Philips 2008 Annual Report Download - page 95

Philips General Business Principles
The Philips General Business Principles (GBP) govern
Philips’ business decisions and actions throughout the
world, applying equally to corporate actions and the
behavior of individual employees. They incorporate
the fundamental principles within Philips for doing
business. The intention of the GBP is to ensure
compliance with laws and regulations, as well as
with Philips’ norms and values.
The GBP are available in most of the local languages
and are an integral part of the labor contracts in
virtually all countries where Philips has business
activities. Responsibility for compliance with the
principles rests primarily with the management of
each business. Every country organization and each
main production site has a compliance officer.
Confirmation of compliance with the GBP is an
integral part of the annual Statement on Business
Controls that has to be issued by the management
of each business unit. The GBP incorporate a
whistleblower policy, standardized complaint
reporting and a formal escalation procedure.
The global implementation of the One Philips Ethics
hotline ensures that alleged violations are registered and
dealt with consistently within one company-wide system.
To drive the practical deployment of the GBP, a set of
directives has been published, which are applicable to
all employees. There are also separate directives which
apply to specific categories of employees, e.g. the Supply
Management Code of Ethics and Financial Code of Ethics
(www.philips.com/gbp). In 2008, an updated and extended
version of the GBP directives was approved and adopted,
reflecting ongoing developments in codes of conduct
and business integrity legislation. New elements in this
edition include: a completely new GBP directive on
anti-trust, an extensive update of the GBP directive
on protection of information and use of information
and communication assets, and a number of changes
Furthermore, as part of BCF, Philips implemented a
global standard for internal control over financial reporting
(ICS). The ICS together with Philips’ established accounting
procedures are designed to provide reasonable assurance
that assets are safeguarded, that the books and records
properly reflect transactions necessary to permit
preparation of financial statements, that policies and
procedures are carried out by qualified personnel, and
that published financial statements are properly prepared
and do not contain any material misstatements. ICS has
been deployed in all main reporting units, where business
process owners perform an extensive number of controls,
document the results each quarter, and take corrective
action where necessary. ICS supports sector and functional
management in a quarterly cycle of assessment and
monitoring of its control environment. Findings of
management’s evaluation are reported to the Board
of Management.
As part of the Annual Report process, management’s
accountability for business controls is enforced through
the formal issuance of a Statement on Business Controls
and a Letter of Representation by sector and functional
management to the Board of Management. Any
deficiencies noted in design and operating effectiveness
of controls over financial reporting which were not
completely remediated are evaluated at year-end by
the Board of Management. The Board of Management’s
report, including its conclusions, regarding the
effectiveness of its internal control over US GAAP
financial reporting, can be found in the chapter US
GAAP financial statements of this Annual Report as
required by section 404 of the US Sarbanes-Oxley Act.
Strategic risks Market risks Operational risks Compliance risks Financial risks
Corporate Governance
Philips Business Control Framework
Philips General Business Principles
Philips Annual Report 2008 95
122
Performance statements
114
Supervisory Board report
110
Our leadership
94
Risk management
70
Our sector performance