APC 2012 Annual Report Download - page 143

2012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 141
CORPORATE GOVERNANCE
3
INTERNAL CONTROL AND RISK MANAGEMENT
•organize and monitor the roll-out of self-assessment campaigns
and internal audit, and implement action plans draw up following
the self-assessments and internal audit;
•analyzing 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 organization.
Finance and Control - Legal Affairs
Department
The Finance and Control - Legal Affairs Department is actively
involved in organizing 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;
•organizing period-end closing procedures;
•analyzing performance and tracking the achievement of targets
assigned to the operating units.
The Management Control and Accounting unit is responsible for:
•the proper application of Group accounting principles and
policies;
•the integrity of the consolidation system database;
•the quality of accounting and fi nancial processes and data;
•training for fi nance staff in the form of specifi c seminars;
•drafting, updating and distributing the necessary documents for
producing quality information.
The unit drafts and updates:
•a glossary of terms used by the Management Control and
Accounting unit, including a defi nition of each term;
•the chart of accounts for reporting;
•a Group statutory and management accounting standards
manual, which includes details of debit/credit pairings;
•a Group reporting procedures manual and a system user’s guide;
•a manual describing the procedures to be followed to integrate
newly acquired businesses in the Group reporting process;
•an intercompany reconciliation procedure manual;
•account closing schedules and instructions.
The Management Control and Accounting unit monitors the reliability
of data from the subsidiaries and conducts monthly reviews of the
various units’ primary operations and performance.
The Finance and Control - Legal Affairs Department oversees
tax and legal affairs, to provide comprehensive management of
theserisks.
Within the Finance and Control - Legal Affairs Department, the
Treasury Department is responsible for:
•the centralization of nearly all of the Treasury and Financing
management of the Group;
•the distribution of rules for fi nancial risk management and the
security of incoming and outgoing payments;
•the annual review of balance-sheet changes and fi nancial risks
facing the Group’s companies on an annual basis during formal
fi nancial review meetings.
Procedures for managing fi nancial risk are described in “Risk
Factors”.
Operating Divisions and operating units
The Operating Division management teams play a critical role in
effective internal control.
All Group units report to one of the Operating Divisions, which are
headed by an Executive Vice-President, supported by a fi nancial
controller.
The Executive Vice-Presidents of the Operating Divisions sit on
the Executive Committee, which is chaired by the Chairman of the
Management Board. The fi nancial controllers report to the corporate
Management Control and Accounting Unit.
Within each division, the management team organizes control of
operations, ensures that appropriate strategies are deployed to
achieve objectives, and tracks unit performance.
A Management Committee led by the corporate Management
Control and Accounting unit reviews the operations of the Operating
Divisions on a monthly basis.
The Operating Divisions have teams of internal controllers who
promote Key Internal Controls in the units within their scope
and analyses the quality of the internal control self-assessments
(including ratings and action plans) returned by the units.
They detect internal control issues that require action plans in some
or all of the units under their responsibility. They also identify units
that need specifi c assistance and either implement or oversee the
implementation of the appropriate support.
They carry out monitoring of the remediation plans drawn up at the
time of the self-evaluations and control assignments on site.
Lastly, the internal control teams offer suggestions for enhancing
and updating the Key Internal Controls.
Global Functions (Human Resources,
Purchasing, Manufacturing, Supply Chain,
Information Systems, etc.)
Schneider Electric centralizes decision-making and risk management
at the corporate level through specifi c bodies such as the Group
Acquisitions Committee (see “Risk Factors”), by combining certain