3 RISK FACTORS, INTERNAL CONTROL AND INSURANCE - Internal control
THE ACCOUNTS AND RISK MONITORING COMMITTEE OF THE SUPERVISORY BOARD
which report operationally to the Country Director and functionally to the division’s Finance Department. In addition, in view of its international expansion, a department has been established to oversee management control, internal audit and consolidation. Accounting and financial information prepared by the subsidiaries is reported to Rubis, via Rubis’ Consolidation and Finance Departments and, ultimately, the Board of Management.
In performing this work, the Accounts and Risk Monitoring Committee hears all Managers involved in the information chain: the Management, the Chief Financial Officer, the Director of Consolidation and Accounting, the Rubis Corporate Secretary and the Statutory Auditors. The members of the Accounts and Risk Monitoring Committee have access to the same documents as the Statutory Auditors, and examine the summary of their work.
The main tasks of the Accounts and Risk Monitoring Committee, whose members and functioning are described in chapter 5, section 220.127.116.11, are as follows: • examining the financial statements, ensuring consistency of methods, quality of data and completeness, and ensuring that the financial statements give a true and fair view; • monitoring internal control procedures for accounting and financial matters and risk exposure. in 3 stages (initial budget validated in the prior year with a 3-year plan, budget forecast update in the second quarter and again in the fourth quarter of the current year). All financial data are archived and backed up daily. Checks are also carried out automatically by the IT system to minimize any data input errors. Documents stored in the central system also serve as a reference and a basis for reconciliation for the internal audit teams during their missions. Rubis Énergie and Rubis Terminal also operate a document management system allowing their various associates to share technical, HSE and legal information. This allows significant investment and construction projects to be monitored closely by the Technical Departments at each division. BUDGETS AND REPORTING Budget s are prepared at year- end, successively, by direct subsidiaries and sub- subsidiaries of the storage (Rubis Terminal), distribution and support and services (Rubis Énergie) divisions, as part of a rolling 3-year budget plan in accordance with management items and budget indicators defined and standardized by business. The indicators are defined by General Management and operational management in accordance with Rubis’ strategy. The budget indicators used include gross margin, revenue, Ebitda, Ebit, capital expenditure, cash flow, debt, volume, traffic, capacity utilization rate, workforce. At Rubis Terminal, budgets are prepared by site Directors with the support of the accounting departments and are signed off
18.104.22.168 PREPARATION AND REPORTING OF ACCOUNTING AND FINANCIAL INFORMATION
The internal control system relies on several channels for reporting information designed to identify sensitive points comprehensively. PROCEDURE MANUALS Rubis and its subsidiaries, Rubis Énergie and Rubis Terminal, have accounting procedure manuals that set out the organizational rules for the accounting department, budget accounting, treatment of purchases, sales, banking transactions, fixed assets, salaries, expense reimbursements, etc. Together, these reference documents define the common principles for preparing the separate and consolidated financial statements. There are also formal notes and procedures covering areas such as: • delegation of powers and limits in terms of incurring expenses (including investments), approval of invoices, and bank payment authorizations; • sales management, to define the special terms and conditions granted to customers, limit the total outstanding amounts authorized, obtain bank guarantees, etc. INFORMATION SYSTEMS Rubis Énergie and Rubis Terminal have centralized information systems that they can use to consolidate all financial information: management reports of each company and terminal, standardized and harmonized by type of business/activity; quarterly financial statements; monthly margin analysis; monthly traffic analysis for each terminal (storage division); monitoring of capital expenditure; budget management and forward planning
by the operational Directors and members of the Management Committee. Joint venture budgets are prepared by these companies and approved by their Board of Directors. Rubis Terminal’s Finance Department draws up a consolidated budget, which is submitted to the Management Committee and then forwarded to Rubis. At Rubis Énergie, budgets are drawn up by country and by each subsidiary. They are reviewed by the division’s Management Co n t r o l, Au d i t a n d Co n s o l i d a t i o n Depar tment before being presented to the Management Commit tee (see section 22.214.171.124). After discussing and/ or reviewing budget proposals by the Management Committee, the Finance Depar tment prepares a consolidated budget, which it sends to Rubis. The Finance and Management Control Departments of the 2 divisional head subsidiaries draw up monthly reports and analyze any differences between actual data and budget forecasts. The reports are issued roughly 10 days after the end of the month, and are then examined and compared with initial forecasts at the Management Committee meeting, with the Management in attendance. Budget dashboards are adjusted accordingly. FINANCING AND CASH MANAGEMENT Rubis’ Finance Department negotiates with banks to raise acquisition financing. It also analyzes banking covenants. Cash is invested in high quality instruments, never in speculative or risky products or ventures, and managed by the entity concerned.