CONTENTS - Capgemini

54 ANNUAL
REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS
Capgemini
In accordance with these principles, the total amount of attendance
fees paid to directors and non-voting directors in respect of 2006
amounted to €609,000 (€272,000 for the first half of the year,
and €337,000 for the second half), i.e., 87% of the maximum
authorized ceiling.
II – LIMITATIONS PLACED BY
THE BOARD ON THE POWERS OF
THE CHIEF EXECUTIVE OFFICER
On the recommendation of Serge Kampf, then Chairman and Chief
Executive Officer of the Company, the Board of Directors decided
at its meeting of July 24, 2002 that the functions of Chairman and
those of Chief Executive Officer should be separated from then
on. Paul Hermelin was appointed as Chief Executive Officer. As
mentioned above, the Board’s internal rules of operation, adopted
on the same day, detailed the functions and characteristics of the
Board, its Chairman and Chief Executive Officer, established the
modus operandi for the specialized committees, and organized the
allocation of responsibilities between these different bodies.
As regards the role and powers of the Chief Executive Officer, the
internal rules of operation stipulate that he must seek and obtain
prior approval from the Board of Directors – or from its Chairman
acting under delegated powers – for any decision which is of major
strategic importance or which is liable to have a material effect
on the financial position or commitments of the Company or on
one of its principal subsidiaries.
This applies in particular to:
the approval and updating of the three-year plan based on the
strategy approved by the Board;
the contracting of strategic alliances;
significant changes to the structure of the Group or its range
of business activities;
significant internal restructuring operations;
financial transactions with a material impact on the financial
statements of the Company or the Group (in particular the
issuance of shares or share equivalents);
acquisitions or disposals of assets individually worth more than
€50 million;
increases or reductions in the capital of a major subsidiary;
specific authorizations concerning the granting of pledges,
security and guarantees.
III – INTERNAL CONTROL
PROCEDURES IMPLEMENTED BY
THE COMPANY
In 2006, the Group pressed ahead with the implementation
of its transformation program for the internal finance function
REPORT 2006 Capgemini
(known internally as the “Green Project”), and internal control
procedures were adapted and modified accordingly. Key actions
include:
Updating the Group’s accounting principles and methods contained
in the “TransFORM” manual, as well as the main obligations with
regard to internal control. In 2006, this update mainly concerned
the management of currency risk for projects drawing on production
resources located in countries exposed to significant inflation
risk, and the rules relating to the recognition of transition and transformation
costs on outsourcing contracts. In order to ensure the
uniform interpretation of Group accounting rules, comprehensive
training sessions are held regularly and backed up by a questionand-answer
style intranet forum to assist participating employees
in developing their understanding of specific issues.
As regards organization, 2006 was marked by the transfer of part
of the Dutch subsidiary’s accounting services to a shared service
center located in Poland, as well as the transfer to India of the
UK accounting services. Lastly, as regards the new legal and
regulatory financial reporting obligations, the program aimed at
shortening closing deadlines launched at the end of 2005 was
successfully implemented for the 2006 accounts closing, and
work is well underway to meet an ambitious closing target for
the first semester of 2007.
In terms of IT systems, during 2006 a new single integrated management
system was deployed in the Group’s Belgian, Dutch, US
and Polish subsidiaries, as well as in the French subsidiary, Sogeti.
This system comprises key functional components – including
a procurement management application – and was enhanced in
2006 by the progressive rollout of an electronic invoicing component
designed to streamline internal billing processes.
These changes aim to further improve the various internal control
procedures set up over the past ten years within the Capgemini
Group, and their objectives are set out below.
3.1 Objectives of internal control procedures
The Group’s internal control procedures are applicable to all of its
businesses, and comprise a set of rules, guidelines and working
practices designed to create a general internal control environment
that is tailored to the Group’s specificities.
The internal control procedures are designed to ensure:
compliance with relevant laws and regulations;
the correct application of instructions and guidelines set out by
Group Management;
the smooth functioning of the Group’s internal control processes;
the reliability of the Group’s financial information; and
respect for the Group’s core values.
Irrespective of their quality and the success of their application,