APC 2007 Annual Report Download - page 53

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Corporate Governance
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clude understandability, relevance, reliability and compa-
rability. These characteristics rely on information that is
neutral, prudent and complete and that represents trans-
actions and events in accordance with their substance and
economic reality and not merely their legal form.
The management reporting and consolidation packages of
all Group entities are prepared strictly in accordance with
Group accounting principles and policies.
The accounting and reporting system
The Corporate Management Control and Accounting unit
of the Finance & Control - Legal Affairs Department has
launched a project to standardize management reporting
processes among the various subsidiaries by rolling out an
integrated SAP system across the entire Group. Sub-
sidiaries in France, Spain, certain other European coun-
tries and China have already migrated their statutory and
management accounting systems to SAP. A SAP core
model for use by all Group entities is currently being de-
veloped and will be implemented in phases over the next
four years.
The accounts of the subsidiaries are prepared in accor-
dance with Group accounting policies. The data are then
adjusted, where necessary, to produce the local statutory
and tax accounts.
Consolidation and reporting software is used to report
monthly actual and forecast data and also to produce the
Group financial statements.
A new reporting and consolidation system was deployed
on January 1, 2006. In connection with the migration to the
new system, reporting systems were reorganized (report-
ing entities, indicators and deadlines), completing the
process of aligning statutory and management reporting
processes.
Account closing
and verification process
a) Consolidating data from operating units
The reporting entities produce monthly income statements,
which are used to determine the Group's monthly operat-
ing profit.
The consolidated financial statements are produced 16
working days after the annual or half-yearly period-end. To
meet this deadline, all of the subsidiaries perform a hard
close at May 31 and November 30 of each year and the
majority of consolidation adjustments for the period are
also calculated at these dates.
The majority of subsidiaries are consolidated at Group
level; however, the Square D subgroup submits a consoli-
dated reporting package.
b) Role of the Corporate Management
Control and Accounting Department
The Corporate Management Control and Accounting unit
includes a reporting team that is responsible for producing
and distributing reporting packages throughout the Group
and a performance analysis team that tracks the operat-
ing units’ performance in relation to their targets.
The list of entities to be consolidated or accounted for by
the equity method is drawn up by the Corporate Manage-
ment Control and Accounting unit, which then uses this list
to determine with the Legal Affairs unit the consolidation
method to be applied to each entity, as well as the per-
centage of the entity’s capital and voting rights held by the
Group.
The unit issues instructions for the closing process, in-
cluding reporting deadlines, required data and any neces-
sary adjustments.
It checks the quality of the reporting packages submitted
by the subsidiaries, focusing primarily on intercompany
eliminations, the accounting treatment of non-recurring
transactions for the period, and movements between the
opening and closing balance sheet used to prepare the
statement of cash flows.
The department also checks the results of programmed
procedures, including conversions, intercompany elimina-
tions, transfers to minority interests and recognition of the
effects of changes in scope of consolidation.
At the same time, the Group's consolidated financial state-
ments are analyzed in detail, to understand and check the
main contributions by subsidiaries, as well as the sub-
stance of transactions reflected in the accounts. Account
classifications are checked. The key control points concern
the preparation and validation of the statement of changes
in equity and the statement of cash flows. Lastly, the Cor-
porate Management Control and Accounting unit analyzes
consolidated data and the contribution of each Group unit.
The Corporate Management Control and Accounting unit
is responsible for providing assurance concerning:
The proper application of Group accounting principles
and policies.
The integrity of the consolidation system database,
which the unit is responsible for administering and main-
taining.
The quality of accounting processes and data.
Training for finance staff in the form of specific seminars.
The unit drafts and updates the financial reporting proce-
dures and guidelines required to produce high quality in-
formation. These procedures and guidelines are available
for consultation by all employees concerned on the Group
intranet. They include:
A glossary of accounting terms used in the reporting
package, including a definition of each term.
The chart of accounts for reporting.
A Group statutory and management accounting stan-
dards manual, which includes details of debit/credit pair-
ings in the consolidation system.
A Group reporting procedures manual and system user’s
guide.
Performance analysis and tracking tools.
An intercompany reconciliation procedure manual.
Account closing instructions.