2 _67 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 2 RISK MANAGEMENT Internal control process relating to the preparation of accounting and financial information Management of accounting and finance internal control Group managers can detect any weaknesses in their internal control processes through the systems used to manage their operations. In addition, internal reviews are performed in the units by their specialized experts. Information generated by the management systems is analyzed by the budget control teams and reported to the managers concerned for inclusion in the scorecards used to manage their operations. A management scorecard is also prepared for the Group Executive Committee, enabling it to track the Group's business month by month. On a quarterly basis, similar reports are presented in an appropriate format to the Supervisory Board. The Corporate Finance Department is responsible for ensuring the relevance and consistency of this management data. The Operational Information Processing Department is in charge of overseeing information system policies and resources. The internal control procedures contained in the Group's Quality System include rules relating to data access and protection, the development of applications, and structuring and segregating development, process engineering and production tasks. Recurring assessments of the accounting and financial information preparation process Self-assessments To ensure that the work carried out to comply with France's Financial Security Act delivers lasting improvements, the Accounting and Financial Internal Control Department reports to the Corporate Finance Department. It is responsible for managing internal control processes and for overseeing work on financial internal control, with a view to providing reasonable assurance that the Group's financial information is reliable and that its assets are safeguarded. It defines internal control standards, coordinates and sets up internal control information systems and day-to-day management procedures in coordination with the Corporate Internal Audit, Risk Management, Internal Control and Quality Department. It also assists the network of internal controllers in the Regions and main areas of operation in implementing these systems and procedures. Its role includes: ● standardizing internal control best practices and training regional correspondents in their use; ● regularly updating key risks by process; ● defining key controls in conjunction with the owners of the processes concerned; ● drafting control guidelines and manuals and preparing internal control tests; ● mapping the issues for which controls are applied in the different Group organizations; ● overseeing the regional managers and managers of operational areas concerned; ● structuring the internal control network; ● interfacing with the other stakeholders in the relevant processes, such as process owners, risk managers and internal and external auditors; ● advising on the implementation of transformation projects and programs. In 2017, the worldwide application for monitoring the entire financial internal control process in place since 2009 was enhanced based on a standard commercial software solution. The new application continues to leverage the guidelines and principles defined in previous phases undertaken since 2004. The model will continue to be extended to cover additional processes and legal entities. Post-acquisition audits are performed for newly acquired companies and sub-groups that are fully consolidated and an internal control process deployment plan is prepared based on their respective characteristics (manufacturing, sales or financial services business, information system, geographic location, organization and governance, materiality in Michelin’s consolidated financial statements, control environment and culture). An initial internal control self-assessment exercise is carried out with the new teams, in order to meet their needs and help them understand what the Group expects from their internal control process. Action plans are drawn up with the teams concerned in order to help them take ownership of the approach and related tools. The financial self-assessment system potentially encompasses the following 16 processes: ● purchasing, from ordering to supplier payment; ● sales, from customer order to payment; ● customer credit management; ● management of inventories (raw materials, semi-finished and finished products, and spare parts); ● inventory valuations; ● financing and financial risk management; ● management of intra-Group transactions (transfer pricing and elimination of intra-Group balances); ● information systems management and administration (general IT testing); ● accounts closing;
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