**Exhibit 11.2**

 

**Alfa Laval AB**

 

**Audit and Non-Audit ServicesPre-Approval Policy**

 

**I. Statement of Principles**

 

Underthe Sarbanes-Oxley Act of2002 (the “Act”), the Board of Directors alternativelythe Audit Committee of the Board is responsible for the appointment,compensation and oversight of the work of the independent auditor. As part ofthis responsibility, the Board is required to pre-approve the audit andnon-audit services performed by the independent auditor in order to assure thatthey do not impair the auditor’s independence from the Company. To implementthese provisions of the Act, the Securities and Exchange Commission (the “SEC”)has issued rules specifying the types of services that an independent auditormay not provide to its audit client, as well as the Board’s administration ofthe engagement of the independent auditor. Accordingly, the Board of Directorshas adopted, the Audit and Non-Audit Services Pre-Approval Policy (the“Policy”), which sets forth the procedures and the conditions pursuant to whichservices proposed to be performed by the independent auditor may bepre-approved.

 

TheSEC’s rules establish two different approaches to pre-approving services, whichthe SEC considers to be equally valid. Proposed services either: may be pre-approvedwithout consideration of specific case-by-case services by the Board or AuditCommittee (“general pre-approval”); or require the specific pre-approval of theBoard or Audit Committee (“specific pre-approval”). The Board believes that thecombination of these two approaches in this Policy will result in an effectiveand efficient procedure to pre-approve services performed by the independentauditor. As set forth in this Policy, unless a type of service has receivedgeneral pre-approval, it will require specific pre-approval by the Board if itis to be provided by the independent auditor. Any proposed services exceedingpre-approved cost levels or budgeted amounts will also require specificpre-approval by the Board.

 

Forboth types of pre-approval, the Board will consider whether such services areconsistent with the SEC’s rules on auditor independence. For a specification ofprohibited non-audit services, see exhibit 1. The Board will also considerwhether the independent auditor is best positioned to provide the mosteffective and efficient service, for reasons such as its familiarity with theCompany’s business, people, culture, accounting systems, risk profile and otherfactors, and whether the service might enhance the Company’s ability to manageor control risk or improve audit quality. All such factors will be consideredas a whole, and no one factor should necessarily be determinative.

 

TheBoard is also mindful of the relationship between fees for audit and non-auditservices in deciding whether to pre-approve any such services and maydetermine, for each fiscal year, the appropriate ratio between the total amountof fees for Audit, Audit-related and Tax services and the total amount of feesfor certain permissible non-audit services classified as All Other services.

 

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Theparagraphs III-VI below describe the Audit, Audit-related, Tax and All Other services that havethe general pre-approval of the Board. The term of any general pre-approval is12 months from the date of pre-approval, unless the Board considers a differentperiod and states otherwise. The Board will annually review and pre-approve theservices that may be provided by the independent auditor without obtainingspecific pre-approval from the Board. The Board will add or subtract to thelist of general pre-approved services from time to time, based on subsequentdeterminations.

 

Thepurpose of this Policy is to set forth the procedures by which the Boardintends to fulfill its responsibilities. It does not delegate the Board’sresponsibilities to pre-approve services performed by the independent auditorto management.

 

Theindependent auditor has reviewed this Policy and believes that implementationof the policy will not adversely affect the auditor’s independence.

 

**II. Delegation**

 

Asprovided in the Act and the SEC’s rules, the Board may delegate either type ofpre-approval authority to one or more of its members. The member to whom suchauthority is delegated must report, for informational purposes only, anypre-approval decisions to the Board at its next scheduled meeting.

 

**III. Audit Services**

 

Theannual Audit services engagement terms and fees will be subject to the specificpre-approval of the Board and the ultimate appointment by the shareholdersmeeting, typically for a term of four years. Audit services include the annualfinancial statement audit (including required quarterly reviews), subsidiaryaudits and other procedures required to be performed by the independent auditorto be able to form an opinion on the Company’ s consolidated financialstatements. These other procedures include information systems and proceduralreviews and testing performed in order to understand and place reliance on thesystems of internal control, and consultations relating to the quarterly review.

