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DANONE
REGISTRATION DOCUMENT 2015
Corporate Governance
6.4 Internal control and risk management
294
Internal control process related to the preparation and processing of Danone's financial
and accounting information
Organization of the finance function
The finance function's organization is based on:
•
centralized functional departments: Treasury and Financing,
Acquisitions, Strategy, Financial Control (to which the following
departments report: (i) Consolidation, Reporting and Standards,
(ii) Controlling, (iii) Internal Control, and (iv) Internal Audit),
Financial Communication, Tax and Insurance;
•
the finance department of each of the Divisions, which are orga-
nized into geographic regions that include operating units with, in
some countries, a sharing of transactional functions (accounting,
treasury, tax compliance) and certain specialized functions.
Production of financial and accounting
information
Financial information is generated by a rigorous and comprehensive
financial planning process. This process includes, in particular:
•
a medium-term strategic plan;
•
an annual budget process, preceded by the preparation of a
framework defining key financial targets;
•
two comprehensive month-by-month re-estimates of financial
indicators projected to the year-end are performed, one in April
and the other in October;
•
monthly updated forecasts of certain financial indicators projected
to the year end (monthly scorecards);
•
monthly reports;
•
monthly performance reviewmeetings attended by the financial
teams and the general managers of the Divisions.
The relevance of the financial indicators selected to monitor per-
formance is reviewed on a regular basis.
In this context, each operating unit prepares a detailed monthly
financial report and, twice a year, an exhaustive consolidation
package used in the preparation of Danone's consolidated financial
statements.
These consolidation packages are verified by a central team, which
is also responsible for the elimination and consolidation entries
and for analyzing and validating the most significant line items of
the consolidated financial statements (intangible assets, financial
assets, taxes, equity, provisions and liabilities).
In addition, the production of financial information includes the fol-
lowing preliminary control stages, carried out by the Consolidation,
Reporting and Standards Department:
•
validation by the central team, throughout the year, of the main
accounting options adopted by the subsidiaries and central
functions and simulation of complex transactions in the con-
solidation software;
•
in-depth review of certain subsidiaries' monthly closings at the
end of May and November (known as the hard close procedures)
based on the specific risks and transactions identified for pre-
paring the interim and annual consolidated financial statements,
respectively;
•
maintenance and implementation of a central tool called WeFi,
which identifies the finance function's main organizational prin-
ciples and processes and the accounting principles validated
for Danone;
•
meetings to share information and best practices are attended
regularly by the main financial managers of each Division and
some central department heads and training sessions covering
specific accounting topics are also held regularly;
•
(i) preparation meetings with the financial staff of Danone's main
subsidiaries based on the specific transactions and risks identified,
and (ii) presentations to the Audit Committee (specific transactions
during the period, the main accounting options concerning the
closing and the contemplated significant changes introduced by
developments of the International Financial Reporting Standards)
(see section 6.1
Governance bodies
).
In addition, Danone's financial and accounting information is pro-
duced using the following applications.
SAP/Themis integrated information system
The management and optimization of information flows for the
financial functions as well as the purchasing, industrial, quality,
supply chain and sales functions, both within the subsidiaries and
between them, is performed primarily through the SAP/Themis
integrated information system. This application is being steadily
deployed in all Danone subsidiaries and its features are constantly
being improved.
As of December 31, 2015, the activities supported by Themis accounted
for 82%of consolidated sales in the Fresh Dairy Products andWaters
Divisions (excluding the Unimilk group's companies). The roll-out
of Themis continued in the Unimilk group's companies in 2015.
The same information system is currently being rolled out at the
subsidiaries of theMedical Nutrition and Early Life Nutrition Divisions
(covering 66% of these two activities' total sales for the year ended
December 31, 2015).
The data center's level of security, until then ensured by an infra-
structure duplicated across two remote sites, was improved by the
implementation of a Disaster Recovery site.
Consolidation and reporting software
Monthly financial reports, and more generally the financial infor-
mation used to manage and control the activities of the operating
units, are produced by a unified information system (SAP/Business
Objects Financial Consolidation).
This same system is also used to produce the six-month and full-year
consolidated financial statements. The procedures related to the
security, use and development of new features of this consolidation
system are documented.