Ubisoft 2016 Annual Report Download - page 49

Governance, risks, riskmanagement andinternalcontrol
3
Report of the Chairman of the Board of Directors on corporate governance, internal control andriskmanagement
♦ secure the Company’s decision-making and processes to help it
achieve its objectives;
♦ promote consistency of actions with Company values;
♦
involve Company employees in a common vision of the principal
risks.
The risk management system is a component of internal control.
It allows the Company to anticipate and identify the key internal
or external risks that could pose a threat and prevent the Company
from achieving its objectives.
3.1.3.2 Organization of internal control
The internal control system relies on a solid foundation of autonomy
and collaboration within the Group’s teams, encouraging the
alignment of goals, resources and mechanisms deployed. It is based
on the clear identifi cation of goals and responsibilities, a human
resources policy ensuring that resources and skill levels are suffi cient,
information systems and tools that are adapted to each team and/
or subsidiary. Each subsidiary is responsible for implementing
the relevant strategies to achieve these objectives, although the
monitoring and verifi cation of the internal control system and risk
management is highly centralized by the operational departments.
The internal control systems of each subsidiary include both the
application of Group procedures and the defi nition and application of
procedures specifi c to each business line in terms of its organization,
culture, risk factors and operational characteristics. With regard to
the parent company, Ubisoft monitors the existence and adequacy
of internal control systems and specifi cally the accounting and
fi nancial procedures implemented by fully consolidated entities.
ORGANIZATION
The key parties involved in the internal control system are as follows:
♦
general management: The general management is responsible
for managing all of the Group’s activities and deals specifi cally
with aspects relating to Group strategy and development. As part
of its role, the general management is responsible for establishing
the procedures and mechanisms employed to ensure both the
functioning and monitoring of the internal control system.
Internal control was strengthened by the creation of an Audit
Committee in 2013;
♦
the Board of Directors assisted by the Audit Committee
since November 20, 2013: The Board of Directors has
defi ned governance regulations in its internal rules specifying
the role of the Board of Directors assisted to this end by its
committees; the Audit Committee in particular, established on
November 20, 2013, is responsible for ensuring the quality of
internal control. The Audit Committee ensures that the Group
has reliable procedures that enable the internal control system
and the risk identifi cation, assessment and management system
to be monitored;
♦ the Group’s managers and employees: the major policies
and goals are determined by the general management in each
area in consultation with Group general management and
are passed on to the subsidiaries. Each subsidiary has its own
general management and management team and is responsible
for implementing the strategies designed to ensure that these
goals are achieved;
♦
operational management: in collaboration with general
management, operational managers are involved in setting the
key accounting, fi nance, legal, tax, IT and human resources
policies, and supporting the subsidiaries with their roll-out.
Specifi c visits are made to the subsidiaries in order to carry out
audits and training and to make recommendations so as to ensure
that the internal control system is satisfactory.
These procedures are presented in detail under “Control
activities”;
♦
the fi nance and accounting teams: present in all Group
subsidiaries, they are responsible for performing analysis and
control functions, including budgeting and the preparation of
the fi nancial statements.
CLEAR GOALS AND RESPONSIBILITIES
The division of powers and responsibilities is clearly defi ned by the
organization charts.
In order to enable the various operational teams to achieve
their goals, temporary and permanent operational and banking
authorizations are granted. These are frequently reviewed by the
Treasury Department assisted by the Administration Department
and are updated to refl ect any changes in roles and responsibilities.
General management defi nes the rules for delegating power to
subsidiaries.
Consequently, at an individual level, each major subsidiary has local
internal control procedures (delegation of bank signing authority,
verifi cation of day-to-day transactions, segregation of duties between
the signatory and the person preparing the payment, limitation of
payments by check to guarantee effective fraud prevention, etc.).
Similarly, budgetary goals are defi ned annually by the general
management and monitored in each subsidiary by the accounting and
fi nance teams. Business performance is monitored by management
audit teams: at subsidiary level, these teams provide relevant cost
analyses to operational managers so that they can make the necessary
management decisions. This information is periodically reported
in a standard format and is consolidated by head offi ce teams, who
analyze the differences between objectives and actual performance.
HUMAN RESOURCES POLICY
HR policy is key to the internal control system and its effectiveness.
HR teams at each of the subsidiaries are responsible for establishing
and implementing the policy, programs and systems required to meet
recruitment goals set at Group level, while ensuring the development
of employees’ skills and potential.
These teams also ensure compliance with local regulations and
apply the Group’s policies on improving collective and individual
- Registration Document 2016 47