Order on the Implementation of Auditing in ATP, AES Payout, and LD Funds

Order on the Implementation of Auditing in ATP, AES Payout, and LD Funds

Pursuant to Section 25 q, paragraph 4, and Section 32 a, paragraph 2, of the Act on Labour Market Supplementary Pension, cf. Act Consolidation No. 1110 of 10 October 2014, Section 67, paragraph 3, of the Act on Work Injury Insurance, cf. Act Consolidation No. 1186 of 19 August 2022, and Section 9 a, paragraph 3, and Section 14 a, paragraph 2, of the Act on the Wage Earners' Price Adjustment Fund, cf. Act Consolidation No. 1109 of 9 October 2014, it is hereby prescribed:

Chapter 1
Scope of Application and Definitions

Section 1. This Order applies to Labour Market Supplementary Pension (hereinafter ATP), AES Payout regarding task performance pursuant to Section 3 of the Act on the Independent Institution Labour Market Insurance, and Wage Earners' Price Adjustment Fund (hereinafter LD Funds).

Paragraph 2. The Order applies to the group as a whole and to the individual companies within the group.

Paragraph 3. Section 9, Sections 11-14, Section 21, paragraph 1, and Section 27 do not apply to subsidiary companies that are not financial undertakings, cf. Section 5, paragraph 1, no. 1, of the Act on Financial Business.

Paragraph 4. In this Order, "the undertaking" is understood as ATP, AES Payout, or LD Funds, as well as undertakings covered by paragraph 2.

General Provisions

Section 2. All conclusions and information provided pursuant to this Order must be given without modifications, or with modifications by including reservations or being negative. The auditor must disclose if the auditor cannot express a conclusion or information on the subject.

Paragraph 2. The auditor must modify the conclusion or information when providing conclusions and information pursuant to this Order if the information on which the work performed is based is subject to material errors or deficiencies, or if the auditor is unable to obtain sufficient and appropriate evidence to conclude that the subject is free from material errors. The auditor's modification must clearly appear in the conclusion and the basis for the conclusion. The auditor must clearly justify the matter that led to the modification.

Paragraph 3. The auditor must, when providing conclusions and information pursuant to this Order, highlight any matters that the auditor points out without modifying the conclusion and information. Highlights must not replace a modification to the conclusion and information. When using highlights, the heading "Highlighting of matters in the accounts" must be used.

Paragraph 4. The auditor must reproduce conclusions and information provided pursuant to this Order that are given without modifications verbatim in accordance with Annex 1.

Section 3. The auditor must, in accordance with good auditing practice, determine the scope and type of audit procedures to be performed to prepare conclusions and information pursuant to this Order. The auditor must perform the relevant audit procedures set out in Annex 2.

Chapter 2
External Audit

Section 4. The external audit must audit the annual accounts, including the group accounts, in accordance with good auditing practice. External audit must verify that the annual accounts, including the group accounts, are prepared in compliance with the legislative requirements for financial reporting and international standards.

The External Audit Protocol

Section 5. The external audit must keep an audit protocol for use by the board of directors and any audit committee in the undertaking, as well as for the boards of directors of subsidiary companies with domicile in Denmark. In the protocol, the external audit must account for the audit performed during the year, which can form the basis for audit sub-conclusions. The external audit must present the protocol at all board meetings, and all additions must be signed by the entire board, any external audit committee members, external audit, and the chief auditor.

Paragraph 2. The external audit must account for the type, scope, and conclusion of the audit work performed in connection with the annual accounts in the protocol minutes. The external audit must describe the distribution of work between internal audit and external audit herein.

Paragraph 3. The external audit must mention significant accounting and audit remarks in the individual subsidiary companies in the protocol minutes regarding the annual accounts of the parent company.

Paragraph 4. The undertaking must submit a copy of the protocol minutes for the annual accounts to the Financial Supervisory Authority at the same time as the undertaking submits a copy of the board-approved annual report. The undertaking must submit this without undue delay after the board's approval of the annual report, and no later than within the time limits specified in Section 25 l of the Act on Labour Market Supplementary Pension, Section 65 j of the Act on Work Injury Insurance, and Section 8 k of the Act on Wage Earners' Price Adjustment Fund.

