APC 2011 Annual Report Download - page 136

134 2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
CORPORATE GOVERNANCE
3INTERNAL CONTROL AND RISK MANAGEMENT
In 2011, the Group’s organisational chart rests on Senior
Management, of Global Functions, of Operating Divisions;
defi ned in terms of businesses, geographical location, logistical or
industrialresponsibility.
The Group’s corporate governance bodies supervise the
development of the internal control and risk management systems.
The Audit Committee has particular responsibility for monitoring the
system’s effectiveness (see Committees of the Supervisory Board,
Chapter3 §4).
Each manager is responsible for monitoring internal control in
his or her area, at the different levels of the organisation, as are
all key internal control participants, in accordance with the tasks
describedbelow.
Senior Management
Senior Management is responsible for designing and leading the
overall internal control system, with support from all key participants
and notably the Internal Audit and Group’s Internal Control
Departments.
It also monitors the Group’s performance, during quarterly reviews
with the Operating Divisions and Global Functions. These reviews
cover business trends, action plans, current results and forecasts
for the quarters ahead. Similar reviews are carried out at different
levels of the Group prior to Senior Management’s quarterly review.
Internal Audit Department
The Internal Audit Department reports to Senior Management. It
had an average staff of 13 people in 2011. The internal auditors are
responsible for ensuring that, at the level of each unit:
•risks are appropriately identifi ed and managed;
•signifi cant fi nancial, management and operating information is
accurate, reliable and timely;
•employees’ actions are in compliance with the Group’s policies,
standards, procedures and the applicable laws and regulations;
•instructions issued by Senior Management are effectively applied;
•resources are acquired economically, used effi ciently and
protected adequately.
Annual internal audit plans are drawn up based on risk and control
concerns identifi ed by Senior Management, taking into account the
results of past audits, the work performed by the external auditors
and the results of internal control self-assessments returned by the
units. When necessary, the audit plan is adjusted during the year to
include special requests from Senior Management. These missions,
which are not included in the initial audit plan, help the Group detect
potential cases of fraud.
The internal audit process is described in Section5 below.
After each internal audit, a report is issued setting out the auditors’
fi ndings and recommendations. Measures are taken to monitor
implementation of recommendations and specifi c audits are
conducted if necessary.
The audit reports and the implementation of its recommendations
are distributed to Senior Management and to the Audit Committee.
The external auditors also have access to the reports.
Internal Control Department
The Internal Control Department, which reports to the Internal Audit
Department, is responsible particularly for:
•defi ning and updating the list of Key Internal Controls in close
cooperation with the Global Functions and in line with the
recommendation of the AMF reference framework;
•maintaining and leading a network:
–a network of internal business controllers in the Operating
Divisions, with responsibility for defi ning Key Internal Controls
and ensuring their use in the operating units within their
scope – notably through training sessions and annual self-
assessments,
–internal regional controllers to carry out training in the entities
and on-site control of the accuracy of self-evaluations and the
effi ciency of the remediation plans implemented as a result
of the previous year’s self-evaluations, by the entities coming
within their geographic scope. After each internal audit, a
report is issued setting out fi ndings and recommendations for
the attention of the persons in charge of the entity audited,
–the internal controllers in the Operating and Regional Divisions,
in their respective assignments, act in close cooperation using
standardised methods;
•analysing and critically reviewing the results of these
self- assessments to identify areas that require an action plan at
the Group, Operating Division or Global Function level;
•leading the Internal Control Committee, comprising internal
controllers from the Operating and Regional Divisions, as well
as internal control correspondents from the Global Functions.
The Committee members work to improve internal control and
adapt procedures in light of the results of self-assessments and
changes in the business environment or organisation.
Finance and Control – Legal Affairs
Department
The Finance and Control – Legal Affairs Department is actively
involved in organising control and ensuring compliance
withprocedures.
Within the department, the Management Control and Accounting
unit plays a key role in the internal control system by:
•drafting and updating instructions designed to ensure that
statutory and management accounting practices are consistent
throughout the Group and compliant with applicable regulations;
•organising period-end closing procedures;
10.2 Internal control organisation and management: key participants