Carrefour - 2017 Registration Document

4 MANAGEMENT’S DISCUSSION AND ANALYSIS AS OF DECEMBER 31, 2017 Internal control system CARREFOUR | 2017 REGISTRATION DOCUMENT 209 Internal accounting 4.8.2.4 and financial control General organisational principles 4.8.2.4.1 of accounting and financial control Internal accounting and financial control aims to ensure: the compliance of reported accounting information with the ● applicable rules (international accounting standards); the application of instructions and strategic objectives ● established by the Group; the prevention and detection of fraud and accounting and ● financial irregularities; the presentation and reliability of published financial information. ● Risks related to the production of accounting and financial information can be classified into two categories: those related to the accounting of recurring operations in the ● Group’s host countries, whose control systems must be set as close as possible to decentralised operations; those related to the accounting of non-recurring operations that ● may have a material impact on the Group’s financial statements. The internal control system described in the following paragraphs incorporates this risk approach. Management within each country is responsible for identifying risks that impact the preparation of financial and accounting information as well as taking the necessary steps to adapt the internal control system. With regard to information that requires special attention given its impact on the Consolidated Financial Statements, the Group Reporting and Consolidation Department requests the necessary explanations and may perform such controls itself. It can also assign an external auditor to carry out such controls or submit a request to the Chairman and Chief Executive Officer for the Internal Audit Department to intervene. The Group Reporting and Consolidation Department checks the country-level consolidated reporting packages at the end of each monthly period. If need be, corrections are made to the reporting packages by the countries themselves. In addition, inspections are conducted in each country at least twice a year. Management of the accounting 4.8.2.4.2 and finance organisation Organisation of the finance function The finance function is mainly based on a two-level organisation: the Group Financial Control Department defines the IFRS ● accounting principles applicable to Carrefour and provides leadership and oversight of the production of Consolidated Financial Statements and management reports. This Department includes a Reporting and Consolidation Department and a Performance Analysis Department: the Reporting and Consolidation Department monitors ● standards, defines the Group accounting doctrine (“IFRS accounting principles applicable to Carrefour”), produces and analyses the Consolidated Financial Statements and prepares the consolidated accounting and financial information, and is the direct link to the Finance Departments at country level, the Performance Analysis Department analyses both ● prospective and retrospective management reports. It requests explanations from the country-level Finance Departments and alerts the Group’s Executive Management to key issues and any potential impact; the country-level Finance Departments are responsible for the ● production and control of the country-level Company and Consolidated Financial Statements. They are also responsible for deploying an internal control system within their scope that is adapted to their specific challenges and risks, taking into account the Group’s recommendations and directives. Management control and merchandise management control at country level also fall within their responsibility. The country/business unit/functional administrator accounting function is handled by centralised teams in each country, under the supervision of the country-level Finance Director. These teams belong to the Finance and Management network and are led by the Group Finance Department, particularly through the sharing of information on a collaborative platform. The Group Executive Director – Finance and Management appoints the country-level Finance Directors. Accounting principles Group accounting principles are specified in a regularly updated document that is communicated to all those involved in the process. The IFRS accounting principles applicable to Carrefour are reviewed twice a year, before the end of each financial year and six-month period. They are defined by the Standards Department, which forms part of the Group Reporting and Consolidation Department, and are presented to the Statutory Auditors. Material changes, additions or deletions are presented to the Accounts Committee. An updated version is available to all members of the Finance and Management network on the collaborative platform. The IFRS accounting principles applicable to Carrefour are incumbent upon the country-level Finance Departments. If necessary, country-level Finance Departments consult the Group Reporting and Consolidation Department, which alone can provide interpretations and clarifications. The country-level Finance Directors meet regularly to discuss new changes to the IFRS accounting principles applicable to Carrefour and any application issues encountered. The Standards Director, who reports to the Reporting and Consolidation Director, performs technical monitoring of IFRS and leads the process of updating Group accounting principles in liaison with the countries. It reviews technical issues raised within the Group and ensures that Carrefour is represented in professional organisations that deal with accounting standards.