Annual Report 2010 - SBM Offshore

Report of the Board of Management
Reporting
The main external reports are the Annual Report,
Half-year Reports, quarterly Trading Updates, the
Sustainability Report and the published Analyst
Presentations.
Financial reporting risks are mitigated through procedures,
controls and international accounting standards.
In 2010, a complete review of the financial reporting
process was performed by an appointed project team
working with the assistance of qualified consultants
(Internal Control over Financial Reporting (ICOFR)).
The objectives and risks were assessed and the control
system redesigned to further consolidate the “in
control” statement in respect of financial reporting.
The critical controls giving assurance for the reliability
of Financial reporting in 2010 have been compliance
tested with good overall results.
Every lease and operate contract, major project
under construction and subsidiary result is reported
on a monthly basis and reviewed by the Board of
Management. The report incorporates the original
budgets, approved change orders and costs incurred
to date, together with any important positive or negative
variances incurred or identified as likely to be
incurred, with explanations. Once per quarter, the status
of the major projects and subsidiaries are reported
to the Supervisory Board.
The operating units’ results are consolidated in a report
to the Board of Management and the Supervisory
Board. External financial reporting consists of the midyear
and full-year financial statements. The irregular
nature of the new order intake and project deliveries
can cause significant variations from one quarter to
another in the Turnkey Systems reporting segment.
Detailed quarterly figures are therefore not published,
but trading updates are issued after the end of the first
and third quarters.
The Company employs appropriately qualified and
competent professionals and a seminar is held each
year for key financial staff to review specific accounting,
fiscal or other topics. An annual tax review
meeting is also held, attended by key finance staff and
tax managers from respective Group companies, and
external advisors.
Compliance
Operations span many diversified jurisdictions with
employees and assets present in each location,
and diligence is required of the organisation and its
94 SBM Offshore – Annual Report 2010
individuals to ensure compliance with applicable laws
and regulations.
A dedicated function exists to manage the regulatory
requirements on projects and preserve the knowledge
within the Company and it is intended to further consolidate
all regulatory compliance activities under a
single reporting line in 2011. For environmental, health
and safety legislation, an independent firm is used in
the first instance to gain an overview of requirements
and obtain specialist advice where required. Clients are
also helpful to assist in this process and provide valuable
information.
A Classification Society is always engaged for floating
projects to give third party approval of engineering,
construction and International Marine Organisation
Convention certification. The Classification Society will
conduct regular surveys to keep vessels in a valid Class
Certificate, which is a requirement for insurance and
maritime authorities.
When entering an unfamiliar jurisdiction, advice is taken
from legal and tax specialists about the country specific
legal and tax obligations. The Company maintains a
system of continual updating and direct inquiry in the
countries in which it operates.
Corporate Governance compliance is monitored and
advised by the Corporate Secretary. Formal procedures
and systems are in place and will be further developed
for confirming compliance with Company rules
concerning Code of Conduct, Inside Information and
Reporting of Irregularities.
The activities and Commitments described above apply
to all of SBM Offshore’s Business Operating Areas,
i.e. Sales & Marketing, Project execution, Production
operations and Support services.
Internal control and Risk
Management
The Dutch Corporate Governance Code under section
II.1.4 requires the Management Board to examine strategic,
operational, legal and regulatory, and financial
reporting risks. The Management Board confirms that it
is responsible for the Company’s risk management and
internal control systems and has performed reviews
of their operational effectiveness for the year ended
31 December 2010. The outcome of this review and
analysis as well as planned improvements for 2011,
has been shared with the Audit Committee and the