Report on the audit of the annual accounts
We have audited the annual accounts of the Fourth Swedish National Pension Fund (AP4) for 2016. The Fund’s annual accounts are included in the printed version of this document on pages 40-65.
In our opinion, the annual accounts have been prepared in accordance with the Swedish National Pension Funds Act (2000:192) and present fairly, in all material respects, the financial position of AP4 as at 31 December 2016 and of its financial performance for the year then ending according to the Swedish National Pension Funds Act.
The statutory administration report is consistent with the other parts of the annual accounts.
We, therefore, recommend that the income statement and balance sheet be adopted.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities according to these standards are described in more detail in the section Auditor’s responsibilities below.
We are independent in relation to AP4 according to generally accepted auditing standards in Sweden and have fulfilled, in general, within the meaning of professional ethical requirements according to these standards.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of the Board of Directors and the Managing Director
It is the Board of Directors and Managing Director who are responsible for the preparation and fair presentation of the annual accounts in accordance with the Law on Pension Funds. The board of Directors and Managing Director are also responsible for the internal control they deem necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts, the Board of Directors and Managing Director are required to assess the Fund’s capacity to continue its operations. They are also to provide disclosures, as appropriate, of the circumstances regarding such assessments and as regards the application of the going concern basis of accounting, provided the Board of Directors and Managing Director do not intend to liquidate the Fund or cease operations, or has no realistic alternative but to do so.
Our responsibility is to obtain reasonable assurance as to whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but does not comprise a guarantee that an audit conducted in accordance with ISA and generally accepted auditing standards in Sweden will always identify material misstatements should they exist. Misstatements can arise from fraud or error and are considered to be material if, individually or taken together, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these annual accounts. As a part of the audit in accordance with ISA, we undertake professional judgement and maintain professional scepticism throughout the entire audit.
In addition, we execute the following activities:
We identify and assess the risks of material misstatement in the annual accounts, whether due to fraud or error, design and execute audit procedures based on, amongst other things, these risks, and obtain audit evidence which is sufficient and appropriate to provide a basis for our opinion. The risk of not identifying a material misstatement resulting from fraud is higher than one resulting from error, as fraud can include collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
- We obtain understanding of the internal control of the company relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal controls.
- We evaluate the appropriateness of the accounting principles applied and the reasonability of the accounting estimates and related disclosures made by the Board of Directors and Managing Director.
- We reach a conclusion on the appropriateness of the Board of Directors’ and Managing Director’s application of the going concern basis of accounting in the preparation of the annual accounts. We are also to reach a conclusion, based on the audit evidence obtained, whether any material uncertainty exists related to such events or circumstances which can result in significant doubt as regards AP4's ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our Auditor’s Report to the related disclosures in the annual accounts, or if such disclosures are inadequate, we are required to modify our opinion on the annual accounts. Our conclusions are based on the audit evidence obtained up to the date of our Auditor’s Report. However, future events or circumstances may cause AP4 to cease to continue as a going concern.
- We evaluate the overall presentation, structure and content of the annual accounts and consolidated accounts, including the disclosures, and whether the financial reports represent the underlying transactions and events in a manner providing a true and fair presentation.
- We are required to inform the Board of Director’s regarding, amongst other matters, the planned scope of the audit and its focus and time schedule, as well as regards any significant observations made during the audit, including significant deficiencies in the internal control which we identify during our audit.
Report on other legal and regulatory requirements
In addition to our audit of the annual accounts, we have also audited the inventory of the assets managed by AP4. We have also audited to determine if there are any criticisms, in general, as regards the Board of Director’s and Managing Director’s management of AP4 for 2016.
The audit has shown no reason to criticise the inventory of the assets or, in general, the administration.
Basis for opinion
We conducted our audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities according to those standards are described in more detail in the Auditor’s responsibilities section below.
We believe that the audit evidence we have obtained is sufficient and appropriate as a basis for our opinion.
Responsibilities of the Board of Directors and Managing Director
It is the Board of Directors who has the responsibility for the accounts and for the administration of the Fund’s assets according to the Law on Pension Funds.
The Board of Directors is responsible for the organisation of AP4 and for the administration of the Fund’s activities of AP4. This includes, amongst other things, the on-going assessment of AP4's financial situation and ensuring that the organisation of AP4 is designed in such a manner that the accounts, funds management and AP4's activities are, in general, subject to satisfactory controls.
The Managing Director is responsible for the day-to-day administration according to the Board of Director’s guidelines and instructions and for, amongst other things, the implementation of measures necessary to ensure that AP4's accounting is executed in compliance with the applicable legislation and that the funds of AP4 are managed in a satisfactory manner.
Our responsibility regarding the audit of the administration and, thereby, our opinion on discharge from liability, is to evaluate audit evidence in order to, with a reasonable degree of assurance on the basis of reasonable assurance, if there is any criticism of the Board of Directors’ and Managing Directors’ administration of AP4 for financial year 2016.
Reasonable assurance is a high level of assurance but does not comprise a guarantee that an audit executed in accordance with generally accepted auditing standards in Sweden will always identify actions or negligence which can result in criticism.
As a part of an audit according to generally accepted auditing practice in Sweden, we exercise professional judgement and maintain a professional scepticism through the entire audit. The audit of the administration is based primarily on the audit of the accounts. Any additional audit procedures selected to be executed are based on our professional judgement with the starting point being the risks in the operations and the determined level of materiality. This implies that we focus the audit on such on such measures, areas and circumstances that are significant to the operations, and where non-compliance in such contexts would be of particular importance to AP4's situation. We review and test decisions taken, decision-making documentation, measures taken and other circumstances relevant to our opinion on the administration.
Stockholm 21 February 2017
Authorised Public Accountant
Appointed by the Swedish Government
Authorised Public Accountant
Appointed by the Swedish Government