Ubisoft 2006 Annual Report Download - page 162

UBISOFT • FINANCIAL REPORT 2007
6.2.5.3 Cash and financial control
procedures
Strict authorization rules
The group has established strict rules at both its French
and foreign subsidiaries concerning managers’ authority
with regard to customer receipts and supplier payments (a
double signature procedure, secure tools for payment faci-
lities, a regularly updated system of authorizations and
signatures, computer access control procedures, etc.).
This means that each significant subsidiary has local inter-
nal control procedures at its own level (delegation of
signing authority for banking transactions, control of cur-
rent operations, segregation of duties between the signa-
tory and the preparer of the payment ensuring effective
prevention against fraud, and so on).
Centralized decisions and controls with subsidiaries
The Cash Management Department is responsible for all
financing needs of the subsidiaries, many of which benefit
from a cash-pooling system. This system centralizes cash
management and supports the optimization of financial
resources within the group.
By the same token, the group cash management software
provides centralized management of the group’s cash
assets by optimizing liquidity management on a day-to-day
basis, thus providing a clearer picture of the subsidiaries’
cash flows and forecasts.
Off-balance sheet commitments (bank guarantees to
finance purchases, letters of credit, comfort letters, price
guarantees, surety bonds, etc.) are managed by the group
Finance Department. Bank guarantees allow subsidiaries
to place orders with their main suppliers by directly com-
mitting the parent company.
Acquisitions are managed by the Acquisitions Department,
which reports to the Finance Department. It reviews and
evaluates the strategic interest of a proposed full or par-
tial acquisition of a company and submits its assessment to
the group’s general management, which makes the final
decision. None of the group’s subsidiaries can make this
decision on their own.
6.2.5.4 Other procedures
A number of procedures for French subsidiaries exist in the
following areas:
Purchasing
Management and accounting of purchases, placement of
purchase orders, tracking of items in stock, fixed assets,
management of disposals of computer equipment and fur-
niture, physical inventory of furniture and equipment, tra-
vel expenses. Travel guidelines have been introduced at the
group. Purchases are made based on project requirements.
Each request must be approved by the manager.
Inventory
General inventory procedures (internal procedures).
Customers
Invoicing of subsidiaries (studios, distribution subsidiaries)
and customers outside France, creation of customer
accounts, resolution of disputes regarding customer deli-
veries, collection procedures and customer reporting.
Corporate
Payroll preparation and processing of post-payroll proce-
dures.
The aim of all these procedures is to define the principles
of authorization and approval, and to highlight the princi-
ples of segregation of duties and, therefore, control in all
areas.
Several other procedures are in the process of being fina-
lized or have been proposed for 2007/08 for both the
French and foreign subsidiaries.
Outlook
The group plans to continue to map out its risks, implement any new action plans that may be needed, and identify and docu-
ment control procedures.
The group’s goal is to develop a dynamic approach to risk and control analysis in order to offer managers effective mana-
gement tools. The objective is therefore to reevaluate risk analysis each year based on changes in the industry and the com-
pany’s strategy.
6.3
Limitations on the powers of the Chief
Executive Officer
You are informed that the Chief Executive Officer exercises his functions without any particular limitations, subject to the
powers expressly granted by law and the Articles of Association to the Board of Directors.
6.4