2010 REGISTRATION DOCUMENT (3.4 Mo) - Groupe Casino

CORPORATE GOVERNANCEChairman’s Report5The rules governing the appointment and replacement of Boardmembers and amendment of the by-laws are described on pages 222onwards.The powers of the Board of Directors are described on pages 181,194 and 223. The Board’s powers to issue and buy back shares aredescribed on page 33 and page 30 respectively.Agreements to which the company is a party and which are alteredor terminate upon a change of control of the Company are describedon pages 28 (“Monoprix”) and 40 (“Liquidity Risks”).There are no agreements between the Company and its directors oremployees providing for compensation if they resign because of atakeover bid, or are made redundant without valid reason, or if theiremployment ceases because of a takeover bid.5.4.2 INTERNAL CONTROL AND RISK MANAGEMENTGroupe Casino’s internal control and risk management systemis based on the risk management and internal control referenceframework published by the Autorité des marchés financiers (AMF),which is a French adaptation principally of the international frameworkpublished by the COSO (Committee of Sponsoring Organizations ofthe Treadway Commission).The work underlying this report involved interviews, analysis ofaudit reports and circulation of AMF and internal questionnaires.The format and content of the report is also based on the AMF’sreference framework and the report of its working group on auditcommittees.The report and the underlying work have been presented to the AuditCommittee for review and opinion, and submitted for approval to theBoard of Directors of Casino, Guichard-Perrachon in accordance withthe law of 3 July 2008.Scope of risk managementand internal controlIn accordance with the AMF reference framework, the scope of riskmanagement and internal control as described in this report coversthe parent company and its subsidiaries within the meaning of theFrench Commercial Code (Code de commerce). The AMF referenceframework requires the risk management and internal control systemto be adapted to the specific characteristics of each company and therelationships between the parent company and its subsidiaries.Parties involved in risk managementand internal controlSenior Management, through the Executive Committee, is responsiblefor defining and implementing the risk management and internalcontrol system to ensure that it is appropriate for the Company, itsoperations and organisation structure.The Board of Directors of the parent company, Casino, Guichard-Perrachon, is informed of the key features of the risk managementand internal control system by Senior Management. The Board hasset up an Audit Committee whose role is described below.The Board may also use its general powers to perform controls andverifications or take any other initiatives it deems appropriate.The Board’s Audit Committee is responsible for checking thatGroupe Casino has the appropriate resources and structure to identifyand prevent risks, errors and irregularities in the management of theGroup’s business. As such it fulfils a clear, ongoing oversight role inrelation to the risk management and internal control system.It issues observations and recommendations on audit work performedwithin the Group, and carries out or commissions any risk managementor internal control analyses and reviews it deems appropriate.It oversees the financial reporting process and monitors theeffectiveness of internal control and risk management systems inthe Group.The Audit Committee’s Charter, which set out its duties andresponsibilities, was revised in 2010.Group Internal Control is responsible for encouraging theimplementation of best internal control practices.Its duties include:■■■■■■■assisting Senior Management in identifying significant risks in theGroup’s business units;setting out the Group’s key internal controls in general proceduresand risk matrices;assisting the operating and support units in improving and optimisingthe control systems in place or to be deployed;setting out, managing and overseeing internal control and riskmanagement training programmes, including fraud prevention;analysing issues identified by the operating or support unitsinvolving deficiencies in internal control or significant developmentsin processes or information systems;overseeing the work underlying the Chairman’s report on internalcontrol and risk management;any other matters relating to internal control and risk managementas determined by Senior Management.Group Internal Control works with local internal control officers in thevarious business units, forming a network of about thirty dedicatedinternal control staff.The role of Group Internal Audit and the Business Unit InternalAudit departments in relation to internal control is described in thesection of this report on “Ongoing monitoring of internal control”.Lastly, employees, managers and operating heads are allresponsible for making the risk management and internal controlsystem work efficiently.Limitations of risk managementand internal controlAs stated in the AMF reference framework, no risk managementand internal control system can provide absolute assurance that thecompany’s objectives will be achieved. There are limitations inherent inany system resulting from numerous internal and external factors.General risk management principlesDef inition of risk managementWithin Groupe Casino, risk management encompasses a set ofresources, behaviours, procedures and actions that is adapted to theGroup’s specific characteristics and that enables Senior Managementto keep risks at acceptable level for the Company.Registration Document 2010 | Casino Group185