Section 6. Conclusions, information, summaries, reproductions, assessments, and remarks etc. pursuant to Sections 7-15 may appear in a separate protocol in the audit protocol named "Protocol with the Financial Supervisory Authority's special reporting requirements for the audit of the annual accounts". The provisions of this Order regarding the protocol minutes for the annual accounts apply correspondingly to the separate protocol. The separate protocol must be signed by the group of persons mentioned in Section 5, paragraph 1, third sentence, and submitted on the same date as the protocol submitted pursuant to Section 5.

Summaries

Section 7. The external audit must summarize all remarks that the audit has raised with the board of directors and any audit committee in a separate section in the protocol minutes regarding the annual accounts. The summary must contain a status of the remarks raised regarding the relevant financial year, and a status of the remarks that appeared open in the protocol minutes for the previous year's annual accounts, cf. Annex 3. The external audit must mention if the audit has not given rise to remarks.

Paragraph 2. The external audit must reproduce in a separate section in the protocol minutes regarding the annual accounts a list prepared by the undertaking of all directives issued by the Financial Supervisory Authority in the financial year, directives issued by the Financial Supervisory Authority in the preceding financial year but not yet complied with at the reporting date, and directives that have been complied with in the financial year. If no directives have been issued in the financial year, and all directives have been complied with by the end of the preceding financial year, this must also be disclosed. The external audit must review the list prepared by the undertaking and provide remarks thereon, including the auditor's stance on the compliance with directives.

Paragraph 3. The external audit must reproduce in a separate section in the protocol minutes regarding the annual accounts a list prepared by the undertaking of all criticisms and risk disclosures issued by the Financial Supervisory Authority in the financial year. The external audit must review the list prepared by the undertaking and provide any remarks thereon.

General Conclusions and Information

Section 8. If the board of directors has established an internal audit, the external audit must, in the audit protocol minutes regarding the annual accounts pursuant to Section 5, conclude whether:
1) the tasks of the audit agreement have been performed, and whether the internal audit functions satisfactorily, including whether the external audit is aware of matters that individually or collectively could negate that the internal audit is independent of the daily management, and
2) the external audit, based on its work, agrees with the content of the internal audit's protocol additions regarding the annual accounts, and if not, in what the disagreement consists.

Section 9. The external audit must disclose the execution of any assistance or advisory tasks in a separate section in the protocol minutes regarding the annual accounts.

Section 10. The external audit must disclose uncorrected errors in a separate section in the protocol minutes regarding the annual accounts. The information must be given per error with indication of amount and effect on account items. The external audit must additionally disclose whether the total effect of uncorrected errors on profit, assets, liabilities, and other payables. The external audit may only omit immaterial uncorrected errors if the external audit discloses a threshold for when errors are immaterial, regardless of whether the errors are considered individually or collectively and assessed based on any criterion regarding size, nature, or circumstances. The external audit must disclose if all errors have been rectified, or if no errors were found during the audit.

Section 11. The external audit must conclude in the protocol minutes regarding the annual accounts whether the undertaking's administrative and accounting practices in significant areas, including business processes and internal control procedures, are organized and function in a satisfactory manner. In this connection, the external audit must conclude whether:
1) the undertaking's overall system, data, and operational security is and functions satisfactorily, and
2) the external audit is aware of matters that are in conflict with the requirements in the Act on Labour Market Supplementary Pension, including Section 23 b and the Order issued pursuant thereto on the management and control of Labour Market Supplementary Pension, the Act on Work Injury Insurance for task performance pursuant to Section 3 of the Act on the Independent Institution Labour Market Insurance, the Act on Wage Earners' Price Adjustment Fund, including Section 4 c and the Order issued pursuant thereto on the management and control of Wage Earners' Price Adjustment Fund.

