Auditing

The external auditor gives its independent opinion on the consolidated financial statements of Hydro. Various internal auditing activities gives management assurance that the internal control system is working adequately and according to management’s expectations.

External auditor

KPMG is Hydro’s primary auditor. The Board Audit Committee supervises the independence of the auditor and has established a pre-approval policy. This policy defines the services that are compatible with the role as independent auditor.

Please see note 43 to the consolidated financial statement for remuneration of external audit. 

Pre-approval of audit services

Hydro's audit committee has a pre-approval policy governing the engagement of primary and other external auditors to provide audit and non-audit services to Hydro or any entity within the group. Under this pre-approval policy, the audit committee has defined and pre-approved subcategories of audit and non-audit services. The audit committee's pre-approval policy includes annual monetary frames for each of the following categories of services: 

• audit-related
• tax
• non-audit related

The chairperson of our audit committee is authorized to approve changes to the subcategories of these services and/or any increase in the monetary frames between regular meetings of the audit committee. Any such change must be disclosed to the full audit committee on a quarterly basis.  

The audit committee's pre-approval policy also applies to auditors, other than our primary external auditors, which, in the aggregate, audit more than 5 percent of Hydro's consolidated assets or income from continuing operations before tax. For such auditors, the pre-approval policy applies only to services provided to the Hydro subsidiary or subsidiaries under audit.  Within the scope of the pre-approval policy, all services have been pre-approved and all amounts for audit related, tax and other non-audit related services are within the monetary frames established by the audit committee.

Internal audit

Group Internal Audit & Investigation (GIA&I) provides independent, and objective (i) assurance and consulting activities (Internal Audit) designed to add value to and improve the operations of Norsk Hydro ASA and its group of companies (Hydro), and (ii) management of Hydro’s whistle-blowing channel, AlertLine, and investigation activities into unwanted, unethical, or potential illegal events (Investigation).

GIA&I assist the Board of Directors (Board) and management with a systematic and disciplined approach to evaluate governance, risk management, internal controls and operational efficiency. GIA&I performs independent audits both at group and subsidiary level across all business units and processes, incl. joint ventures.

GIA&I aims to promote sustainable business operations by performing audits with the objective to provide:

• Assurance: Confirm that operations and processes are in line with the directions and policies given by the Board and management.
• Insight: Analyze data and assess risks and efficiency/effectiveness of processes and internal controls.
• Improvement: Identify root causes, recommend improvements and share best practices.

The Chief Audit Executive (CAE), Head of GIA&I, is independent from the line organization and reports directly to Hydro’s Board of Directors and the Board Audit Committee. The CAE participates in all Board Audit Committee meetings and provides quarterly updates to the Committee and Corporate Management on matters reported through the AlertLine and internal audit activities. Hydro’s Group Internal Audit & Investigation has resources in Norway, Brazil, and North America.

HSE audits

To secure continuous improvement and compliance with corporate requirements, sector presidents must submit self-assessment letters on health, security, safety and environment biannually. In addition, every sector is audited every three year through Hydro Executive Leadership Protocol based on the International Safety Rating System (ISRS) and ISO 14001, and adjusted to include all elements of HSE.

At lower levels in the organization, HSE audits are performed regularly based on standardized audit tools and audit plans that are updated every year.

Hydro's policy is that all production sites shall be in accordance with the ISO 14 001 standard or equivalent. It is not a requirement that the sites shall be certified. Still, the majority of our production sites are. Compliance is also followed up through our internal HSE audit protocol HELP, which is based on inter alia ISO 14 0001 and our HSE Management System.

Other audit activities

In addition to audits performed by Internal Audit Corporate and HSE audits, there are several other audit activities undertaken throughout the organization. These include performance audits, partnership audits, and various certification activities including ISO audits.