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2010 EDITION
An adventure of enterprise
GROUP
INTERNAL
CONTROL CHARTER
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TABLE OF CONTENTS
Introduction
FIRST PART
Overview of internal control
Defnition
Te mechanisms of internal control
Te limitations of internal control
SECOND PART
Internal control at PPR
Roles and responsabilities
A proactive approach at all levels
Internal control and risk evaluation tools
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INTRODUCTION
Internal control management must more than ever be at the
heart of our priorities
Franois-Henri Pinault
PPR Group Chief Executive Ofcer
Internal control plays an essential role in corporate governance.
It enables the directors and managers to ensure the efcient
and economical deployment of the resources that are needed
to achieve their objectives.
Internal control operates from a preventative and organisatio-
nal perspective. Te aim is to set up measures to prevent fraud,
but also to minimise the risk of errors and failures in order to
strengthen company performance.
It forms part of a system for controlling the risks to which the
company is exposed, risks which could prevent the company
from reaching its targets.
As such, internal control needs to be understood and taken on
board by all the people in the organisation.
In a context of business development, particularly at the in-
ternational level, and the stepping up of regulations in general
and of corporate governance requirements in particular, this
Charter aims to reiterate the guiding principles of internal
control and to underline the role and the responsibilities of the
management within this framework.
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OVERVIEW OF INTERNAL CONTROL
Defnition
Internal control is a system which is defned and implemen-
ted under the responsibility of the company. It consists of
a set of measures, practices, procedures and actions which
allow the company to control:
its activities, operational efectiveness and the efcient use of
its resources; and
signifcant risks, whether they be strategic, operational, f-
nancial or compliance-related.
In particular the system aims to ensure:
compliance with laws and regulations;
application of guidelines and instructions set by Executive
Management;
the smooth running of internal processes, particularly
those contributing to the protection of its assets;
the reliability of fnancial information.
As such internal control extends beyond a set of procedures or
fnancial and accounting processes.
FIRST PART
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Te quality of the internal control system depends on the fol-
lowing mechanisms:
the control environment based on the code of conduct and
integrity set by management and communicated to all em-
ployees;
an organisational framework which clearly defnes responsi-
bilities, provides adequate skills and resources and is suppor-
ted by the appropriate procedures, information systems, tools
and practices;
the internal communication of relevant and reliable informa-
tion so as to provide each employee with the knowledge nee-
ded to exercise his/her responsibilities;
a system for identifying, analysing and managing the key
risks;
control activities that are scaled and adapted to the specifc
issues of each process;
constant surveillance and regular testing of the internal
control system.
Te internal control framework needs to be monitored and
modifed where necessary, so that the system can respond
quickly in any given context.
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Risk mapping
By identifying and prioritising risks, mapping provides the
Executive Management of the various Branches and the Group
with added reassurance as to the efectiveness of the controls
implemented and the decisions taken in respect of risks that
could impact the value of the companys assets and prevent it
from achieving its targets.
Te purpose of mapping is to implement appropriate mea-
sures to control risks and, where necessary, to allow for a de-
cision not to cover a risk if the cost of the measures needed is
deemed to exceed the potential cost relating to the impact of
the risk were it to arise.
SECOND PART
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Published by the Internal audit department of the PPR group in June 2010
PPR SA (commercial company) with a share capital of 506 314 352 - 552 075 020 RCS Paris
10, avenue Hoche - 75381 Paris Cedex 08 - France
Tel. : +33 (0)1 45 64 61 00 Fax : +33 (0)1 45 64 60 00
ppr.com
Tis document is for internal use only by the employees
designated by the relevant entities of the PPR group.
Tis document is printed on fbre-based paper from forests managed in accordance
with sustainable development.
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An adventure of enterprise