03 Risk management Internal control process relating to the preparation of accounting and financial information n overseeing the regional managers and managers of operational areas concerned; n structuring the internal control network; n interfacing with the other stakeholders in the relevant processes, such as process owners, risk managers and internal and external auditors; n advising on the implementation of transformation projects and programs. In 2017, the worldwide application for monitoring the entire financial internal control process in place since 2009 was enhanced based on a standard commercial software solution. The new application continues to leverage the guidelines and principles defined in previous phases undertaken since 2004. The model will continue to be extended to cover additional processes and legal entities. Post-acquisition audits are performed for newly acquired companies and sub-groups that are fully consolidated and an internal control process deployment plan is prepared based on their respective characteristics (manufacturing, sales or financial services business, information system, geographic location, organization and governance, materiality in Michelin’s consolidated financial statements, control environment and culture). An initial internal control self-assessment exercise is carried out with the new teams, in order to meet their needs and help them understand what the Group expects from their internal control process. Action plans are drawn up with the teams concerned in order to help them take ownership of the approach and related tools. The financial self-assessment system potentially encompasses the following 16 processes: n purchasing, from ordering to supplier payment; n sales, from customer order to payment; n customer credit management; n management of inventories (raw materials, semi-finished and finished products, and spare parts); n inventory valuations; n financing and financial risk management; n management of intra-Group transactions (transfer pricing and elimination of intra-Group balances); n information systems management and administration (general IT testing); n accounts closing; n project and fixed asset management; n taxes; n people management (pay, benefits and travel expenses); n consolidation; n investor relations; n mergers/acquisitions/divestments and their integration into the Group; n management of customs affairs, including the Group’s customs management processes, import/export management, supervising freight forwarders, organizing delegations of authority, customs documentation, etc. At every company covered by the system, the key internal control activities for each process are self-assessed and improved by the line personnel concerned every year. Internal Controller reviews The key controls for every process are tested in every facility at least once every four years or more often if necessary, depending on the degree of risk. The results of tests conducted by internal controllers are shared with the external auditors of the Group's companies, so that they can capitalize on the findings and strengthen their own external audit procedures. Action plans In each company, action plans are prepared to address the identified areas for improvement and are implemented by line personnel. More generally, this approach is integrated into the continuous improvement process, which is also supported by the findings of the external and internal auditors. In addition, this self-assessment and testing system is applied to the five integrated components of the internal control process, as defined by the Committee of Sponsoring Organizations of the Treadway Commission (COSO): control environment, risk assessment, control activities, information and communication, and monitoring activities. Action plans are generally scheduled for completion within two years for a large majority of compliance shortfalls, excluding information system issues, which take longer to resolve and require more resources. Countermeasures have been implemented to mitigate risk exposure in the interim. 169 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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