the committee assists the Board of Directors in other duties related to the committee’s work as specified by the Board. The purpose of the committee is to assist the Board by preparing the committee-dedicated matters for the Board.

The members of the committee must be sufficiently qualified to perform the responsibilities of the committee and at least one member shall have expertise specifically in accounting or auditing. The members of the committee shall not participate in the daily management of the Company or other companies or foundations consolidated in the consolidated financial statements. Further, the majority of the members of the committee shall be independent of the Company and at least one of the members shall be independent of significant shareholders.

The external auditors and Chief Financial Officer attend the committee meetings on a regular basis. Other senior executives attend the meetings as invited by the committee.

In the end of the year 2021 the audit committee consisted of Juhani Vanhala (chairman), Goutam N. Challagalla and Clemens Krause. All members of the audit committee are independent of significant shareholders and Juhani Vanhala and Goutam N. Challagalla are independent of the Company.

The members do not participate in the daily management of the Company or other companies or foundations consolidated in the consolidated financial statements. Clemens Krause has the required expertise in accounting and auditing.

The audit committee had six meetings during 2021. Juhani Vanhala and Clemens Krause attended all meetings, and Goutam N. Challagalla attended all five meetings that were arranged after his appointment to the audit committee.

The committee shall, in particular:

1. monitor the financial position of the Company;
2. monitor and assess the financial reporting system;
3. monitor and assess the reporting process of financial statements and interim reports; and assess the draft financial statements and interim reports;
4. review any formal announcements related to the Company’s financial performance;
5. monitor the Company’s auditing and review all material reports from the auditor;
6. monitor and evaluate the independence of the auditor, auditing and, in particular, the offering of services other than auditing services (i.e. ancillary services) by the auditor;
7. prepare the appointment, re-appointment or removal of the Company’s auditor and, in particular, prepare for the Board the proposals to be made to the Shareholders’ General Meeting regarding such matters or the auditor’s remuneration;
8. maintain contact with the auditor, and discuss with the auditor the scope, planning and staffing of the annual audit, including the working relationship, co-ordination and exchange of information between the auditor and the Company’s internal audit function;
9. review, at least annually, the qualifications, performance and independence of the external auditors and of the main responsible auditor and communicate the committee’s conclusions to the Board;
10. monitor and assess the efficiency of the Company’s internal controls and audit as well as the risk management systems;
11. ensure that the internal audit function is independent, has sufficient authority, stature and resources, and has access to all records, documents and information held by the Company;
12. approve the operating instructions for internal audit;
13. review the Company’s corporate governance statement and non-financial report;
14. assess the Group’s compliance with laws and regulations and evaluate the processes aimed at ensuring such compliance;
15. review the internal auditor’s plans and reports;
16. establish principles concerning the monitoring and assessment of related party transactions and possible conflicts related thereto;
17. monitor and assess how agreements and other legal acts between the Company and its related parties meet the requirements of the ordinary course of business and arm’s length terms; and
18. prepare for the Board any decisions on significant changes in the accounting principles or in the valuations of the Group’s assets.

The committee may also discuss other matters and duties appointed to it by the Board.

REMUNERATION COMMITTEE

The Board of Directors of Multitude has appointed a remuneration committee among the Directors. The Board of Directors has confirmed the central duties and operating principles of the committee in a written charter, the essential contents of which are presented on the Company’s website https://www.multitude.com/. The remuneration committee reports regularly on its work to the Board.

The task of the remuneration committee is to ensure the proper functioning of corporate governance, in particular, to ensure the efficient preparation of matters pertaining to the remuneration of the members of the Board, the CEO and other executives of the Company as well as the remuneration schemes of the personnel. In addition, the committee assists the Board in other duties related to the committee’s work as specified by the Board.

The purpose of the committee is to assist the Board by preparing the committee-dedicated matters for the Board. The members of the committee must be sufficiently qualified to perform the responsibilities of the committee.

In the end of the year 2021 the remuneration committee consisted of Frederik Strange (chairman), Juhani Vanhala and Goutam N. Challagalla. All members of the remuneration committee are independent of the significant shareholders and of the Company.

The remuneration committee held five meetings during 2021, and all members attended all the meetings.

The remuneration committee prepares the following matters for the Board, and where the matter calls for a decision, the committee prepares decision proposals to the Board:

1. compensations, pensions, benefits and other material terms of the contract of the members of the Board, the CEO and the Leadership Team;
2. incentive and retention plans of the Board, the CEO and the Leadership Team;
3. the CEO’s and the other executives’ performance reviews;
4. assessment and development of the HR policy and leadership;
5. equity-based incentive plans;
6. the principles of the Company’s compensation policies;
7. the management’s participation in the boards’ of directors of the Group companies and of external companies; and
8. major organizational changes.

In addition, the committee shall answer questions related to the remuneration policy and the remuneration statement at the General Meeting.

The committee may also discuss other matters and duties appointed to it by the Board.

RISK COMMITTEE

The risk committee is established to ensure that risks are identified, monitored and can be managed. In addition, the committee assists the Board in other duties related to the committee’s work as specified by the Board.

The purpose of the committee is to assist the Board by preparing the committee-dedicated matters for the Board. The members of the committee must be sufficiently qualified to perform the responsibilities of the committee.

In the end of the year 2021 the risk committee consisted of Clemens Krause (chairman), Frederik Strange and Michael A. Cusumano. All members are independent of significant shareholders and Frederik Strange and Michael Cusumano are independent of the Company.

The risk committee had four meetings during 2021, and all members attended all the meetings.

The Committee shall work with Multitude team members to establish and maintain a framework to:

1. identify new and existing material risks pertaining to Multitude and its business;
2. regularly classify, monitor, calibrate probability and severity of risks; and
3. where needed, suggest actions to mitigate risks.

The committee may also discuss other matters and duties appointed to it by the Board.

INTERNAL AUDIT

Multitude's internal audit function is the responsibility of Multitude's audit committee, which is responsible for developing, implementing and overseeing internal audit policies and procedures. The audit committee reports on its findings to the Board of Directors.