 

Auditservices also include the attestation engagement for the independent auditor’sreport on management’ s report on internal controls for financial reporting.The Board will monitor the Audit services engagement as necessary and will alsoapprove, if necessary, any changes in terms, conditions and fees resulting fromchanges in audit scope, Company structure or other items.

 

Inaddition to the annual Audit services engagement approved by the Board, theBoard may grant general pre-approval to other Audit services, which are thoseservices that only the independent auditor reasonably can provide. Other Auditservices may include statutory audits or financial audits for subsidiaries oraffiliates of the Company and services associated with SEC registrationstatements, periodic reports and other documents filed with the SEC or otherdocuments issued in connection with securities offerings.

 

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TheBoard has pre-approved the Audit services as specified in appendix A. All otherAudit services not listed above or in the appendix must be specificallypre-approved by the Board.

 

**IV. Audit-related Services**

 

Audit-relatedservices are assurance and related services that are reasonably related to theperformance of the audit or review of the Company’ s financial statements orthat are traditionally performed by the independent auditor. Because the Boardbelieves that the provision of Audit-related services does not impair theindependence of the auditor and is consistent with the SEC’s rules on auditorindependence, the Board may grant general pre-approval to Audit-relatedservices. Audit-related services include, among others, due diligence servicespertaining to potential business acquisitions/dispositions; accountingconsultations related to accounting, financial reporting or disclosure mattersnot classified as “Audit services”; assistance with understanding andimplementing new accounting and financial reporting guidance from rulemakingauthorities; financial audits of employee benefit plans; agreed-upon or expandedaudit procedures related to accounting and/or billing records required torespond to or comply with financial, accounting or regulatory reportingmatters; and assistance with internal control reporting requirements.

 

TheBoard has pre-approved the Audit-related services specified in appendix B. Allother Audit-related services not listed above or in the appendix must bespecifically pre-approved by the Board.

 

**V. Tax Services**

 

TheBoard believes that the independent auditor can provide Tax services to theCompany such as tax compliance, tax planning and tax advice without impairingthe auditor’s independence, and the SEC has stated that the independent auditormay provide such services. Hence, the Board believes it may grant generalpre-approval to those Tax services that have historically been provided by theauditor, that the Board has reviewed and believes would not impair theindependence of the auditor, and that are consistent with the SEC’s rules onauditor independence. The Board will not permit the retention of theindependent auditor in connection with a transaction initially recommended bythe independent auditor, the sole business purpose of which may be taxavoidance and the tax treatment of which may not be supported in the InternalRevenue Code and related regulations. The Board will consult with the Group TaxManager or outside counsel to determine that the tax planning and reportingpositions are consistent with this policy.

 

Pursuantto the preceding paragraph, the Board has pre-approved the Tax services asspecified in appendix C. All Tax services involving large and complextransactions not listed above must be specifically pre-approved by the Board,including: tax services proposed to be provided by the independent auditor toany executive officer or director of the Company, in his or her individualcapacity, where such services are paid for by the Company.

 

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**VI. All Other Services**

 

TheBoard believes, based on the SEC’s rules prohibiting the independent auditorfrom providing specific non-audit services, that other types of non-auditservices are permitted. Accordingly, the Board believes it may grant generalpre-approval to those permissible non-audit services classified as All Otherservices that it believes are routine and recurring services, would not impairthe independence of the auditor and are consistent with the SEC’s rules onauditor independence.

 

TheBoard has pre-approved the All Other services as specified in appendix D.Permissible All Other services not listed above or in the appendix must bespecifically pre-approved by the Board.

