Registration document 2011 - tota - Total.com

With regard to counterparty risks, credit limits and risk analysis
processes are set and updated regularly, for each activity.
The broad range of activities and countries in which the Group
operate requires local analysis, by business segment, of the related
legal, contractual and political risks. Compliance programs
with regard to competition and bribery law matters are implemented
by the Group to ensure compliance with applicable legislation.
Business units are responsible for assessing their industrial and
environmental risks and for implementing the regulatory requirements
of the countries where they operate, as well as any relevant guidelines
and recommendations defined at the Group or business segment
level. They are also responsible for actively monitoring changes
in legislation, to comply with local and international standards
concerning industrial and environmental risk assessment
and management. Risk assessments lead to the establishment
of management measures to prevent and reduce environmental
impact, minimize the risks of accidents, and contain their consequences.
The “Risk Factors” section of this Registration Document
(Chapter 4) contains a formal and extensive description of the
principal risks faced by the Group and how the Group manages
these risks and secures appropriate insurance coverage.
1.10.3. Control activities
Control activities and financial reporting systems, are designed
to take into account the specific nature of these risks and the degree
to which operational control is delegated to the business segments
and entities.
The General Management exercises operational control over TOTAL’s
activities through the Executive Committee’s approval of
investments and commitments for projects, based on defined
thresholds. These projects are subject to prior vetting by the Risk
Committee (CORISK), whose assessments are transmitted to the
Executive Committee.
Control activities are primarily based on a strategic plan that is reviewed
annually, an annual budget, monthly management financial reports
with detailed analysis of differences between actual and budgeted
expenditures, and a reconciliation between quarterly published
consolidated financial statements and reporting.
These processes are supervised by the Budget/Financial Control
and Accounting Departments, which are part of the Finance
Department, and are performed in compliance with financial
reporting standards, consistent and compliant with the accounting
standards used for the published financial statements. Financial
indicators and the accounting methods used allow appropriate
assessment of risks and return on average capital employed (ROACE).
Moreover, the Group’s Accounting Department draws up a quarterly
report of consolidated off-balance sheet commitments as part
of the closure of the consolidated financial statements. The financial
reporting manual contains a procedure to identify and escalate
off-balance sheet commitments.
The Group’s Accounting Department centralizes the interpretation
of accounting standards applicable to the Group’s consolidated
financial statements and distributes these standards through formal
procedures and a financial reporting manual. It monitors the
effective implementation of standards across TOTAL through periodic,
formal communication with functional managers in the business
segments. The Department also periodically reports any exceptions
to the Chief Financial Officer.
Corporate governance 5
Report of the Chairman of the Board of Directors
The Treasury Department monitors and manages risks related to
cash management activities and interest rate-related and foreign
exchange-related financial instruments in accordance with strict
rules defined by the General Management. Cash and cash
equivalents, financial positions and financial instruments are
centralized by the Treasury Department.
Oil and gas reserves are reviewed by a committee of experts
(the Reserves Committee), approved by the Exploration &
Production’s senior management and then confirmed by the Group’s
General Management.
The Disclosure Committee, whose members are the managers
of the main corporate departments, establishes and maintains
procedures designed to ensure the quality and accuracy of external
communications intended for financial markets.
At the profit center and entity level, control activities are organized
around the principal operational processes: exploration and reserves,
purchasing, capital expenditures, production, sales, oil, gas and
petroleum product trading, inventories, human resources, financing
and cash management.
The Group has implemented a wide range of procedures
and programs that help to prevent, detect and limit different types
of fraud. This effort is supported by the business principles and
rules of individual behavior described in the Code of Conduct and
in procedures, charters and codes issued at the Group business
segment level. The Group has also implemented a whistleblowing
system that employees and third parties can use to report
circumstances that might amount to fraud or other violations
related to accounting and internal control.
The Information Technology Department has developed and
distributed governance and security rules that describe the
recommended infrastructure, organization and procedures to maintain
information systems that are appropriate to the organization’s
needs and to limit information security risks. These rules are
implemented across the Group under the responsibility of the
various business segments.
Control activities to prevent industrial and environmental risks
are implemented in the business units. External certification
or third-party audits are conducted for some of the management
systems related to this type of risk. More detailed information
on the Group’s safety and environmental initiatives is provided
in the Group’s Society and Environment report.
1.10.4. Information and communication
Internal control procedures are defined at each of the three
operational levels: general rules at the corporate level; sectorspecific
procedures at the business line level; and others at the
profit center and entity level. These procedures are circulated
in memorandums and are also available on the Group’s intranet
sites and, whenever they are common, those of the business lines.
The principal procedures regarding financial controls established
at the corporate level cover acquisitions and disposals, capital
expenditure, financing and cash management, budget control
and financial reporting. Disclosure controls and procedures are
in place. At the operating levels, they mainly consist of procedures,
guidelines and recommendations covering safety and security
(both industrial and information technology), health, the environment
and sustainable development.
The procedures for the business sectors primarily concern financial
Registration Document 2011. TOTAL 111