ANNUAL REPORT ARCELOR 2003 - paperJam

3. INTERNAL CONTROL OPERATINGPROCEDURESRegarding the specific operation of the Arcelor groupinternal control mechanism, it should be noted thatthe various corporate departments have defined a setof rules, internal directives, and procedural methodscovering in particular the areas of finance, accounting,management control, fiscal control, legal, human relations,health and safety, environment, communications, internalaudit and risk management, which are implementedthroughout all sectors and companies of the Group, andare regularly updated.One example is the internal control and risk managementsystem for the following processes:3.1. Legal internal control proceduresThe control performed by the Arcelor Legal Departmentover the activities of Arcelor and its subsidiaries is derivedfrom the Group’s general organisational principles and,in particular, from the definition of the general mission ofthe legal function at Arcelor.In order to optimise coverage of the legal risks andcontribute to the growth of the Group, the internal controlsystem implemented by the Legal Department includesthe following procedures:- all major contracts creating liability for companies withinthe Group must be approved by the Legal Department;- in the event of a new dispute or the risk of a dispute,Group companies must refer the matter to the LegalDepartment, which will determine the strategy to befollowed in each case;- more specifically, the Legal Department will reviewany ongoing disputes exceeding 500,000 euros in alitigation report that is updated every 6 months;- any use of legal subcontracting (lawyers, outsidecounsel) must be communicated in advance to theLegal Department which will advise on the appropriatenessand the modalities of such use;- legislative or regulatory developments that could haverepercussions on the activities of the Group are constantlyreviewed by the Legal Department, which will take theappropriate measures if necessary;- a team dedicated to monitoring the Group’s subsidiariesand holdings carries out a review of the legal documentationit receives with regard to corporate law and the structureof the operations, and corrects any anomalies detected.3.2. Internal control procedures forGroup financingThe allocation of financial resources within the Arcelorgroup is carried out under the control of a FinancingCommittee composed of:- the Senior Executive Vice-President Finance (CFO);- the heads of Finance, Management Control, Mergers& Acquisitions and Group Operations;- representatives of the sectors on a case-by-case basis.The role of this Financing Committee, clearly defined inthe internal procedures approved by the ManagementBoard and submitted to the Audit Committee of the Boardof Directors, is to:- allocate financial resources to Group companies and todetermine the terms and conditions thereof;- review the balance sheet structure of the companies;- approve the financial operations decided by the sectorsand business units.The Financing Committee met 15 times during 2003and approved the allocation of EUR 3.5 billion in capitalresources, long-term loans or short-term lines of credit.Every lending or borrowing operation is subject to awritten contract. Any utilisation of short-term lines ofcredit with Arcelor Treasury SNC is continually computermonitored.All financial operations are systematically subject to anAFO – Authorisation for Financial Operation.The decision-making level is defined in the proceduresand every decision is included in the monthly financialreporting.general information > report of the chairman of the board of directorsANNUAL REPORT ARCELOR 2003 29