Plastic Omnium - 2018 Registration Document

1 PRESENTATION OF PLASTIC OMNIUM AND ITS BUSINESSES Risk factors and control PLASTIC OMNIUM 2018 REGISTRATION DOCUMENT 39 The Internal Control Department oversees annual internal control self-assessment campaigns, launched in 2006. The questionnaire design is based on the Implementation Guide to the AMF Framework. It is both an effective assessment tool and a means of raising the awareness of local organizations. Lastly, the application of international safety, environmental and quality assurance standards, in addition to the audit of our insurance companies and our customers, gives rise to regular specialized audits conducted by independent bodies. Information and communication The internal control rules and procedures are available to employees on the home page of the Group’s intranet portal. However, the internal control system is deployed largely through formal documents, awareness raising, training programs and reporting processes conducted by the corporate departments. These activities, which include the self-assessment referred to above, allow local management teams to appreciate senior management’s profound commitment to internal control processes. Finally, the relaying of information on the preparation of financial and accounting data is subject to specific processes described later in this report. Oversight Senior management, assisted by the Risk Management Department, is responsible for the overall oversight of the Company’s internal control and risk management processes. The Risk Management Department exercises a critical oversight role concerning the internal control system as part of its specific remit. It reports its analyses and recommendations to senior management, to which it reports directly, as well as the Internal Control Committee. The Internal Control Committee coordinates the internal control system, and ensures that it runs smoothly. It is chaired by the Compagnie Plastic Omnium Corporate Secretary. Its other members include the Head of Human Resources, Deputy and Chief Financial Officer, the Head of Internal Control, the Head of Risk Management and Internal Audit, the Internal Audit Manager, the Chief Executive Officers and the Chief Financial Officers of the managers of the Group’s businesses. It is tasked with ensuring the quality and effectiveness of the system. It relays the decisions and recommendations of the Chairman and Chief Executive Officer, to whom it reports its findings. Its composition gives it the authority to coordinate the efforts of all actors involved in internal control and risk management in each Division or corporate function. Lastly, the Board of Directors reviews all of the major assumptions and strategies laid down for Compagnie Plastic Omnium by senior management. It reviews the broad outlines of the internal control and risk management system and acquires an understanding of the various procedures involved in the preparation and processing of overall and financial information. INTERNAL CONTROL RELATING TO THE PREPARATION OF FINANCIAL AND ACCOUNTING INFORMATION Basis of preparation of the Group’s financial information The Finance Department is responsible for ensuring that the preparation of the Group’s financial information is consistent. As such, it is tasked with: laying down financial and accounting standards for the Group, in ● accordance with international standards; determining the policy in respect of the preparation of financial ● information; coordinating information systems used for the preparation of financial ● and accounting data; reviewing subsidiaries’ financial information; ● preparing financial information for the Group’s consolidated financial ● statements. The consistency of the Group’s financial statements is guaranteed by the use of the same accounting standards and a single chart of accounts by all Group entities. The standards and chart of accounts take into account the specific characteristics of the subsidiaries’ various businesses. They are laid down by the Accounting Standards and Principles Department, which is part of the Accounting and Tax Department and is the sole entity with authority to change them. This consistency is further ensured by the coordinated management of information systems that contribute to the preparation of the financial information of each Group subsidiary: the use of a single software application guarantees that reporting and consolidation processes are standardized and applied consistently. Moreover, based on a software package recommended by the Group, the various businesses have developed integrated management systems and rolled them out across almost all of their plants, thereby helping to ensure that the information used in the preparation of financial statements is properly controlled. Consolidated Group financial information is prepared for the following key processes: weekly cash reporting; ● monthly reporting; ● interim consolidated reporting; ● annual budget. ● These four processes apply to all subsidiaries controlled directly and indirectly by Compagnie Plastic Omnium. Financial reporting and control procedures Each subsidiary is responsible for producing its own accounts. First-tier controls and analyses of subsidiaries’ financial statements are performed locally. Second-tier controls are performed centrally in each Division. Third-tier controls are performed by the Finance Department. Reporting is done on a monthly basis. It is submitted to senior management one week after the close of the monthly accounts, and is reviewed by the senior management and analyzed by the Executive Committee. The reporting package comprises an income statement broken down by function, with an analysis of production costs, overheads, and Research and Development expenditure. It also includes a fullcash-flow statement, business forecasts for the subsequent three months and a set of environmental and safety indicators. The information is prepared at Group, business and subsidiary level. The reporting provides comparisons between the various items – monthly actual, year-to-date actual compared with prior-year actual and current-year budget. It provides an analysis of material differences.