LensCrafters 2013 Annual Report Download - page 72

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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 department, 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 a comparison with other companies listed on the NYSE, the designed
control system is subject to continuous improvements. 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 process for the evaluation and rationalization of the controls is in place, which
allows the Company, on the one hand, to eliminate any redundant controls that burden
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 is 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 at December 31, 2014, is composed of Francesco
Vella, Chairman, Alberto Giussani and Barbara Tadolini. The substitute auditors are Giorgio
Silva and Fabrizio Riccardo Di Giusto.
The appointment of the Board of Statutory Auditors currently in office took place through the
list-based voting system: Alberto Giussani, Barbara Tadolini and Giorgio Silva were