Section 12. The external audit must disclose the following regarding speculation provisions in the protocol minutes regarding the annual accounts:
1) Whether the undertaking's guidelines pursuant to Section 24 b, paragraph 4, of the Act on Labour Market Supplementary Pension, Section 63 of the Act on Work Injury Insurance, and Section 5 a, paragraph 4, of the Act on Wage Earners' Price Adjustment Fund are assessed to be satisfactory and have functioned appropriately, cf. Section 24 b, paragraph 5, of the Act on Labour Market Supplementary Pension, Section 63 of the Act on Work Injury Insurance, and Section 5 a, paragraph 5, of the Act on Wage Earners' Price Adjustment Fund.
2) Whether the review pursuant to Section 24 b, paragraph 5, of the Act on Labour Market Supplementary Pension, Section 63 of the Act on Work Injury Insurance, and Section 5 a, paragraph 5, of the Act on Wage Earners' Price Adjustment Fund has given rise to remarks.

Section 13. The external audit must disclose transactions between ATP and its subsidiary companies, between ATP and AES Payout, and between LD Funds and its subsidiary companies in the protocol minutes regarding the annual accounts, including providing a detailed description of the transactions carried out during the year and a detailed description of the basis for pricing.

Section 14. The external audit must conclude the following regarding engagements with related parties in the protocol minutes regarding the annual accounts:
1) Whether the engagements granted by the board of directors and security provided from companies in which members of the management or board of directors of ATP, AES Payout, or LD Funds are directors or board members, have been granted in accordance with the usual business terms of ATP, AES Payout, or LD Funds and on market-based terms, cf. Section 24 c, paragraph 3, of the Act on Labour Market Supplementary Pension, Section 63 of the Act on Work Injury Insurance, and Section 5 b, paragraph 3, of the Act on Wage Earners' Price Adjustment Fund.
2) Whether ATP, AES Payout, or LD Funds have engagements with commercial undertakings covered by Section 24 d, paragraphs 1 and 2, of the Act on Labour Market Supplementary Pension, Section 63 of the Act on Work Injury Insurance, and Section 5 c, paragraphs 1 and 2, of the Act on Wage Earners' Price Adjustment Fund, cf. Section 24 d, paragraph 8, second sentence, of the Act on Labour Market Supplementary Pension, Section 63 of the Act on Work Injury Insurance, and Section 5 c, paragraph 8, second sentence, of the Act on Wage Earners' Price Adjustment Fund.

Section 15. The external audit must provide a conclusion in the protocol minutes regarding the annual accounts on whether control is maintained over ATP's, AES Payout's, or LD Funds' investment assets. The external audit must also provide a conclusion in the protocol minutes regarding the annual accounts on whether control is maintained over the calculation of pension provisions in the ATP scheme, the calculation of insurance provisions in AES Payout, and the members' assets in Wage Earners' Price Adjustment Funds respectively Wage Earners' Holiday Funds, cf. however Section 16.

Other Provisions

Section 16. The external audit and the chief auditor may, if the board of directors has established an internal audit that meets the provisions in Chapter 3, agree that conclusions and assessments etc. pursuant to Section 15, second sentence, shall only appear in the internal audit's protocol. The agreement must appear in the audit agreement, cf. Section 24.

Chapter 3
Internal Audit

Section 17. If the board of directors has not established an internal audit pursuant to Section 25 p, paragraph 4, of the Act on Labour Market Supplementary Pension, Section 66, paragraph 4, of the Act on Work Injury Insurance, or Section 9, paragraph 4, of the Act on Wage Earners' Price Adjustment Fund, the board of directors must at least once a year discuss the need to establish an internal audit taking into account the undertaking's complexity, including whether the undertaking outsources and insources activities. The board's decision must appear in the board's minutes of proceedings.

Paragraph 2. If the undertaking has established an internal audit, the provisions regarding internal audit apply.

Paragraph 3. For groups, paragraphs 1 and 2 apply correspondingly.

Section 18. The internal audit must function independently of the daily management.

Paragraph 2. The internal audit must be led by a chief auditor. The appointment and dismissal of the chief auditor may only be carried out by the board of directors, and may be carried out for the group as a whole.

Paragraph 3. The chief auditor must have a theoretical education corresponding to what is required to become an approved auditor.

