6 Risks and control Internal control SAINT-GOBAIN UNIVERSAL REGISTRATION DOCUMENT 2021 251 Organization of internal control in preparing and processing 2.6 financial and accounting information to the Shareholders Compagnie de Saint-Gobain 2.6.1 individual (parent-company) financial statements The Accounting Department is responsible for producing financial information for shareholders, partners and other third parties in accordance with French legal requirements. This information is prepared using the standards and principles in force. These are generally accepted principles such as the going concern principle, the principles of consistent application of accounting policies, alignment of the opening balance sheet with the prior-period closing balance sheet, recognition of expenses in the same period as the income to which they relate, segregation of accounting periods and substance over form. Accounting organization 2.6.2 The accounting organization is based on the rules, methods and procedures set out in the Group’s doctrine memos. It enables the monthly reconciliation and substantiation of the accounts and the true and fair view of the events which are represented. The organization also has an advisory role and works upstream to anticipate the accounting impacts of events and the regulatory changes that are likely to have a material impact on the Company’s financial statements. The chart of accounts is aligned with the Company’s needs in terms of classification of transactions, and complies with the materiality principle. It is linked to the Group’s Financial Information system. Internal control 2.6.3 Internal control is based on periodic assessments of the process for preparing accounting and financial information. In addition to controlling compliance with payment authorization procedures and the double signature rule for secure payment means, the Accounting Department contributes to internal control by acting as guarantor in respect of responsibilities defined by General Management and formalized through a cost accounting system organized by cost center. Specifically, cost center managers receive monthly schedules listing the expenses incurred under their signature, allowing them to check these expenses and also to compare actual and year-to-date expenses with the initial budget. A summary of these cost accounting reports is sent to the Finance Department and the Group’s General Management at the end of each month. Measures are implemented to strengthen the arrangements for managing accounting risks and contributing to the reliability of the financial statements. For this purpose, since 2016, Group units have been subject to a Balance Sheet Review (BSR) procedure under the direction of the Group Financial Control Department, to increase the level of accounting control by the Finance Department of each entity. The Group’s consolidated financial 2.6.4 statements The consolidated financial statements are prepared by the Group Consolidation and Reporting Department. The department is also responsible for updating consolidation procedures, training, and integrating the subsidiaries into the consolidation process, processing information, and utilizing, maintaining and developing consolidation systems and the Financial Information System for the Group and for regions and HPS. Group standards 2.6.5 The Consolidation Department is responsible for providing information and periodic training to subsidiaries in conjunction with the Regions and HPS, using the consolidation manual, a number of data input manuals, an intranet site and an online training application in French and English. New consolidation instructions are issued for each monthly closing, describing the changes compared with the previous period-end and enhancements to reporting systems, standards and procedures, in collaboration with the Group’s Accounting Standards and Pension Liabilities Department. Each year, the Consolidation Department offers training sessions. Processing information and 2.6.6 control of the financial statements Each subsidiary submits its accounts in accordance with the timetable set by the Company. They are processed and controlled by the Consolidation Department and by each Region and HPS. The Consolidation Department reviews the Group’s financial statements as a whole and makes the necessary adjustments to prepare the consolidated financial statements. These consolidated accounts are submitted to General Management every month. The consolidated financial statements are then examined by the external auditors in accordance with professional Auditing Standards. Consolidation tools 2.6.7 The consolidated financial statements are prepared using consolidation software equipped with a powerful, efficient and highly secure database aligned with the Group’s structure. The software is regularly updated to guarantee the financial information system’s sustainability. A tightly controlled access procedure has also been put in place to ensure that the overall system is secure, and a comprehensive access review is performed once a year. This tool manages a common database that contains the data of all of the Group’s consolidated entities. It feeds data into a secure reporting system accessible on the Group’s Intranet, for the Group’s General Management and the Region and HPS Management, contributing to the internal control of information output.
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