 

**VII. Pre-Approval Fee Levels orBudgeted Amounts**

 

Pre-approvalfee levels or budgeted amounts for all services to be provided by theindependent auditor will be established annually by the Board. Any proposedservices exceeding these levels or amounts will require specific pre-approvalby the Board. The Board is mindful of the overall relationship of fees foraudit and non-audit services in determining whether to pre-approve any suchservices.

 

Foreach fiscal year, the Audit Committee may determine the appropriate ratiobetween the total amount of fees for Audit, Audit-related and Tax services, andthe total amount of fees for services classified as All Other services.

 

**VIII. Procedures**

 

Allrequests or applications for services to be provided by the independent auditorthat do not require specific approval by the Board will be submitted to theCEO/CFO and must include a detailed description of the services to be rendered.The CEO/CFO will determine whether such services are included within the listof services that have received the general pre-approval of the Board. The Boardwill be informed on a timely basis of any such services rendered by theindependent auditor.

 

Requestsor applications to provide services that require specific approval by the Boardwill be submitted to the Board by both the independent auditor and the CEO/CFO,and must include a joint statement as to whether, in their view, the request orapplication is consistent with the SEC’s rules on auditor independence.

 

TheBoard has designated the Internal Audit Manager to monitor the performance ofall services provided by the independent auditor and to determine whether suchservices are in compliance with this policy. The Internal Audit Manager willreport to the Board on a periodic basis on the results of its monitoring. Boththe Internal Audit Manager and management will immediately report to thechairman of the Board any breach of this policy that comes to the attention ofthe Internal Audit Manager or any member of management.

 

TheBoard will also review the internal auditor’s annual internal audit plan todetermine that the plan provides for the monitoring of the independentauditor’s services.

 

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**IX. Additional Requirements**

 

TheBoard has determined to take additional measures on an annual basis to meet itsresponsibility to oversee the work of the independent auditor and to assure theauditor’s independence from the Company.

 

Thispolicy has been approved by the Board on February 13, 2004

 

 
| /s/ Anders Narvinger |   |
|----------------------|--------|
| Anders Narvinger     |
| Chairman             |

 

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Appendix A

 

Pre-Approved Audit Services for Fiscal Year2004

 

Dated: , 2004-02-13

 
| **Service**                                                                                                                                                                                                                                                                                                                                                                                                             |   | **Range of  Fees** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|
| Statutory audits or financial audits for  subsidiaries or affiliates of the Company                                                                                                                                                                                                                                                                                                                                     |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Services associated with SEC registration  statements, periodic reports and other documents filed with the SEC or other  documents issued in connection with securities offerings (e.g., comfort  letters, consents), and assistance in responding to SEC comment letters                                                                                                                                               |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Attestation of management reports on  internal controls                                                                                                                                                                                                                                                                                                                                                                 |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Consultations by the company’s management  as to the accounting or disclosure treatment of transactions or events and/or  the actual or potential impact of final or proposed rules, standards or  interpretations by the SEC, FASB, or other regulatory or standard setting  bodies (Note: Under SEC rules, some consultations may be “audit-related”  services rather than “audit” services) |   |               |

 

Totally for above specified services; **up to SEK 15 million** (exclusive of expensessuch as travelling, secretarial support etc.)

 

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Appendix B

 

Pre-Approved Audit-Related Services forFiscal Year 2004

 

