APC 2012 Annual Report Download - page 142

2012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC140
CORPORATE GOVERNANCE
3INTERNAL CONTROL AND RISK MANAGEMENT
Internal control reference documents
The Group’s internal control system complies with the legal
obligations applicable to companies listed on the Paris stock
exchange. It is consistent with the reference framework laid down
by the Autorité des marchés fi nanciers (French Financial Markets
Authority - AMF).
The internal control process is a work in progress; procedures are
adapted to refl ect changes in the AMF recommendations and the
business and regulatory environment, as well as in the Group’s
organization and operations.
Information used to prepare this report
This report was prepared using contributions from the Group’s
Internal Audit and Internal Control Departments, the Management
Control and Accounting Departments, as well as the various
participants in internal control. It was reviewed by the Audit
Committee.
10.2 Organization and management: internal control key participants
In 2012, the Group’s organizational chart rests on Senior
Management, Global Functions and 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 Section4).
Each manager is responsible for monitoring internal control in
his or her area, at the different levels of the organization, 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 Group Internal Audit and 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 the Management Board. It
had an average staff of 15people in2012. The internal auditors are
responsible for checking, at the level of each unit:
•the identifi cation and control of risks;
•signifi cant fi nancial, management and operating information is
accurate, reliable and timely;
•compliance with the Group’s policies, standards, procedures and
the applicable laws and regulations;
•compliance with the instructions of the head of the Group;
•acquisition of resources at a competitive cost, and
theirprotection;
•correct integration and control of acquisitions.
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. The internal
audit process is described in Section“Control procedures” below.
After each internal audit, a report is issued setting out the auditors’
fi ndings and recommendations for the units or function audited.
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:
–internal business controllers in the Operating Divisions, with
responsibility for ensuring the appropriation and implementation
of the Key Internal Controls in the operating units within their
scope – notably through training sessions and annual self-
assessments,
–internal regional controllers to carry out training in the units
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 untis coming within
their geographic scope. After each internal control mission, a
report is issued setting out fi ndings and recommendations for
the attention of the persons in charge of the unit audited,
–the internal controllers in the Operating and Regional Divisions,
in their respective assignments, act in close cooperation using
standardized methods;