Internal control

The role of these bodies is described in “Organization and Functioning of the Board of Directors”.

Group Executive Committee and Group Management Board

Their role is described in the “Governing Bodies” section.

The Internal Audit department

Internal audit, as defined by professional standards, consists of “an independent and objective process which ensures that the Group has adequate control of its operations and which offers advice on improving the latter while contributing to added value. The internal audit function helps the Group to achieve its objectives by systematically and methodically valuating its risk management, control and corporate governance procedures, and through recommendations for their improvement.”

The role of the Groupe SEB Internal Audit department is fully consistent with this approach.

The Internal Audit department is responsible for evaluating, at all locations where the Group is established and for all functions, compliance with Group Internal Rules and procedures and any non-compliance with legislation, and for ensuring that Group assets are protected. It is also required to evaluate the efficient conduct of operations and to ensure that all business risks are anticipated and controlled.

In the area of risk management, the Internal Audit department draws up a map of high-level risks.

Based on this map, on the self-assessment questionnaires and on the principle of an audit in each entity every three or four years, the Audit department proposes an internal audit plan for the following year.

This plan is submitted to the Audit Committee.

Each internal audit – adapted to circumstances and conducted locally by an average of three Auditors over a two-week period – gives rise to an audit report which is sent to the audited structures and their upline management, to the members of the Group Executive Committee and to the Group Chairman and CEO, describing the basic organization of each process and making recommendations.

Steps are then taken by operational management to remedy identified shortcomings in internal control, and to make any other necessary improvements. The implementation of resulting action plans is subjected to a systematic internal audit review within 12 months of the audit.

The results of these audits are compared with the results of the self-assessments, thus completing the full circle of the internal control process.

In order to ensure continuous improvement of internal control and company efficiency, the main recommendations issued by the Audit department for each process are shared yearly with the Group Management Committee for the main Group divisions: purchasing, IT, quality, finance, human resources, logistics, production, after-sales service and marketing.

The Internal Audit department draws up an annual report of work done which is presented to the Group Executive Committee and the Audit Committee.

The Audit Committee reviews the resources needed by the Internal Audit department to carry out its work, and makes observations or recommendations as required. The Internal Audit department has a staff of ten people.

Legal and Insurance department

The role of the Group Legal department is to ensure that the Group complies with legal and regulatory requirements wherever it operates, to protect the Group’s assets and businesses and to defend the interests of the Group, its management and employees in carrying out their functions. The Legal department is concerned with three main areas of internal control:

 it drafts and updates model contracts and their related procedures for frequently recurring transactions (purchases of goods and services, conditions of sale, advertising campaigns, damages claims, etc.);

 it makes recommendations to the Group Executive Committee on rules for delegating authority, and on the circulation and protection of confidential information, and it applies and monitors these rules;

 it selects external legal advisors, monitors their services and performance, and oversees invoicing follow-up in liaison with the Management Control department.

The role of the Legal department in the area of insurance is to ensure that there is adequate insurance cover of the risks to which the Group is exposed. Groupe SEB insurance cover is managed on a worldwide consolidated basis. Worldwide insurance cover is arranged in partnership with leading insurance pools; additional specifi c policies can be subscribed to locally.

Finance, Treasury and Tax department

The role of this department is to ensure the security, transparency and efficiency of treasury and fi nancial transactions, and to ensure compliance with regulations and tax obligations in all the countries where the Group is based.

Its responsibilities in this area cover:

 financial resource management, in consultation with the Executive Vice-president, Finance, to ensure the Group’s liquidity;

 cash flow management ;

 financial risk assessment and hedging (particularly in the areas of foreign exchange and raw material prices);

 ongoing relations with banks;

 financial management support for subsidiaries, and support for the Group’s General Management, in fi nancial planning for new projects.

This department has a triple responsibility in the area of internal control :

 monitor tax inspections carried out by taxation authorities in all the Group’s entities;

 ensure consistency in the tax procedures used by the Group’s entities and in liaison with tax consultants, verify the compliance of the Group’s main activities with current legislation;

 select tax consultants and monitor the services provided along with their cost.

In 2010, the position of Credit Management Director in charge of managing and limiting the Group’s customer risk was created at a global level.

A Credit Management Committee is in charge of prior authorization in the event of any client receivable balance signifi cantly exceeding the balance covered within the framework of contracts with COFACE or any other credit insurance organization.

The Group Management Control department 

The Group Executive Committee attaches great importance to the Group’s planning procedures. These prepare the ground for the annual budget, which makes it possible to defi ne the Group’s strategic priorities and draw up operational plans.

The Management Control department is responsible for issuing appropriate directives and guidelines to help those involved in drawing up the budget.

It coordinates budget planning and control, using a handbook of management procedures and rules applicable to all entities, including Group budgeting, forecasting and management reporting methods.

The management reporting system uses a consolidation management tool for calculating the Group results.

Physical or financial controls make it possible to verify balance sheet items such as components of the working capital requirement and cash position.

These various aggregates are budgeted at the end of the year and monitored monthly.

The Management Control department draws up a Group budget forecast chart and distributes this, with an analysis of signifi cant variances and trends based on the information provided by the Group’s entities in their monthly business reports.

The Department operates with accounting and management software that allows effi cient operational and strategic monitoring.

The Information Systems department

The Group’s IT system is designed to guarantee the security, integrity, availability and traceability of information.

To ensure the proper use of these tools and the utility of data, an operating manual adapted to the needs of users has been drawn up.

The Group has also introduced procedures to ensure the security of its information systems and the integrity of its electronic data.

An Information Systems Steering Committee is responsible for drawing up an IT master plan which corresponds to the Group’s organizational needs and general development policy. This committee, chaired by the Executive Vice-president, Industry, comprises the Information Systems department and representatives of user entities (including Continental General Management, Strategic Business Areas Management, the Group Finance department and the Human Resources department). Within this framework, it determines the nature of IT system projects and decides on priorities for resource allocation and IT security policies.

The IT data security committee, of which the Audit department is part, meets regularly to ensure that the level of IT risk within the Group and its subsidiaries is adequately managed and that appropriate informational and sensitization measures are taken to prevent the risk of piracy of our systems.

Internal audit missions now include more detailed scrutiny of IT security risk areas, in particular concerning integrated software: user profi le management and the risk of system access rights within an enterprise function.

The risk of intrusion into the network and/or into a centralized application is periodically evaluated and tested.

Data security audits were also conducted in some supplier companies.

The Quality department

The desire to improve the quality of its products and processes has always been a central concern of Groupe SEB.

The Group uses a Quality Management System (QMS) with Group-wide standards that are posted on the Company’s intranet.

Documentation for this system includes reference to all procedures, tools and methods relating to the Group’s key processes:

 management procedures, defi nition of Group policy, strategic planning, constant improvement in quality, and safeguarding the environment;

 operational processes including strategic marketing, R&D, sales and marketing, client order processing and production transfers;

 operational support functions, covering human resources, information systems, purchasing, fi nance, after-sales service and customer assistance.

The Quality department uses monthly feedback reporting to fi ne-tune its action plans, which are then submitted to the Group Executive Committee.

The Financial Communications department 

Each year, this department draws up a schedule of the Group’s regular financial communications for financial markets and institutional investors. It identifies, in collaboration with the Legal department, legal and regulatory requirements for publication of Group financial notices.