BIC_REGISTRATION_DOCUMENT_2017

GROUP PRESENTATION Risk management and internal control procedures implemented by the Company

when receiving the supplier’s invoice for generation of payment. ● The three-way match process assures the segregation of duties principle and allows clear tracking of the validity of transactions throughout the purchasing process. In terms of capital expenditure, an additional step is required for the purchase initiator. Prior to any investment, specific documentation is prepared to gather all necessary data such as description and return on investment features, approvals in accordance with the level of commitment and a post-acquisition audit schedule. In terms of organization, attention is drawn to the segregation of the procurement function from that of purchasing. The goal is to mitigate any risk of overlapping responsibilities. This process also centralizes at Group level the procurement flows on strategic materials, to better control the needs and level of financial commitment. Finally, vendor management, including the suppliers’ database, also follows specific control procedures and rules throughout any relationship these third parties could have with the Group. Selling procedures The selling procedures follow common rules and principles, but they are customized for local markets and customers, based on the existing nature of transactions. These common principles deal in particular with: the validity of selling prices and selling conditions (price list ● set-up process, special pricing authorization schemes, etc.); the completeness and accuracy of the selling orders received ● through different media; the respect of recognition timing with emphasis on cut-off ● processes and adjustment procedures; the fair value of trade receivables with procedures for bad debt ● reserve computation and credit note issuance. Similarly, to the relationships with suppliers, procedures deal with customers’ master file management, including the creation of new accounts, the cash allocation process for the payment receipts and credit management. Inventory management procedures The management of inventory covers physical custody of the goods, valuation of these items and monitoring of the related flows. Thus, the procedures in place address all these topics. Regarding physical safeguarding, Group policies are provided in addition to local regulations. They deal with: the safety objectives for the employees involved in the inventory ● management; the assets' security with clear guidelines in terms of storage ● conditions, stock-take process or segregation of duties.

In terms of valuation, a BIC costing procedure is established to help local controllers to follow the Group rules as well as comply with local accounting and financial standards. The Group rules are disclosed in “Note 1 of the consolidated financial statements – Main rules and accounting policies”. Cash management procedures Mostly centralized within the Group Treasury, some aspects of cash management are maintained at the local level. For both levels, procedures are in place to cover: cash balance and payment management including physical ● safeguards, the performance of bank reconciliations and supervision of segregation of tasks performed; bank mandates and management of authorization signatures; ● debt financing activities, whether short or long term. ● Centrally, the Group Treasury follows specific procedures regarding its investment portfolio and foreign exchange exposure management, as described in the “Comments on the year” – section 4.3. “Management of currency and interest rate risks”. Fixed asset management procedures As defined in the objectives for internal control, asset security is identified as a matter of priority. To achieve this, procedures have been implemented within the Group. Some of them are described above. The existence and the validity of assets being essential, instruction is given to local sites to perform physical inventories on a regular basis for reconciliation with the financial systems. In addition to the investment authorization process mentioned earlier, all fixed asset movements ( i.e.  transfers, disposal and sales) are regulated by dedicated procedures. Finally, specific rules are required for the management of the Fixed Asset Registers to support compliance with both local and Group accounting standards and to permit efficient control activities. Control activities 1.7.2.5. Each level of the Group is involved in control activities to ensure that Group rules, guidelines and procedures are correctly applied. Moreover, the IC&A Department ensures through its annual audit plan that no material discrepancy with the Group procedures exists. This control addresses both operational and financial environments and focuses on: validity of the operations and transactions, including the ● authorization processes for expenditures and investments; completeness of transaction reporting; ● proper evaluation and recognition of operations for accurate ●

information availability and disclosure; the guarantee of the Company’s future. ●

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BIC GROUP - 2017 REGISTRATION DOCUMENT

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