Financial Report and Registration Document 2010 - Groupe Seb

2 CHAIRMAN’S
CORPORATE GOVERNANCE
REPORT ON INTERNAL CONTROL
The risk analysis and internal control processes use two basic tools:
an annual ‘top-down’ review and analysis of the main risks. In 2010,
the members the Group Executive Committee, the Director of Legal Affairs
and the Director of IT Systems, the President in charge of Innovation
and the President in charge of Strategy were interviewed individually to
help identify and analyze the top ten risks that Groupe SEB is or could
be exposed to. Estimating a probability, an impact and a degree of
preparation for the Group to be ready to manage each of these risks
enables us to establish an annual map of the major risks for Groupe SEB;
a ‘bottom-up’ process involving self-assessment questionnaires, based on
processes. These are sent out to each operational entity and are designed
to identify possible weak points and encourage the practice of internal
control at all levels, with a view to making Group operations more efficient.
In 2010, the self-assessment process was completed as in previous years,
with one questionnaire every two years for each Group entity.
Added to these two methods of evaluation are regular internal audits of all
entities and of all the Group’s functions, as well as the annual and half-yearly
reviews carried out by the Statutory auditors.
In 2010, the self-assessment questionnaires for each process were
thoroughly reviewed and analyzed to enhance their efficiency as tools.
In 2010, a crisis drill was conducted with the entire Executive Committee
and involved a certain number of operational functions connected to this
fake scenario. An analysis of the strengths and weaknesses of this simulation
allowed the improvement of the Group’s crisis prevention and management
process.
INTERNAL CONTROL PARTICIPANTS
THE BOARD OF DIRECTORS, THE AUDIT
COMMITTEE AND THE NOMINATIONS
AND REMUNERATION COMMITTEE
The role of these bodies is described in the “Organization and Operation of
the Board of Directors” section, pages 42 and 43.
GROUP EXECUTIVE COMMITTEE
AND GROUP MANAGEMENT BOARD
Their role is described in the “Group Management Bodies” section, page 45.
THE INTERNAL AUDIT DEPARTMENT
Internal audit, as defined by professional standards, consists of
“an independent and objective process which ensures that the Group has
adequate control of its operations and which offers advice on improving the
latter while contributing to added value. The internal audit function helps the
Group to achieve its objectives by systematically and methodically evaluating
its risk management, control and corporate governance procedures, and
through recommendations for their improvement.”
The role of the Groupe SEB Internal Audit department is fully consistent
with this approach.
The Internal Audit department is responsible for evaluating, at all locations
where the Group is established and for all functions, compliance with Group
Internal Rules and procedures and any non-compliance with legislation, and
for ensuring that Group assets are protected. It is also required to evaluate
the efficient conduct of operations and to ensure that all business risks are
anticipated and controlled.
In the area of risk management, the Internal Audit department draws up a
map of high-level risks.
Based on this map, on the self-assessment questionnaires and on the
principle of an audit in each entity every three or four years, the Audit
department proposes an internal audit plan for the following year.
This plan is submitted to the Audit Committee.
Each internal audit – adapted to circumstances and conducted locally by
an average of three Auditors over a two-week period – gives rise to an audit
report which is sent to the audited structures and their upline management,
to the members of the Group Executive Committee and to the Group
Chairman and CEO, describing the basic organization of each process and
making recommendations.
Steps are then taken by operational management to remedy identifi ed
shortcomings in internal control, and to make any other necessary
improvements. The implementation of resulting action plans is subjected to
a systematic internal audit review within 12 months of the audit.
The results of these audits are compared with the results of the
self-assessments, thus completing the full circle of the internal control process.
In order to ensure continuous improvement of internal control and company
efficiency, the main recommendations issued by the Audit department for
each process are shared yearly with the Group Management Committee for
the main Group divisions: purchasing, IT, quality, finance, human resources,
logistics, production, after-sales service and marketing.
The Internal Audit department draws up an annual report of work done which
is presented to the Group Executive Committee and the Audit Committee.
The Audit Committee reviews the resources needed by the Internal
Audit department to carry out its work, and makes observations or
recommendations as required. The Internal Audit department has a staff
of eight people.
LEGAL AND INSURANCE DEPARTMENT
The role of the Group Legal department is to ensure that the Group complies
with legal and regulatory requirements wherever it operates, to protect the
Group’s assets and businesses and to defend the interests of the Group,
its management and employees in carrying out their functions. The Legal
department is concerned with three main areas of internal control:
it drafts and updates model contracts and their related procedures for
frequently recurring transactions (purchases of goods and services,
conditions of sale, advertising campaigns, damages claims, etc.);
52 FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010 GROUPE SEB