QUADIENT - 2020 Universal Registration Document

4 RISK FACTORS AND INTERNAL CONTROL

Internal control and internal audit procedures

Internal audit

Internal control system is organized around three pillars: the first line of defence is composed of the operational ● management which is in charge of communication and application of procedures; the second line is composed of functional departments: ● finance, quality, risks management, internal control, legal and human resources; the third line involves internal audit. ● A manual of procedures has been drafted and covers the following topics: budget consolidation and reporting processes; ● investment and assets management; ● cash flow; ● communication (including financial communication, ● press communication…); finance and accounting principles; ● legal; ● conflict of interests; ● anti fraud policy; ● Code of ethic; ● insurance manual; ● human resources procedure. ● Every new or updated procedure is circulated electronically to the manager of each subsidiary. Each subsidiary arranges internal communication of the procedure and ensures they are implemented and applied by employees. The procedures are permanently available on the Group’s Intranet dedicated to internal control. The consistent involvement of Group management in subsidiaries’ operations through regular reviews also allows for the rapid identification of any anomalies and the efficient and timely implementation of appropriate remedial action plans. Furthermore, the internal audit department conducts cross audits to strengthen these controls. An Intranet dedicated to internal control is designed to improve circulation of procedures and to facilitate communication by providing information on internal control, audits, legal affairs and cash management. A self-assessment questionnaire on internal control is regularly updated on the basis of the control targets defined within the AMF reference framework and to take into account the specific circumstances of Quadient Group. The answers are used to inform the audit plan.

The Group’s internal audit missions respect the following principal working standards: a scoping letter; ● an opening meeting with the local management; ● a wrap-up brief following the audit; ● the delivery of a preliminary report by the Auditors; ● a response from the audited entities with specific action ● plans for each audit point (manager, description of the action plan and deadline); delivery of the final report to the managing director, the ● Group Chief Financial Officer, the Chief Executive Officer and the regional director; quarterly monitoring of the audit points through a ● communication to the area manager and a review during operational reviews. Two types of audits were conducted in 2020: general audits covering all aspects of internal control ● were carried out. They dealt with all topics covered by Given the COVID-19 situation, most of internal audits were performed remotely in 2020. Despite this situation, the audit plan has been covered. In addition, training sessions for new Auditors were held in December 2017 in Europe. In all, since 2009, around 65 employees with complementary roles in the Group (Chief Financial Officer, accountant, Group Director of quality, Chief Executive Officer, investor relations manager, human resources manager, etc.) have received training. The 2021 audit plan was presented to the audit committee on 25 March 2021. It contains the audit schedule, structured around 30 or so audits, including general and thematic audits (each Group entity is audited at least once every two years), and audits of newly acquired entities, as well as production and leasing units. The audit plan takes into account new organization by regions and by major solutions and all field are covered. As in previous years, the Group will pursue the recruitment and training, notably targeting finance department personnel who will join the internal audit team to conduct more cross-audits during the financial year. Quadient opted for an audit system consisting of audits in subsidiaries that are carried out by employees from another subsidiary or from head office, with the aim of sharing best practices. the self-assessment questionnaire; thematic audits on specific topics. ●

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UNIVERSAL REGISTRATION DOCUMENT 2020

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