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LISI 2011 —
113
— financial report
Documents specific to the Ordinary General Meeting
1.4
Compensation and benefits in kind
The principles and rules governing corporate officers’ remuneration,
which are verified annually by the Remunerations Committee, are
detailed in the chapter dealing with corporate governance policy.
1.5
Internal control procedures
The LISI Group’s current internal control procedures fall formpart of its
corporate governance policy as drawn up in accordance with the latest
French financial markets authority (AMF) guidelines for small- and
mid-caps businesses.
1.5.1 Definition of internal control procedures
The Group’s current internal control procedures are designed to ensure
that:
– Administrative acts or those implementing operations at all
management unit levels are carried out within the scope of the
guidelines and aims set out by the General Management;
– These acts comply with all relevant laws and regulations and adhere
to the values enshrined by the Group’s companies;
– All accounting and financial data reflect exhaustively and honestly
the Group’s economic situation.
To ensure that these objectives are met, the Group has set up a
prevention and detection process based on the coordinated audits of
the internal audit officer and external auditors (during the review of
internal control mechanisms which takes place at least once a year in
all divisions). This process is then also implemented in each division,
through the deployment policy of the local auditors.
Aswith any control system, this preventative scheme is not exhaustive.
Consequently, it cannot provide any absolute guarantee that all risks
have been completely eliminated.
1.5.2 Description of the internal control environment
General description
The wider internal control environment is based on a decentralized
organization within each division. An Executive Committee is
responsible for ratifying a global policy, whichmust then be channeled
down to each individual department.
The Group has set out a number of procedures, summarized in an
internal Group control manual, which is available to all relevant Group
staff via an intranet site. This manual is supplemented by a Group
accounting procedures manual. In addition, the Group has deployed
a uniform reporting and information system in each division using an
identical procedure each time.
The specificities of the LISI Group’s activities require that precise
quality control be carried out on operational processes in the following
areas:
– Production, stock, flow management,
– Quality,
– Health, Safety and Environmental,
– Personnel, payroll,
– Accounting, management control and cash flow,
– Purchasing and investments,
– Sales.
Action is taken within the Group on a continual basis to ensure that
these mechanisms are effective. This action is regularly assessed using
performance tables.
Supervisory bodies
– The Group’s Board of Directors is the most senior decision-making
entity. The group’s Executive Committee channels the information
to the divisions, which are themselves organized in such a way that
enables their management to carry out the Group’s decisions at
individual department level.
– TheAudit Committee, which includes an independent administrator,
is acquainted, in concert with the external auditors and the internal
auditmanager, with the generalmanagement and riskmanagement
environment at the time of publication of each financial statement.
– The internal audit unit comprises the Group internal audit manager
assisted by an auditor. Depending on the scale and nature of
the task to be performed, internal and external partners may be
co-opted to round off the team.
– Coordination with the external auditors is particularly close in
order to direct controls specifically towards areas that have been
identified as being high-risk and to allocate sufficient time to the
task.
– Certain tasks identified as critical are monitored in the Group in
a cross-departmental manner: financial management, accounts
management, consolidation, legal services, insurance cover, security
policy, environmental policy, purchasing policy and human resources
management.
Group baseline
– Each division has set up a value charter based on a common set of
values.
– An internal control procedures manual is in circulation, which is
supplemented by an accounting and consolidation procedures
manual. These procedures are made available to all the individuals
involved and are regularly updated in electronic formvia a dedicated
Internet portal.
– Each division and each operational unit is responsible for ensuring
that these procedures are followed and adapted to their country’s
specific context.
– Each manager receives notification of new levels of responsibility in
the form of delegation letters.
Risk-mapping and monitoring processes
– The Group is engaged in a convergent risk-mapping process. This
methodology is currently employed throughout the Group and
down to the level of the basic Management Units. It is subject to
a complete and systematic review once a year. The priority action
plans for the main risks identified in each division are validated
within the budget of the following year.
– The health, safety and environmental risks committee, set up
in 2001, identifies and indexes inherent risks, then initiates the
necessary corrective actions.