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I LISI FINANCIALREPORT2013
DOCUMENTSSPECIFICTOTHEANNUALGENERALMEETING
8
As with any audit system, this preventative scheme is not exhaustive.
Consequently, itcannotprovideanyabsoluteguaranteethatallriskshave
beencompletelyeliminated.
1.5.22013achievementsandoutlook
The Internal Audit Department developed in 2011 a new internal audit
repository, which is based on a self-declaratory questionnaire with
130 questions showing all the processes in the internal audit manual:
Purchases, Capital Expenditures, Sales, Inventories, Cash, and Human
Resources.
Audits havebeenused since 2012 to validate (or invalidate) the level of
internalauditachieved ineachofthebusinessunits; theyhavecontinued
throughoutthewholeof2013withy14audittaskscompleted.
Thus,we foundthatamongthe36sitesoftheLISIGroup:
n
12sites,or33%,achievedascorebeyond90%
n
19sites,or53%,achievedascorebetween80%and90%
n
The five remaining sites, or 14%, achieved a score between 60%
and 80%: these are all the sites that belong to the LISI AEROSPACE
Structural Components Business Unit. Following its consolidation in
July2011, and theestablishmentofGroup standards in2012, efforts in
2014will focusonachievingtheminimumscoreof80%withsuccess.
Amorequalitative review reveals that theoverall level of internal audit
withintheGroup improved in2013: in fact, theoverallconsolidatedscore
is 87.30% versus 85.69% in 2012. This improvement is general and all
processesshowsimilarprogress.
RISKMAPPING
The main risks identified in the context of the budget and strategic
planning inthemediumtermbelongto fourcategories:
n
Commercial issuesthatrequiremanagement, suchas:
–Renewal of certainmajor long-term contractswithkey clients in the
aerospaceandmedicalworld;
–The need to restore amore constructive dialogue and partnership
withsomemajorclientsofLISIAUTOMOTIVE.
n
Industrial challenges that need to be overcome, especially in
automotive:
–The "CompetitivenessPlan" launchedatthePuiseux (95)plant;
–The"Screws"PlanspecializingmutuallythesitesofDelle(90)andSaint
FlorentsurCher (18);
–The "Nuts" Plan that relates to the closureof Thiant (59) in 2014and
the repatriationof itsactivitieson twosites,namelyDasle (25)andLa
FerteFresnel (28).
n
Security risks regarding the assets found on certain sites: flood , fire
detectionandprotection;
n
Labor-related risksarising from the restructuringplans thathavebeen
announcedor initiated.
FRAUD
Thegrouphas facedan increase in fraudattempts in2013,mostof them
through impersonation. Faced with this exponential scourge, an alert
procedurehasbeenestablishedwithstrengthenedprotectionsonaccess
to the group's cash. During the second half of 2013, 25 attempts were
recorded, all of themwere thwarted, and someof themhavebeen the
subjectofcomplaints.
CONTROLOFRETURNONINVESTMENT
Aspart of theprocedure for investment commitmentsdescribed in the
internal auditmanual, audits formeasuring theachievement of criteria
(Payback and ROI) are routinely performed within 2 years after the
completionofmajorprojects forthegroup.
Thus, among the sevenaudits of this type thatwere carriedout in2013
tasks:
n
2projectshave improvedtheirreturnon investmentcriteria;
n
4projectshaveconfirmedtheir initialassumptions;
n
1 project sees the returnon investment conditions deterioratedue to
unsubstantiatedcommercialassumptions.
CONCLUSION
The Group deems that the internal audit management methods are
satisfactory, but it is aware that improving themonanongoingbasis is
anecessity.
Theworktobeconducted in2014willaimto:
n
raisethe levelof internalauditof thosewhosescoredoesnotreachthe
groupstandardof80%;
n
study a new process that will be inserted into the internal audit
repository: InformationSystem;
n
implement a comprehensive IT ERM - Enterprise Risk Management
- solution in the group to follow the recommendations of audits and
optimizeriskmapping followingabottom-upapproach.
GillesKOHLER
ChairmanoftheBoardofDirectors
