Annual Report 2009

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CORPORATE GOVERNANCE REPORT Lundin Petroleum has a Group Accounting Principles (GAP) manual which has been distributed to all offices. The GAP manual outlines the Group’s accounting principles and explains how transactions are to be accounted for and requirements for disclosure. The GAP manual focuses upon the accounting policies to be applied in accordance with International Accounting Standards (IFRS). In 2009 the Lundin Petroleum Authorisation Guidelines have been completed and an update of the Lundin Petroleum Finance and Administration Manual (FAM) has commenced. The FAM describes the day-to-day financial procedures within the Group. Within the Group, existing policies, guidelines and procedures are subject to constant review. In February 2009 the Management Investment Committee was established by the Board to assist the Board in discharging the Board’s responsibilities in overseeing the Group’s investment decisions and to make recommendations to the Board as required. The Management Investment Committee meets at least twice per month. these principles. Minutes are taken at all meetings of the Audit Committee and are provided to all Board members and the auditors. The working procedures determined by the Board include detailed instructions regarding the type of internal financial reports that shall be submitted to the Board. The Board reviews and approves the interim reports for the second and fourth quarter and the annual report. The first and third quarterly reports are reviewed and approved by the Audit Committee. External Auditing Lundin Petroleum’s financial statements are audited by the external auditors on an annual basis and the audit report is included in the annual report. A limited review is carried out on the half year report. The external auditors meet regularly with Group Management and attend the Audit Committee meetings for the review and approval of the half year and year-end financial statements. The external auditors meet the Board of the Company without Management present at least once a year. External communications In addition to the interim and annual reports, the following information is issued to the public to enable shareholders to monitor the activities of the Company: » Press releases on all important matters which could materially affect the share price » Presentations, webcasts and telephone conferences for analysts, investors and media representatives on the day of publication of the quarterly and year-end results, and in connection with release of important news » Regularly updated information on the Company’s website relating to its business and operations Internal Control Auditor/Internal audit function The Internal Control Auditor meets with and reports to the Audit Committee at least twice per year and reviews and assesses the internal controls for financial reporting. Compliance with the control activities is monitored at all levels from departmental management up to the Board of Directors. Information and Communication Communicating relevant information throughout all levels of the Group and to the appropriate external parties is an important part of internal control. Management has focused on understanding the systems and processes that are important in the accumulation of financial data, including the system of controls that safeguard information, the processes for authorising transactions and the system for maintaining records. Lundin Petroleum believes that an awareness of the COSO Framework throughout the organisation stimulates an environment of self control and constant improvement. Information and documentation regarding the financial reporting is communicated to employees, for example, by ensuring that all policies, guidelines and procedures are published and accessible internally. Regular meetings were held between the senior finance staff and the external auditors during 2009 to discuss accounting policies and procedures and for planning the annual audit and the half year review. The Audit Committee was advised of the content of these meetings as part of the quarterly reporting cycle along with the financial results and principal accounting policies. Improving on a continuous basis The internal control of financial reporting is a continuous evaluation of the risks and control activities within the Group. The evaluation work involves internal as well as external benchmarking. This evaluation process and the work that follows is an ongoing process involving enhancement of control activities such as procedures and processes and information and communication within the Group. Monitoring Monitoring of the financial reporting of Lundin Petroleum is carried out by the Board of Directors, Group Management and external auditors and by Lundin Petroleum’s Internal Audit function and other employees holding various functions within the Group through their COSO awareness. The Board of Directors The Board reviews and evaluates comprehensive financial information regarding the Group as a whole and the entities it comprises. The Board also reviews, primarily through the Audit Committee, the most important accounting principles applied by the Group in the financial reporting, as well as changes to 37 GOVERNANCE

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