LISI GROUP - 2018 Financial report

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■■Certain functions considered to be critical are monitored in the Group
in a cross-departmental manner: financial management, cash
management, consolidation, legal services, hedging, insurance cover,
security policy, environmental policy, purchasing policy and human
resourcemanagement.
3.3 IGroup baseline
■■Each division has set up a value charter based on a common set of
values.
■■An internal control procedures manual is in circulation and is
supplementedbyanaccountingandconsolidationproceduresmanual.
These procedures aremade available to all the individuals involved and
are regularly updated in electronic formvia a dedicated Internet portal.
■■Since the end of 2017, a continuous improvement approach has been in
place.The internalauditcellholdsquarterly internalcontrolcommittee
meetings: the internal controllers of each division are invited, to build
synergies as regards operational and financial internal control
compliance.Theseresults inGroupproceduresbeingupdated:theyare
adapted according to the changes in processes to reduce the risks
detected during audits.
■■Each division and each operational unit is responsible for ensuring that
these procedures are followed and adapted to their country’s specific
context.
■■Eachmanagerreceivesnotificationofnew levelsofresponsibility inthe
formof delegation letters.
3.4 IRisk-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 basicManagement Units. It is subject to a complete and
systematicreviewonceayear.Actionplansforthemainrisks identified
in each division are approved as part of the medium-term budget and
strategy planning.
■■Note that the risks are updated according to the risk areas identified:
for example, in 2018, the cyber crime risk was included.
■■The Health, Safety and Environmental Steering Committee, set up in
2001, identifies and indexes the inherent risks, then initiates the
necessary corrective actions.
3.5 IMain internal Control Procedures regarding
the preparation and processing of the
accounting and financial information
■■The Group carries out an annual review of the five-year strategic plan
anddefinesapriorityactionplanaccordingly.Thebudgetforthecoming
financial year falls within the scope of this plan for a 12-month period.
Theplanningprocess isapprovedfirstbytheExecutiveCommitteeand
then by the Board of Directors. Progress on preparation of the budget
is assessed monthly at all levels: business units (B.U.), Divisions and
Group-level teams.
■■The monthly consolidation of management indicators, the income
statement, the balance sheet and the funding table allow a precise
measure to be obtainedwithin a short time of year-end. This facilitates
the decision-making process.
■■The purchasing and investment process falls within the scope of the
strategic and budgetary mechanism. Any purchasing or investment
commitment that deviates from the budget authorizations must have
prior approval at the appropriate level.
■■Thesalesandcontractprocess iscarefullyreviewedbythe localteams,
BUs,divisionsorGroup-levelteams,dependingonthemateriality level,
before the actual commitment is made.
■■The Cash Flow-Finance process also involves specific commitments.
So, for instance, financial investments are mostly managed at Group
level.
■■The pay process is managed at operational unit level and is regularly
reviewed both by the internal audit team and by external auditors.
■■The Health, Safety, and Environment (HSE) process involves a monthly
review of management indicators (industrial accident rates, non-
compliances, etc.) and of the resultingmain corrective action plans.
■■All of the processes described in paragraph 3.1 are audited by the
Finance/Operational internal audit cell or HSE. The financial and
operationalauditsareconductedbasedonaquestionnairewhich isthe
same for all Group entities audited: it has 156 questions. The audits are
assessedbygivingascorebasedonthetotalnon-complianceexamples
detected: the contractual minimum required is 80%. The audit work
results in an action plan that the operational teams are recommended
to follow to mitigate the risks identified during the internal audits. This
actionplanismonitoredoneyearaftertheauditforentitiesauditedwith
a level of internal control below the Group’s requirements.