Paragraph 4. The chief auditor must, upon appointment, have participated in audit work for at least 3 years within the last 5 years.

Paragraph 5. The Financial Supervisory Authority may in special cases grant dispensation from the requirements in paragraphs 3 and 4.

Section 19. The board of directors may appoint one or more deputy chief auditors.

Paragraph 2. The board of directors may appoint a deputy chief auditor as substitute for the chief auditor.

Paragraph 3. Section 18, paragraph 2, second sentence, and paragraphs 3-5, Section 20, paragraphs 1-3, and Section 21, paragraphs 2, 3, and 5, regarding the chief auditor apply correspondingly to deputy chief auditors.

Section 20. The board of directors must report the appointment of a chief auditor to the Financial Supervisory Authority no later than 1 month after the chief auditor's commencement of duties.

Paragraph 2. The board of directors must, when reporting to the Financial Supervisory Authority regarding the appointment of a chief auditor pursuant to paragraph 1, provide a declaration that the chief auditor meets the requirements pursuant to Section 18, paragraphs 3 and 4.

Paragraph 3. In connection with the declaration required in paragraph 2, the board of directors must state whether the chief auditor signs the annual accounts pursuant to Section 30.

Paragraph 4. The board of directors must inform the Financial Supervisory Authority of any change in the decision regarding whether the chief auditor signs the annual accounts.

Paragraph 5. The board of directors and the chief auditor must, no later than 1 month after the chief auditor's departure, each send a report to the Financial Supervisory Authority regarding the background thereof.

Paragraph 6. The board of directors must inform the Financial Supervisory Authority of the decision to dissolve the internal audit.

Section 21. The audit performed by the internal audit must cover all significant and risk-filled areas in the undertaking where the Financial Supervisory Authority has been assigned powers or mandates, cf. Annex 4. For AES Payout, the audit performed by the internal audit must cover all significant and risk-filled areas that are covered by the task performance pursuant to Section 3 of the Act on the Independent Institution Labour Market Insurance.

Paragraph 2. The board of directors must ensure that the chief auditor has access to all information that this finds necessary for the implementation of the audit, including the board's minutes.

Paragraph 3. The chief auditor and employees in the internal audit must not participate in other work in the undertaking or group than audit, except for work covered by Section 24 d, paragraph 9, and Section 25 p, paragraph 8, of the Act on Labour Market Supplementary Pension, Section 63 of the Act on Work Injury Insurance, and Section 9, paragraph 8, of the Act on Wage Earners' Price Adjustment Fund, cf. Annex 4.

Paragraph 4. Internal audit must not perform tasks if the performance of the task is suitable to raise doubt in a well-informed third party about the internal audit's independence.

Paragraph 5. The chief auditor must not declare, conclude, or disclose matters or documents for which the chief auditor, employees in the internal audit, or consultants used by the chief auditor have prepared the basis.

Section 22. Chief auditors and deputy chief auditors must not have economic interests in companies that are group-related with the undertaking or group in which they are employed, cf. Section 24 b, paragraph 9, of the Act on Labour Market Supplementary Pension, Section 63 of the Act on Work Injury Insurance, and Section 5 a, paragraph 10, of the Act on Wage Earners' Price Adjustment Fund.

Section 23. Undertakings and groups that have an internal audit must have a job description approved by the board of directors. The internal audit may prepare the job description for the group as a whole. The job description must then be accepted by the boards of directors of the individual group companies. The job description must as a minimum contain provisions on:
1) the internal audit's general powers, responsibilities, and tasks, including that the audit performed by internal audit must cover all significant and risk-filled areas in the undertaking,
2) the employees' qualifications,
3) how and to what extent the chief auditor and employees in the internal audit are ensured continuous further education,
4) that the appointment and dismissal of employees in the internal audit must be carried out or approved by the chief auditor, and that the employees' education must be approved by the chief auditor,
5) the internal audit's budget, and that this is approved by the board of directors, which must appear in a board protocol minutes, and
6) information on agreements between the undertaking's management and the internal audit regarding the performance of special audit tasks. One-off tasks and tasks of a temporary character need only appear in the internal audit's protocol.

