Page 162 - 2012 Annual Report

162 VIVENDI l 2012 l Annual Report
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INFORMATION ABOUT THE COMPANY – CORPORATE GOVERNANCE
SECTION 4 - REPORT BY THE CHAIRMAN OF VIVENDI’S SUPERVISORY BOARD ON CORPORATE GOVERNANCE, INTERNAL AUDITS
AND RISK MANAGEMENT – FISCAL YEAR ENDED DECEMBER 31, 2012
KEY PROCEDURES FOR FINANCIAL AND ACCOUNTING INFORMATION
4.5. KEY PROCEDURES FOR FINANCIAL AND ACCOUNTING INFORMATION
The procedures listed below help reinforce internal controls concerning
the treatment of financial and accounting information disclosed by Vivendi.
The provisions of the guide on applying internal control procedures in
relation to financial disclosures, contained within the standards for
internal control published by the AMF, were taken into account during the
update of these procedures.
✱ Consolidation and financial reports: the Consolidated Financial
Statements of the Group and its financial reporting are prepared in
accordance with international accounting standards (IFRS) based
on accounting data prepared by the management for each business
unit. The IFRS and IFRIC interpretations used are those adopted by
the European Union with a mandatory application as of December 31,
2010. The main topics addressed in the Financial Report must comply
with specific requirements, which include, in particular, an impairment
test on assets held by the company during the fourth quarter of each
fiscal year, an assessment of the liquidity risk, the valuation of
employee benefits, duties and taxes (see below) and off-balance sheet
commitments. The Consolidated Financial Statements are closed and
approved by the Management Board quarterly. The annual and half-
year financial statements are reviewed by the Supervisory Board, in
reliance on the observations of the Audit Committee. The Group’s
Consolidated Financial Statements are published quarterly. They are
subject to an annual audit and limited semi-annual reviews by the
Group’s Statutory Auditors.
Budget and management control: every year, each business unit must
present its strategy and its annual budget for the following year to
the Group’s Senior Management. Following approval by Vivendi’s
Management Board, a summary is then presented to the Supervisory
Board. Quantitative and qualitative targets used as a basis to assess
performance are then set for each business unit’s management. The
budgets are reviewed each month and updated three times a year.
✱ Investments/divestments: any investments or divestments exceeding
€15 million must receive prior approval from the Investment Committee
chaired by the Chairman of the Management Board. This procedure
applies to all transactions (including the acquisition of equity interests
and the launch of new businesses), whatever the amount, and to any
other financial commitment (including the purchase of rights and
property contracts) that was not provided for in the annual budget.
The Investment Committee meets as often as necessary. The analysis,
documents and reports used in their deliberations are prepared by the
Disposals and Acquisitions department at corporate headquarters.
Any transaction involving amounts greater than €100 million and
€300 million must receive the prior approval of the Management
Board and the Supervisory Board, respectively, pursuant to their
Internal Regulations. In the case of Activision Blizzard, whose rules
of governance are defined in its by-laws, any investment decision
involving a sum greater than US$30 million not provided for in the
budget must be approved by its Board of Directors, consisting of a
majority of members appointed by Vivendi.
✱ Follow-up of investment transactions: in connection with the
regular follow-up of value creation, Vivendi’s Management Board
strengthened the process of reviewing the post-completion integration
of investment operations, supplementing the existing budgetary
reviews and quarterly financial reporting. The analysis aims to
validate the implementation of controls and initiatives as well as the
actual financial performance pursuant to the business plan which was
approved for the acquisition. It takes into account both the progressive
integration of companies acquired by the business units and the
impact of changing market conditions following the acquisition date.
Vivendi’s Internal Audit department reviews the conclusions, which
are then presented to Vivendi’s Senior Management and, if there are
major issues, to the Management Board.
✱ Monitoring of financial commitments: as part of the financial reporting
process, the business units compile a list of the commitments given
and received on a quarterly basis. These commitments are presented
by the business units’ legal and finance officers at meetings held with
Vivendi’s Management which take place as part of the closing process
for the annual financial statements.
✱ Sureties, endorsements and guarantees: pursuant to the provisions of
the company’s by-laws and the Internal Regulations of the Supervisory
Board, the granting of sureties, endorsements and guarantees by the
company to its subsidiaries is subject to prior approval in accordance
with the following dual limitations:
– any commitment under €100 million where the aggregate amount
of commitments is under €1 billion is subject to the approval of the
Management Board which may delegate such power. The approval
requires the signatures of both the Chief Financial Officer and the
General Counsel; and
– any commitment over €100 million and any commitment, regardless
of the amount, where the cumulative amount of commitments is
over €1 billion are subject to the approval of the Supervisory Board.
The approval requires the Chairman of the Management Board’s
signature.
✱ Treasury, financing and liquidity: the management of cash flows and
hedging transactions (including foreign exchange and interest rates)
is centralized at the headquarters of Vivendi SA. SFR manages its
treasury function itself, under the supervision of Vivendi SA. GVT
and Maroc Telecom’s treasury functions are managed independently
and are tailored to the Group’s policies and procedures. At Activision
Blizzard, a cash management agreement defines the services to be
performed by the company on behalf and under the responsibility of
Activision Blizzard. Liquidity position at the business unit level, as well
as exposure to foreign exchange and interest rate risks are monitored
on a bi-monthly basis by a Treasury Committee. The majority of short
and long-term financing activities take place at the head office and
are subject to the prior approval of the Management Board and
Supervisory Board, in accordance with the provisions of their Internal
Regulations. However, financings that are part of the management of
the company’s debt, whenever they are being optimized within the
ceilings already authorized by the Supervisory Board, only require a
notification to the Board.