2007 Interactive Registration Document - Renault

04 REPORT
CORPORATE GOVERNANCE
OF THE CHAIRMAN OF THE BOARD PURSUANT TO ARTICLE L. 225-37 OF THE COMMERCIAL CODE
4.5.2.6 CONTROL ACTIVITIES AND
PARTICIPANTS
The Group’s organization relies on the precisely interlinked responsibilities of
the Board of Directors, senior executives (Group Executive Committee), the
Management Committee, and operations and support functions.
BOARD OF DIRECTORS AND SENIOR EXECUTIVES
Responsible both for managing and overseeing the company, the Board’s duly
empowered and accountable members issue clear, transparent decisions.
Their efforts, combined with those of the ever-watchful Accounts and Audit
Committee, help to ensure an effective internal control process.
When carrying out its supervisory and control duties, the Board of Directors
relies on the opinions of the committees set up in 1996 and in particular on
the Accounts and Audit Committee (see c hapter 4.1.5.1).
CONTROLS PERFORMED BY MANAGEMENT CONTROL AND
ACCOUNTING TEAMS
A key element of the internal control system, the management control function
coordinates and measures economic performance at different levels of the
organization (Group, business area, operations).
Within the Group’s management model, the management control function’s
specifi c role consists in:
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supervising the Group through:
organized and consistent adaptation of the performance measurement
process so as to compute operating margin for each entity, region and
vehicles program,
Key Performance Indicators to allow standardized measurement of business
line results,
use of Return On Invested Capital as an indicator to measure how well
capital is allocated to operations;
setting the company’s economic targets and budget, and delivering operating
reports;
making an economic analysis of proposed management decisions at every
level, checking compliance with standards, plans and budgets, assessing
economic relevance, and formulating an opinion and a recommendation in
each case;
implementing and controlling management of transfer pricing in line with
OECD guidelines.
Central and decentralized accounting teams revise the accounts, clarify interperiod
changes and, in conjunction with management controllers, help to
analyze disparities between budgets, reforecasts and outturns. If this analysis,
or any other verifi cation procedure, reveals shortcomings in the quality of the
information originating from the linked accounting and operational systems,
action plans are implemented, with the active involvement of line personnel
and the management control function, to deal with the root causes.
Assets, liabilities and off-balance sheet commitments are subject to control and
audit, in conjunction with the legal, fi nancial and general functions of the entities
and the Group. The Group circulates special memos about off-balance sheet
commitments, which are reported by means of the consolidation tool.
INTERNAL AUDIT CONTROLS
Renault has a centralized, independent Internal Audit function that assesses
the level and quality of internal controls, and helps management to carry out
its duties.
The Internal Audit function has jurisdiction over the entire Group. An annual audit
plan is defi ned after consulting with all company entities and presented to the
Group Executive Committee and the Accounts and Audit Committee.
Whenever it intervenes, the Internal Audit function provides the President and
CEO and the relevant members of the Group Executive Committee a summary
report outlining the level of internal control, as well as the main strong and
weak points noted, and setting out its main recommendations and a list of
commitments made by the entities in their action plan. An annual internal
audit report is presented to the Group Executive Committee and the Accounts
and Audit Committee.
In 2007, as in previous years, Internal Audit controls covered:
assessment of the internal control of activities, including compliance of
operations with internal rules;
identifi cation of factors for improving the effectiveness of audited processes,
in line with the objectives of the Renault Commitment 2009.
Line managers are tasked with implementing audit mission recommendations.
However, the Internal Audit function keeps precise track of action plans related to
key recommendations, working closely with the Group’s network of management
controllers. A status report is presented every half-year to the Group Executive
Committee and Accounts and Audit Committee, to help ensure that progress
is effective across the company.
In 2007, IFACI-IIA certifi cation – the international standard for the internal
audit industry – awarded the previous year to the Corporate Audit Department
was confi rmed.
The Vice President of Corporate Audit is required at all times to alert the Chairman
of the Accounts and Audit Committee, after fi rst informing the President and
CEO, of any unusual facts that have come to his attention.
152 Registration Document Renault 2007
Find out more at www.renault.com
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