2006 - Interparfums

within the Group, even though vested with all powers
conferred upon him by the law to represent the company,
the Chairman and Chief Executive Officer must obtain the
authorization of the Board to pursue growth strategies that
could have a material impact on the accounts and modify
the scope of the company's activity, strategy and financial
structure. In consequence, the Board was consulted on
several occasions in connection with the signature of new
license agreements and the Board confirmed the Chairman's
powers to conduct these negotiations.
Information concerning directors
Article 15 of the bylaws stipulates that the Chief Executive
Officer shall provide each director with all documents
necessary to perform their duties. Before each Board
meeting, Directors consequently receive all documents
and information necessary to this purpose. In addition in
connection with Board meetings, Directors may be regularly
provided with all material information concerning the
company.
Internal control procedures
Internal control refers to a set of processes, methods
and measures defined by general management to ensure
a coherent and effective system of corporate governance
and management of company operations.
Internal control procedures implemented by Inter Parfums
management that apply to all Group companies are destined
to provide a reasonable assurance that the following
objectives are met:
■ safeguarding corporate assets,
■ identifying, limiting and avoiding risks of errors and other
irregularities in the management of operations to ensure that
they remain consistent with the objectives defined by
corporate bodies in relation to the businesses of the
company and remain in line with the annual budget targets,
■ ensuring the accuracy and thoroughness of accounting
records and the publication of reliable and timely information
fairly presenting the activity of the company for the period in
question,
■ ensuring compliance with laws and regulations.
One of the objectives of internal control is to manage and
prevent risks resulting from the activity of the company and
risks of material errors or fraud, particularly in accounting and
financial areas. An in-depth review of the risk factors affecting
Inter Parfums is presented in the management discussion
and analysis.
However, no system of internal control can provide an
absolute guarantee concerning the elimination of risks and
the effective implementation of procedures.
2006 annual report inter parfums
corporate governance
1.
General overview of internal control procedures
The organization of the Inter Parfums Group is centralized at
the level of the Inter Parfums company that assures the main
activity of the Group. To this purpose, it possesses a
significant administrative and commercial organization that it
makes available to other Group companies. Relations with
Inter Parfums are governed by assistance agreements,
service agreements, the provision of personnel and
equipment. Fees are invoiced for the latter in proportion
to the level of services rendered.
Members of the Finance Department team actively participate
in overseeing internal control procedures, intervening both
on a top-down and a transversal basis. In consequence they
play a decisive role in the way internal controls are exercised
by management.
The key internal control procedures of Inter Parfums are
based on the following priorities, defined in terms of their
impact on assets and/or results:
■ key operating processes in the management of production,
sales to distributors and the management of the company
image,
■ processes and managing resources, and notably cash and
currency hedges, human resources, committed fixed costs
and overhead, monitoring capital expenditures and tax
obligations, monitoring the settlement of trade receivables,
■ the processing and communication of accounting and
financial information.
These processes generate information concerning sales
objectives, risks and internal control strategies. An interface
for information generated by the different units responsible
for managing internal control procedures in their respective
areas to general management contributes to an effective
decision-making process.
To increase awareness of the importance of internal control
procedures among management staff, the company has
established and distributed to all operating and financial
departments a manual of internal procedures providing
a detailed description of the principal company processes
including sales/customers, purchasing/suppliers, inventories,
management information systems and personnel/payroll.
This manual also provides detailed information about the
procedure for expense requests and signature authorizations
for bank accounts. In addition, the company has developed
an information technology charter for all personnel to ensure
that information technology resources are operated in an
environment that ensures the security of the company's
computer network.
The Chairman and Chief Executive Officer who decides
the strategic objectives of the company in terms of sales,
accounting and finance, is responsible, in coordination with
the Finance Department, for developing internal control
procedures and resources to be deployed for this purpose
and verify their application by each department. The Finance
Department monitors their implementation and effectiveness.
In general, the organization of the company is assured
through five main departments (Production & Logistics,
Burberry Fragrances, Luxe & Fashion, French Distribution
and Finance & Corporate Affairs) reporting on their activity
to Executive Management on a monthly basis which
constitutes the preferred system of oversight and control.