LEGRAND / 2018 Registration document

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INTERNAL CONTROL AND RISK MANAGEMENT

INTERNAL AUDIT SYSTEM

3.4 – INTERNAL AUDIT SYSTEM

3.4.1 – Definition and objectives of internal audit

The purpose of internal audit is to provide objective assurance regarding the degree of control over operations and the processes for managing, controlling and governing risk, and to make recommendations on how to make them more effective.

3.4.2 – Audit planning, implementation and follow-up action

An audit plan is drawn up each year, applying the following rules: W the rotation of audits across all the Group’s reporting entities and functional departments; W audits of the Group’s new acquisitions within a year of the Group acquiring them or investing in them; W follow-up audits on the action plans put in place by operational entities, if the situation requires it; W audits of systems for controlling the risks identified in connection with risk management; W specific and cross-functional audits aimed at covering major or emerging risks.

After approval by General Management, the audit plan is presented annually to the Audit Committee. Every audit assignment results in a report. Those reports are submitted to General Management. A summary of them is presented quarterly to the Audit Committee. The recommendations expressed in the audit reports directly address the risks inherent in the identified internal control weaknesses, thereby strengthening the previously mentioned bottom-up approach. Correct implementation of action plans is monitored systematically by the Internal Control Department.

3.5 – PROCEDURES FOR PREPARING AND PROCESSING ACCOUNTING AND FINANCIAL INFORMATION

Objectives

Internal controls applied in the accounting and finance areas must meet the following objectives: W ensure that the published accounting and financial information complies with applicable regulations; W ensure that the instructions concerning this information, issued by the Group’s General Management, are applied;

W safeguard the Group’s assets; W detect and prevent fraud and accounting irregularities wherever possible; W ensure the reliability of internal financial and accounting information, and of information disclosed to the markets.

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LEGRAND

REGISTRATION DOCUMENT 2018