Implementation of
compliance management
system in TKM Group
Helen Tulve
12 February 2016
WHO WE ARETKM Group
55 years of retail experience
130,000 sq m sales area
88 stores
• 45 supermarkets (Selver)
• 28 shoe stores
(ABC King, SHU, Outlets)
• 8 beauty stores
(I.L.U., L’Occitane)
• 4 car showrooms
(Viking Motors, Forum Auto, Kia
Automobiles)
• 2 department stores (Kaubamaja)
• 1 outlet
(Kaubamaja, ABC King, SHU)
WHO WE ARETKM Group
9.9% market share of Estonian retail market
€555.5 M revenue 2015
Ca 450,000 different products
61 M visitors and 42M purchases 2015
3,946 employees
Loyalty program with ca 590,000 loyal
customers
In 1996 shares of Tallinna Kaubamaja Grupp
were listed at Tallinn Stock Exchange
WHO WE ARETKM Group
- Kaubamaja is the first and the oldest
department store in Estonia
- Selver is represented in 23 towns in
Estonia with 16.2% market share in
2014
- Kulinaaria has the biggest kitchen in
the Baltics with production area of
4,000 sq m and 14 tons of production
every day
- Exclusive importer and distributor of
KIA vehicles, own dealerships in
Tallinn, Riga and Vilnius (Kia, Opel,
Peugeot, Cadillac)
- Total leasable area ca 110,400 sq m,
total book value of real estate ca €205
M (incl. undeveloped)
GROUP STRUCTURETKM Group
Tallinna Kaubamaja Grupp AS
Supervisory
Board
Selver AS
Kaubamaja AS
100%
OÜ TKM Beauty
100%
100%
Internal
Control Dept.
Internal
Control Dept.
OÜ TKM Beauty
Eesti
100%
Kulinaaria OÜ
100%
Viking Security
AS
100%
Audit
Committee
TKM Auto OÜ
AS TKM King
100%
100%
Internal Audit
Tallinna
Kaubamaja
Kinnisvara AS
100%
Kia Auto AS
100%
Viking Motors
AS
OÜ Tartu
Kaubamaja
Kinnisvara
100%
100%
SIA Selver Latvia
100%
Forum Auto SIA
100%
UAB Kia Auto
100%
SIA TKM Latvija
100%
HISTORYTKM Group
Establishment of controlling bodies in TKM Group:
1996
Internal control function in Kaubamaja
2000
Internal control function in Selver
2007
Security Departments in Selver and Kaubamaja
2010
Group wide Audit Committee and Internal Audit Department
2012
Security company Topsec Turvateenused OÜ
2014
Acquiring shares of Viking Security AS
2015
Acquiring shares of Digisilm Videovalve OÜ
HISTORYTKM Group
2016
 Clear and more transparent processes
 Significantly decreased the amount of outflow (stealing, writing off goods
etc.)
 Identified several wrongdoings
Few examples of identified wrongdoings:
payroll fraud
forging a death certificate to get a day off
schemes related to discounts and bonus-points
return of counterfeited goods
taking undeclared rewards from suppliers
buying goods from a self related company (conflict of interest
situations)
violation of campaign rules
HOW WE DO ITTKM Group
Controlling bodies at TKM Group are:
• Audit committee
• Internal audit
• Internal control department
HOW WE DO ITTKM Group
Audit committee conducts supervision over
• the compliance with accounting principles
• the sufficiency and efficiency of external audit efforts
• the development and implementation of internal control
system (incl. risk management)
• the lawfulness of the business of the company
The Audit Committee is separately participating in ensuring the
independence of external audit process and efforts, and in
planning and evaluation of internal audit work.
HOW WE DO ITTKM Group
Internal audit:
• Independent and objective function on the Group level
• Provides risk based assurance by performing assurance and
consultative services
• Evaluates internal controls, risk management and governance
processes
• Reports continuously and directly to the Audit Committee
HOW WE DO ITTKM Group
Internal control department
–
–
–
–
Risk assessment
Control activities (posteriori control)
Information and communication
Surveillance, prevention, counselling
HOW WE DO ITTKM Group
Viking Security
•
•
•
•
The best security solutions – always a step ahead
Video surveillance centre
Professional manned security
Very good cooperation with internal control department
WE CONSIDER IMPORTANTTKM Group
• High awareness of the employees- continuous trainings and
discussions, information sharing
• Transparency of the processes
• Clear and uniquely understandable procedures and
requirements
• Separation of duties
• Four eye principle
• Rotation
WE CONSIDER IMPORTANTTKM Group
• To ensure high awareness of the employees we are
continuously conducting internal and external trainings about:
– corruption, court case studies, stock rules, internal rules and regulations
• Informing employees that private sector corruption (giving as
well as accepting bribery) is criminal offense in Estonia:
– for private persons, the punishment is a monetary penalty or imprisonment
up to 5 years;
– the punishment for legal persons is monetary penalty.
• As a stock/ listed company, we regularly inform our employees
about relevant rules
• Detecting conflicts of interest as preventive measure:
– collecting declarations of economic interests
WE CONSIDER IMPORTANTTKM Group
• Processes are described in internal regulations that are
introduced to the new employees when they start to work and
to existing employees continuously through in-house trainings
• Major changes in the assortment are done collectively and
must be confirmed by purchasing managers. For certain
products, a separate assortment committee is established
• Our goal is to cooperate with honest and ethical companies,
therefore, we perform a background check from public sources
to our new partners
• Strict rules apply to conducting procurements:
- Approval of Supervisory Board is required for predefined monetary limit;
- The offers are sent to independently administered e-mail address to ensure
equal terms for all participants and uncompromised decisions
• Transparent decisions and informing thereof to all relevant
employees
WE CONSIDER IMPORTANTTKM Group
• Internal regulation on accepting, declaring and registering
goods with monetary value is enforced
– Covers goods with monetary value, incl. presents, discount services and
travel offers, product samples, which has value of consumption
– Some companies exercise the so-called zero tolerance – all goods have to
be declared and are used and dividend collectively; some have enforced a
monetary limit for obligation to declare such good
– If a good with monetary value is used for personal purposes, its estimated
value is determined and taxes have to be paid (fringe benefit)
– The goods brought for degustation are consumed collectively and
employees can rate the products
• We called on our partners during Christmas to respect our
practice of not accepting gifts from our partners and to thank
each other with kind words and continuous good co-operation
WE CONSIDER IMPORTANTTKM Group
• We have set processes and rules, and we supervise, whether
they are followed
• Job descriptions are detailed, including, in addition to work
assignments, also rights, obligations and mandates
• The organisational structure, incl. subordination, is clear and
transparent
• Wherever reasonable and efficient, we have implemented the
four eyes principle to avoid individual decisions
• Employees are rotated in many departments from time to time
– It is considered to be challenging and interesting, fresh point of view
– Eliminates possible corruptive relationships formed through time
END REMARKSTKM Group
• Tone at the top
• Promote ethical principles
• Good co-operation between internal control functions and
internal audit
• Good co-operation with police
• Despite of all measures taken, unexpected/ unwelcomed issues
can still happen and we have to learn and evolve constantly.
Thank you
Helen Tulve
Tallinna Kaubamaja Grupp AS
helen.tulve@kaubamaja.ee
Phone: +372 667 3300