Dated: , 2004-02-13

 
| **Service**                                                                                                                                                                                                                                                                                                                                                                                                             |   | **Range of  Fees** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|
| Due diligence services pertaining to  potential business acquisitions/dispositions                                                                                                                                                                                                                                                                                                                                      |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Financial statement audits of employee  benefit plans                                                                                                                                                                                                                                                                                                                                                                   |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Agreed-upon or expanded audit procedures  related to accounting and/or billing records required to respond to or comply  with financial, accounting or regulatory reporting matters                                                                                                                                                                                                                                     |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Internal control reviews and assistance  with internal control reporting requirements                                                                                                                                                                                                                                                                                                                                   |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Consultations by the company’s management  as to the accounting or disclosure treatment of transactions or events and/or  the actual or potential impact of final or proposed rules, standards or  interpretations by the SEC, FASB, or other regulatory or standard-setting  bodies (Note: Under SEC rules, some consultations may be “audit” services  rather than “audit-related” services) |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Attest services not required by statute or  regulation                                                                                                                                                                                                                                                                                                                                                                  |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Information systems reviews not performed  in connection with the audit  (e.g.,.  application, data center and technical reviews)                                                                                                                                                                                                                                                                                  |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Statutory, subsidiary or equity investee  audits incremental to the audit of the consolidated financial statements                                                                                                                                                                                                                                                                                                      |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Closing balance sheet audits pertaining to  dispositions                                                                                                                                                                                                                                                                                                                                                                |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| Review of the effectiveness of the internal  audit function                                                                                                                                                                                                                                                                                                                                                             |   |               |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |
| General assistance with implementation of  the requirements of SEC rules or listing standards promulgated pursuant to  the Sarbanes-Oxley Act                                                                                                                                                                                                                                                                           |   |               |

 

Totally for above specified services; **up to SEK  5million** (exclusive of expenses such as travelling, secretarialsupport etc)

 

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Appendix C

 

Pre-Approved Tax Services for Fiscal Year2004

 

Dated: , 2004-02-13

 
| **Service**                                                                                          |   | **Range of  Fees** |
|------------------------------------------------------------------------------------------------------|--------|--------------------|
| U.S. federal, state and local tax planning  and advice                                               |   |               |
|                                                                                                 |   |               |
| U.S. federal, state and local tax  compliance                                                        |   |               |
|                                                                                                 |   |               |
| International tax planning and advice                                                                |   |               |
|                                                                                                 |   |               |
| International tax compliance                                                                         |   |               |
|                                                                                                 |   |               |
| Review of federal, state, local and  international income, franchise, and other tax returns          |   |               |
|                                                                                                 |   |               |
| Domestic and foreign tax planning,  compliance, and advice                                           |   |               |
|                                                                                                 |   |               |
| Assistance with tax audits and appeals  before the IRS and similar state, local and foreign agencies |   |               |
|                                                                                                 |   |               |
| Tax only valuation services, including  transfer pricing and cost segregation studies                |   |               |
|                                                                                                 |   |               |
| Tax advice and assistance regarding  statutory, regulatory or administrative developments            |   |               |
|                                                                                                 |   |               |
| Expatriate tax assistance and compliance                                                             |   |               |

 

Totally for above specified services; **up to SEK 3 million** (exclusive of expensessuch as travelling, secretarial support etc)

 

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Appendix D

 

Pre-Approved All Other Services for FiscalYear 2004

 

Dated: , 2004-02-13

 
| **Service**                                                                                                                                              |   | **Range of  Fees** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|
| Risk management advisory services, e.g.,  assessment and testing of security infrastructure controls                                                     |   |               |
|                                                                                                                                                     |   |               |
| Treasury advisory services, e.g., review of  check-clearing and float-management practices and recommendations regarding  potential areas of improvement |   |               |

 

Totally for above specified services; **up to SEK 2 million** (exclusive of expensessuch as travelling, secretarial support etc.)

 

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Exhibit 1

 

Prohibited Non-Audit Services

 

•                       Bookkeeping or other services related to the accounting records orfinancial statements of the audit client

 

•                       Financial information systems design and implementation

 

•                       Appraisal or valuation services, fairness opinions orcontribution-in-kind reports

 

•                       Actuarial services

 

•                       Internal audit outsourcing services

 

•                       Management functions

 

•                       Human resources

 

•                       Broker-dealer, investment adviser or investment banking services

 

•                       Legal services

 

•                       Expert services unrelated to the audit

 

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