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DANONE
REGISTRATION DOCUMENT 2015
Corporate Governance
6.4 Internal control and risk management
291
•
managing and analyzing (i) the internal control indicators, and
(ii) the results of the assessments and action plans implemented
by the community of internal controllers;
•
establishing and monitoring operational risk mapping at the
various levels of the organization and managing the network of
internal controllers on priority actions to be defined in response
to these risk maps;
•
supporting and overseeing the international network of internal
controllers through coordination, communication and training
initiatives.
Internal Audit Department
The Internal Audit Department is part of the Financial Controlling
Department. It reports functionally to the Chairman of the Audit
Committee (see section 6.1
Governance bodies
) and submits a re-
port twice a year to the Audit Committee on internal audit activity.
The Internal Audit Department consists of a central team of audit
directors and managers which oversees internal teams of audi-
tors with the support of auditors from international audit firms
(including KPMG) and manages a Singapore-based internal audit
team. It conducts regular audits at the operating units as well as
audits covering central and cross-functional issues. In 2009, the
Internal Audit Department was certified, for the first time, by the
French Institute for Internal Audit and Internal Control (IFACI) in
accordance with International Internal Auditing Standards. The
Internal Audit Department was again certified by IFACI in 2012 and
then in 2015. The interim follow-up audits have always confirmed
the IFACI certification.
This central unit is supported by the audits and supervision activi-
ties of other centralized functions (Food Safety, Quality, Industrial,
Safety, Environment, Information Systems, Crisis Management,
Organization, Human Resources, etc.).
Compliance Department
As part of General Secretary team, the Compliance Department
directly reports to the General Secretary, to the Executive Committee
and to the Audit Committee.
The Compliance Department mission mainly consists in protecting
Danone from risks related to bribery, anti-competitive behavior,
and non-compliance with data privacy rules. In this context, the
Compliance Department is in charge of Danone fraud reporting
and whistleblowing system (Dialert).
Other internal control participants
In Danone's largest and most complex subsidiaries, particularly in
emerging countries, the local head of internal control is supported
by a team of operational internal controllers, who are responsible
for ensuring the proper operational application of internal control
practices at the sites (warehouses, plants, etc.).
In addition, the operational line managers at the subsidiaries and
headquarters play a major role in internal control and its implemen-
tation in their respective areas of responsibility, with support from
the relevant corporate functions (mainly Finance, but also Human
Resources, Sustainable Development, Environment, Safety, Quality,
Information Systems, Legal, etc. – see section
Risk identification and
assessment
hereafter).
Finally, (i) the DANgo steering and cross-functional coordination
Committee, (ii) the Internal Control steering Committee, (iii) the
Dialert Committee (fraud monitoring), and (iv) the Compliance
Committee described hereafter are also involved in themanagement
and continuousmonitoring of internal control, with a view to ensuring,
in particular, consistency with the operating activity at all levels.
Danone's overall internal control and risk management process
Internal control consists of the following five closely-related
components:
•
control environment;
•
risk identification and assessment;
•
control activities;
•
dissemination of information;
•
continuous monitoring.
They are implemented as described hereafter.
Control environment
The aim of the control environment is to make staff aware of the
usefulness and necessity of internal control; it is the foundation of
all the other components of internal control and imposes an ethical
standard, discipline and an organization.
Danone's control environment is based on the following:
•
Danone's values, which are widely communicated across all of
the subsidiaries and Danone's dual economic and social project;
•
the Business Conduct Policy, defined by the Group and conveyed
through a Questions&Answers booklet updated inDecember 2011;
•
the human resources and social policy, particularly with regard
to employee development and training;
•
the impetus given by the Board of Directors and the willingness
to achieve continuous improvements in all operating procedures,
as expressed by the Danone's General Management;
•
the DanoneWay approach, which is deployed in nearly all Danone's
subsidiaries;
•
an anti-fraud program, which has been deployed and operated by
the Group for several years and which informs the subsidiaries'
Management Committees and all employees of internal fraud
and corruption risks. This anti-fraud program is based on seven
“stages”: (i) raising awareness, (ii) prevention, (iii) detection, (iv)
investigation, (v) penalties, (vi) reporting and (viii) continuous im-
provement of the internal control system. In addition, since 2006
Danone has operated a whistleblowing system (Dialert), which
focuses on internal control matters concerning (i) employees, (ii)
suppliers and (iii) any failure to comply with the terms defined by
the World Health Organization Code. The system's visibility was
enhanced in 2010 through the gradual deployment of an intro-
ductory guide (Danone Inside Pack) for new employees, which
highlights the Business Conduct Policy and the ethics hotline;
•
the standardization of Danone's operating processes through the
implementation of the DANgo framework and the regular use of
a single integrated information system (Themis, see section
SAP/
Themis integrated information system
hereafter) which contribute
to the strength of the control environment;
•
the DANgo framework (see section
Danone's internal control
framework
:
DANgo)
above
:
accessible to all Danone employees
in a user-friendly electronic version, it is subject to a systematic
annual review by which the Group ensures that the DANgo internal
control and best practices framework is kept up-to-date. DANgo
is updated by (i) experts from the network of internal controllers
and (ii) operational teams at various business lines, which enables