APC 2015 Annual Report Download - page 169

2015 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 167
CORPORATE GOVERNANCE
3
INTERNAL CONTROL AND RISK MANAGEMENT
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9. Internal control and risk
management
This section is included in the Chairman’s report to the board of directors.
9.1 Definition and objectives of internal control and risk management
Definition and objectives
The Group’s internal control procedures are designed to ensure:
•compliance with laws and regulations;
•application of instructions and guidelines issued by Group Senior
Management;
•the proper functioning of the company’s internal processes,
notably as concerns asset preservation;
•the reliability of fi nancial reporting; and more generally, internal
control helps the Group manage its businesses, run effi cient
operations and use its resources effi ciently.
Internal control aims to prevent and manage risks related to the
Group’s business. These include accounting and fi nancial risks,
the risk of fraud, as well as operating, fi nancial and compliance
risks. However, no system of internal control is capable of providing
absolute assurance that these risks will be managed completely.
Scope of this report
The system is designed to cover the Group, defi ned as the
Schneider ElectricSE parent company and the subsidiaries over
which it exercises exclusive control.
Jointly controlled subsidiaries are subject to all of the controls
described below, with the exception of self-assessments of the
implementation of Key Internal Controls (see « Operating Units »
below), page 171.
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 Financiers (French Financial Markets
Authority– AMF) on internal control and risk management.
The Group’s 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.
9.2 Organization and management: Internal Control key participants
In 2015, the Group’s organizational chart is based on Senior
Management for 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 board, Chapter 3
Section4), page 144.
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, in particular 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 quarterly
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 headcount of 20 people in 2015. The internal
auditors are responsible for ensuring that, at the level of each unit:
•the identifi cation and control of risks is performed;