LensCrafters 2010 Annual Report Download - page 100

ANNUAL REPORT 2010> 98 |
The objectives of the control system have been defined consistently with the guidelines of SOX, which differentiates
between the following two components:
controls and procedures to comply with the disclosure obligations related to the consolidated financial statements •
and the Form 20–F (Disclosure controls and procedures–DC&P);
internal control system that supervises the preparation of the financial statements (Internal Control Over Financial •
Reporting–ICFR).
The disclosure controls and procedures are designed to ensure that the financial information is adequately collected
and communicated to the Chief Executive Officer (CEO) and to the Chief Financial Officer (CFO), so that they may make
appropriate and timely decisions about the information to be disclosed to the market.
The internal control system that supervises the preparation of the financial statements has the objective of ensuring the
reliability of the financial information in accordance with the relevant accounting principles.
The structure of the internal control system was defined consistently with the model provided by the COSO report, the most
widely used international model to define and assess the internal control system, which establishes five components (control
environment, risk assessment, control activity, information systems and communication flows and monitoring activity).
For the most important companies of the Group (so–called Material Control Units) controls were designed and their
effectiveness was assessed both at general/cross level (entity level controls) and at the level of each operational/
administrative process. For the smaller companies, which were however still significant, especially when considered in the
aggregate (so–called Material When Aggregated), the assessment was performed on the general effectiveness level of
the control system.
Among the cross level controls, the controls to reduce the risk of fraud are particularly important. To this end, Luxottica has
developed Anti–Fraud Programs & Controls derived from an in–depth risk assessment which, after mapping the possible
ways in which fraud could be committed, defined the necessary controls to reduce the risk of fraud and/or allowing its
identification. This “anti–fraud” system is constantly updated and improved.
In addition to defining and testing the internal control system in compliance with SOX requirements, Luxottica has also
identified the necessary actions to ensure its optimal functioning over time.
The entire system must be monitored at two levels: by line management, supervising the significant processes and by the
Internal Audit function, which independently and according to an approved intervention plan must check the effectiveness
of the controls and report on these to the relevant functions and bodies.
Moreover, as a result of an ongoing comparison with other companies listed on the NYSE, the designed control system
is subject to continuous improvements and streamlining. Since 2007, on the basis of experience gained internally, of the
independent evaluations by the external auditors and the introduction of audit standard no. 5 adopted by the PCAOB
(Public Company Accounting Oversight Board), a significant process has been implemented for the evaluation and
rationalization of the controls currently in place, which has allowed the Company, on the one hand, to eliminate redundant
controls that burdened operations without offering a real benefit in terms of strengthening of the internal control system
and, on the other hand, to define and better protect the key controls and the monitoring controls. This process has been
performed for all of the most important companies of the Group.
The Board of Statutory Auditors
The Board of Statutory Auditors currently in office for the duration of three fiscal years, until the approval of the financial
statements as of December 31, 2011, is composed of three statutory auditors – Francesco Vella, Chairman, Alberto Giussani
and Enrico Cervellera – who were all appointed at the meeting of April 29, 2009, and by two substitute auditors – Alfredo
Macchiati, who was appointed at the meeting of April 29, 2009 and Giorgio Silva, who was appointed at the meeting of
October 29, 2009. Giorgio Silva was appointed in substitution of Mario Magenes, who had been appointed at the meeting
of April 2009 and had subsequently passed away.