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DANONE
REGISTRATION DOCUMENT 2015
Corporate Governance
6.4 Internal control and risk management
295
Control environment
The control environment relating to the preparation and processing
of Danone's financial and accounting information is based on the
following:
•
the organization of the finance function, which is based on central
functional departments and the finance department of each of
the Divisions (see section
Organization of the finance function
above). In all cases, the operating units are responsible for the
production and content of their financial statements as well as
their internal control;
•
the DANgo control practices and procedures, which help to ensure
the reliability of the processes for preparing the financial state-
ments. Indeed, the DANgo framework includes many points that
address the quality of the financial and accounting information;
•
the controls carried out by the Consolidation, Reporting and
Standards Department (see section
Production of financial and
accounting information
above);
•
the definition for the Company of the roles and skills required
at the various levels of the financial organization and the devel-
opment, as a result, of internal training programs;
•
the production and communication of the Company's financial
and accounting information via the unified tools described above;
•
the single set of guidelines covering the Company's accounting
procedures and principles, which are consistent with its internal
control principles. Available on theWeFi intranet, these guidelines
are accessible to all the finance function's employees.
Risk identification and assessment
The monitoring and management of the main risks identified re-
lated to the preparation and processing of Danone's financial and
accounting information is organized as follows:
•
the risks identified and the results obtained through the various
approaches taken (DANgo) are used;
•
the budgeting and strategic planning processes, performance
monitoring, the regular meetings mainly attended by the finance
functions (Controlling, Treasury and Financing, Consolidation,
Reporting and Standards, Development) and the meetings of
the Risks Executive Committee and the Executive Committee
allow the main risks identified to be monitored and managed;
•
the internal control system is also adapted based on the risks
identified.
Control activities
Each Division has a finance department, which is responsible for
monitoring performance, capital expenditure and operating cash-
flow, primarily through the rigorous financial planning and reporting
process. The Divisions' finance departments are supported by the
finance departments in the geographic regions and operating units,
with the overall financial planning process administered by the
Controlling Department.
Members of the central departments visit the operating units on
a regular basis (performance monitoring, procedure reviews,
pre-closingmeetings, ad hoc audits, progress on improving internal
controls, follow-up on action plans, and training in accounting stan-
dards). The appropriate documents are provided sufficiently well in
advance for them to be reviewed by Danone's management bodies.
Twice a year, the general manager and finance director of each
subsidiary along with their counterparts in the regions and Divisions
provide written confirmation of compliance with Danone's applicable
procedures and with all of the standards applicable to the financial
information sent to the central teams. This confirmation is provided
in a representation letter that covers the closing of the six-month
and full year financial statements, including all subjects involving
risk management, internal control and corporate law.
The control activities are therefore conducted at all of Danone's
hierarchical and functional levels and include a variety of actions
such as approving and authorizing, verifying and comparing,
assessing operational performances, ensuring the protection of
assets and monitoring the segregation of duties. The audits con-
ducted independently by the Internal Audit Department provide
appropriate validation.
Transmission of information
Danone's financial and accounting information is produced and
communicated via the tools described above.
To disseminate financial information within Danone, each quarter
the entire finance function can log onto a website where the Chief
Financial Officer comments on the activity for the quarter, the year-
to-date financial results and the main challenges for the Company.
Lastly, Danone's guidelines related to financial and accounting in-
formation (WeFi, DANgo, etc.) are accessible to all employees of the
finance function and some are available to all Danone employees.
Continuous monitoring
One of the responsibilities of each Division's finance director and
function manager is to improve the procedures used to prepare and
process financial information. Detailed audits are conducted on the
key control procedures in the preparation of financial information
(particularly published disclosures) in the subsidiaries and in
Danone's headquarters and on their effective application. Moreover,
the internal audit assignments conducted in the operating units are
aimed primarily at verifying the quality of the accounting and financial
information. The Divisions' Finance Departments ensure that the
action plans established subsequent to the above-mentioned internal
and external audits have been carried out correctly.
Assessment
The procedures intended to control the accounting and financial
information provided by the consolidated subsidiaries, as well as
the internal control procedures used to prepare the consolidated
financial statements, are adequate to provide reliable accounting
and financial information.