APC 2010 Annual Report Download - page 135

CORPORATE GOVERNANCE
3
INTERNAL CONTROL ANDRISKMANAGEMENT
3. Distributing information: benchmarks and guidelines
The main internal control benchmarks are available to all employees,
notably on the Group intranet. The Global Functions send updates
of these Registration Documents to the appropriate units and
individuals through their networks of correspondents.
In some cases, dedicated e-mails are sent out or messages are
posted on the intranet portal to inform users about publications or
updates.
Whenever possible, the distribution network leverages the
managerial/functional organisation to distribute standards and
guidelines.
3.1. Principles of Responsibility
The Principles of Responsibility, initially published in 2002, were
updated in 2009. The Principles of Responsibility describe Schneider
Electric’s core values and each team member’s responsibility in
maintaining those values.
Translated into all the languages used within the Group, given
to all new employees and available on the Group’s intranet, they
are designed to guide employees in their decisions and actions.
They defi ne the Group’s essential values and set out individual
responsibility in respect of these values. They also set out the
interrogation and alert procedures.
A Committee on Ethics and Responsibility has been set up, and
correspondents appointed to steer action in this area, to make
updates and to validate changes. The Committee also answers
employee questions that are not addressed in the companion guide
to the Principles of Responsibility, or that employees’ own managers
are unable to answer. The Internal Audit Department has carried out
work to assess the deployment of the Principles of Responsibility
throughout the Group (see Sustainable development framework,
Chapter 2 § 2)
3.2. Insider code
This code sets out the rules to be followed by management and
employees to prevent insider trading. It imposes an obligation of
confi dentiality on all employees who have access to confi dential
information and sets permanent restrictions on purchases and
sales of Schneider Electric SA shares by persons who have access
to price-sensitive information in the course of their work (see
“Organisational and operating procedures of the Supervisory Board”,
Chapter 3 § 2).
3.3. International internal auditing standards
The Schneider Electric internal auditors are committed to complying
with the international standards published by the Institute of Internal
Auditors (IIA) and other bodies.
3.4. International Financial Reporting
Standards (IFRS)
The consolidated fi nancial statements for all fi scal years commencing
on and after January1, 2005 have been prepared in accordance with
International Financial Reporting Standards (IFRS), in compliance
with European Union regulation 1606/2002.
The Group applies IFRS as adopted by the European Union as of
December31, 2010.
The Group’s accounting principles refl ect the underlying assumptions
and qualitative characteristics identifi ed in the IFRS accounting
framework. This involves preparing the fi nancial statements on the
accrual basis of accounting and assuming that the business is a
going concern. It also requires fi nancial statements to provide a fair,
neutral, prudent, complete, relevant and understandable view of the
Group’s accounts, with a preeminence of substance over form.
The application of Group accounting principles and methods is
mandatory for all Group entities, for management reporting and
statutory consolidation.
IFRS guidelines are available on the intranet, along with training
modules covering the more technical aspects.
3.5. Commitment limits and authorisations
Commitment limits have been set for executives from Group level
down to the individual units.
Thus, product purchase and sale contracts may only be signed by,
or with the authorisation of, operations correspondents who benefi t
from ad-hoc authorisations which, in turn, are granted by their
managers. Within this organisational framework, Business executives
have the power to authorise the signature of product or service,
purchase or sale contracts covering up to EUR10million. Moreover,
they enable their collaborators to authorise smaller amounts which
they consider appropriate for the signature of such contracts.
Moreover, all transactions that may affect the Group’s fundamental
interests, due to their size or nature, must be authorised in advance
by the Management Board or, in some cases, by the Supervisory
Board. This rule applies in particular to all transactions affecting the
scope of consolidation, purchases and sales of strategic assets,
trademarks and patents, and off-balance sheet commitments.
3.6. Statutory and management reporting
principles
An integrated reporting and consolidation system applicable to all
Group companies and their management units has been in place
since January1, 2006. Statutory and management reporting
principles and support tools are available on the Group intranet.
The subsidiaries record their transactions in accordance with Group
standards. Data are then adjusted, where necessary, to produce the
local statutory and tax accounts.
The reporting system includes consistency controls, a comparison
of the opening and closing balance sheets and items required to
analyse management results.
3.7. Key Internal Controls
A list of Key Internal Controls was drawn up in 2008 and is expanded
annually. Its 103items cover:
•the control environment (Principles of Responsibility, Delegation
of Powers, Separation of Functions, Business Continuity Plans
and Retention of Records);
•operating processes (purchases, sales, inventories, etc.);
•accounting and fi nancial cycles;
•Human Resources, IT, Legal and Tax cycles.
2010 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 133