Paragraph 2. The internal audit may only take on tasks pursuant to paragraph 1, no. 1, if the internal audit has sufficient competencies and resources to perform them.

Section 24. In undertakings and groups that have an internal audit, the audit work must be performed in accordance with good auditing practice and according to an audit agreement between the external audit and the chief auditor. The audit agreement may be prepared for the group as a whole. The audit agreement must contain:
1) an overall description of which audit tasks must be performed, and which of these tasks are the responsibility of the external audit and the internal audit respectively,
2) guidelines for cooperation between the external audit and the internal audit, including for the work the external audit must perform in connection with the control of the internal audit's work, and
3) a description of how and to what extent information is exchanged between the internal audit and the external audit regarding the audit performed.

Paragraph 2. It must appear from the audit agreement that the chief auditor participates in the audit of the significant and risk-filled areas during the audit of the annual accounts, if the chief auditor signs the annual accounts pursuant to Section 20, paragraphs 3 and 4, and Section 30, paragraph 2.

Section 25. In undertakings that have a chief auditor, the chief auditor must also be the chief auditor in the undertaking's other companies in the group.

Paragraph 2. Paragraph 1 does not apply if the undertaking is operated temporarily with a view to winding up previously entered engagements or with a view to participating in the restructuring of commercial undertakings.

Paragraph 3. Paragraph 1 does not apply to subsidiary companies that are not domiciled in Denmark.

The Internal Audit Protocol

Section 26. The internal audit must keep an audit protocol for use by the board of directors and any audit committee. The internal audit must account in the protocol for the audit performed during the year, which can form the basis for audit sub-conclusions. The internal audit must present the protocol at all board meetings and meetings of any audit committee. Any protocol addition must be signed by the entire board, any external audit committee members, the external audit, and the chief auditor.

Paragraph 2. The internal audit must always provide an annual protocol minutes for processing at a board meeting that takes place after the end of the financial year and no later than at the board meeting where the annual accounts are approved by the board of directors. The internal audit must account in the annual protocol minutes for the type and scope of the audit work performed, including how the internal audit has performed the audit of the significant and risk-filled areas and the conclusion thereon. If the board of directors has chosen that the chief auditor shall sign the annual accounts, the internal audit must account in the annual protocol minutes for how the internal audit has participated in the audit of the significant and risk-filled areas and the conclusion thereon.

Paragraph 3. The chief auditor must present the internal audit's annual protocol minutes, the audit plan, and the budget for the internal audit at the relevant board and audit committee meetings. The audit plan must be flexible and adjusted continuously so that the internal audit can handle unforeseen events and prioritize in relation to changed or new risks.

Section 27. The internal audit must conclude in the annual protocol minutes for ATP whether the undertaking's risk management, compliance function, business processes, and internal controls in all significant and risk-filled areas are organized and function in a satisfactory manner, cf. Annex 4.

Paragraph 2. The internal audit must conclude in the annual protocol minutes for AES Payout whether the undertaking's risk management, business processes, and internal controls in all significant and risk-filled areas covered by the task performance pursuant to Section 3 of the Act on the Independent Institution Labour Market Insurance are organized and function in a satisfactory manner, cf. Annex 4.

Paragraph 3. The internal audit must conclude in the annual protocol minutes for LD Funds whether the undertaking's risk management, compliance, business processes, and internal controls in all significant and risk-filled areas are organized and function in a satisfactory manner, cf. Annex 4.

Section 28. The internal audit must summarize all remarks that the audit has raised with the board of directors and any audit committee in a separate section in the annual protocol minutes. The summary must contain a status of the remarks raised for the relevant financial year, as well as a status of the open remarks from the previous year's protocol minutes, cf. Annex 3. The internal audit must mention if the audit has not given rise to remarks.

Paragraph 2. The chief auditor must as a minimum disclose in a separate section in the annual protocol minutes that the chief auditor does not declare, conclude, or disclose matters or documents for which the chief auditor or employees in the internal audit have prepared the basis, cf. Section 21, paragraph 5.

Paragraph 3. The internal audit must disclose in the annual protocol minutes whether the internal...