2. Tasks of the audit committee
According to the CSRD, audit committees should be assigned certain tasks related to sustainability reporting and sustainability reporting assurance. A monitoring and assessment task for sustainability reporting and its assurance is proposed for the boards of directors of public interest entities1. In this regard, a government proposal introduces amendments to the Limited Liability Companies Act, the Co-operatives Act, the Act on Credit Institutions and the Insurance Companies Act. The amendment of the Act on Earnings-related Pension Insurance Companies is progressing as a separate process.2 Proposals for amendments to chapter 6, sections 16 a-d of the Limited Liability Companies Act (624/2006) are set out below.
It would be the task of the board of directors, with regard to the reporting of sustainability matters referred to in the Accounting Act (sustainability reporting) and the assurance thereof referred to in the Auditing Act (sustainability reporting assurance), to specifically monitor and assess:
- the company’s reporting system
- the efficiency of the company’s internal control and auditing, and of the risk-management systems
- the provision of sustainability reporting assurance services.
According to the regulation in force, the company may have an audit committee comprised of members of the board of directors, whose task would be to prepare the above-mentioned duties of the board of directors. If there is no audit committee or other committee carrying out the tasks, the preparation of the duties would belong to the entire board of directors.
With regard to sustainability reporting assurance, the audit committee’s tasks would include presenting to the board of directors:
- the results of sustainability reporting assurance
- its understanding as to how sustainability reporting assurance has increased the integrity of reporting
- its understanding of the committee’s role during the sustainability reporting assurance process.
With regard to sustainability reporting, the audit committee’s tasks would include monitoring:
- procedures for sustainability reporting
- procedures for identifying information to be reported in accordance with the sustainability reporting standards
- the effectiveness of internal control and audit as well as risk management in relation to the above
- performance of sustainability reporting assurance.
In addition, the Commerce Committee’s report proposes monitoring the independence of the sustainability reporting assurance provider as the task of the audit committee.3
1 Listed company, credit institution and insurance company, as referred to in chapter 1, section 9 of the Accounting Act (1336/1997).
2 The Commerce Committee has in its expert opinions drawn attention to the fact that the government proposal does not propose amendments to regulations on the audit committees of earnings-related pension insurance companies, similar to those proposed in the Insurance Companies Act. The Commerce Committee considers it important that sustainability reporting regulations are consistent for all public interest entities (TaVM 5/2023 vp, in Finnish).
3 The Commerce Committee proposes that chapter 6, section 16e of the Limited Liability Companies Act be supplemented in this respect (TaVM 5/2023 vp), in Finnish).