Cap Gemini - Registration Document 2016

CORPORATE GOVERNANCE AND INTERNAL CONTROL

2.5 Internal control and risk management procedures

internal audit system Implementation of the risk management and exposed is an integral part of the Group’s various decision-making processes, whether for short-term annual plans or mid-term The analysis of the risks to which the Group’s activities are strategic plans. dynamic risk management process in order to ensure the proper conduct of business and the attainment of the various strategic In this context, the Group has implemented a systematic and specific risk strategy for each risk considered a priority. up-to-date overview of its key risk exposures and has defined a objectives, structured around four key stages - identification, prioritization, processing and steering - the Group has an

major for the Group and the related risk management systems implemented to mitigate such risks. The different risks are Section 1.7, Risk factors, sets out the various risks identified as presented by type: risks relating to operations and the strategy; ◗ operational risks; ◗ legal risks; ◗ financial risks. ◗ The risk management and internal control system comes from the interaction between the Risk Committee and other risk players, departments, which are responsible for day-to-day risk management in their specific areas. including the Ethics, Compliance and Internal Audit Department, the Insurance Department, the Business Units and the functional which sets out: All financial staff are required to apply the Group’s accounting procedures and policies contained in the TransFORM manual, the strict rules of internal control; ◗ what information must be reported, when, and how often; management rules and procedures; ◗ accounting policies, rules and methods; ◗ performance measures. ◗ In addition, the Group has a single integrated management system (GFS). The application as a whole migrated to the uniformity of management systems is therefore a step closer, strengthening the control environment. publisher’s latest version on January 1,2015 and its roll-out in the Group’s subsidiaries continued during 2016. The desired centers are consolidated within a globalized structure. Finally, the shared service centers pool the accounting processing resources of the Group’s subsidiaries. The main centers are located in Cracow (Poland) and Calcutta (India). These various operational and accounting information required for the general management of the Group as follows: Group requires Business Units to submit weekly, monthly, quarterly, half-yearly and Annual Reports of all budget, forecast, In order to exercise effective control over their operations, the budget and forecasting process; budgets form the basic building ◗ blocks in the management control process. They are debated belong. A forecast operating income statement (for the current month, the following six months and the full year) is prepared managers to the attainment of the budgetary targets of their Business Unit and the next level Business Unit to which they monthly by each Business Unit manager. Variances from budget the variable portion of the compensation paid to Business Unit key moment in the relationship between the different levels of the Group’s management and makes it possible to substantially link each geographic area, Strategic Business Unit and their component Business Units. The budget preparation process is a strategic priorities and available information concerning expected market trends. Group Management sets quantified targets for Unit managers and their superiors, with each budgetary item decided based on past performance, the Group’s chosen and negotiated at length between the different Group Business b. Budgets, forecasts, reporting and consolidation

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Implementation of risk management and internal control objectives 2.5.3 for the preparation and processing of financial and accounting information

financial control and financial communications. accounting and financial rules defined by the Group relating to budgets and forecasts, operational reporting, consolidation, These procedures ensure the application of and compliance with

a. Financial and accounting structure

access to common resources encompassing accounting rules The Group’s financial functions are integrated into the operating structure, that is, both Business Units and countries. They have shared service centers. and procedures, information and management systems and to the corresponding Strategic Business Unit’s financial controller) who is responsible for ensuring that the results of its activities are Each Business Unit has a dedicated financial controller (reporting accurately reported in the accounts in accordance with Group accounting rules and methods. The financial controller verifies that reported to the parent company on a timely basis, report to the Group Chief Financial Officer in order to safeguard the Business Unit financial controllers, whose main responsibility is to ensure that high-quality financial and accounting information is independence required when preparing accounting results. Financial control is, therefore, decentralized. reports and accounting packages used as the basis for preparing the Group’s consolidated financial statements. The Strategic attests to the quality of the information contained in the financial services are correctly billed and paid, checks profit estimates for ongoing projects and assesses their accounting impact, and The countries and geographic areas have a Legal Financial Director, whose duties and responsibilities include rolling-out service centers and the Statutory Auditors, setting accounts closing and financial reporting timetables, signing off on the accounting policies and methods, checking compliance with local taxation and statutory reporting requirements, liaising with shared matters that he or she sees fit to the attention of the Chief consolidation packages of the subsidiaries under his or her authority, signing the representation letter and bringing any and all an effective internal control environment, ensuring that all financial staff in the country or region are well-versed in the Group’s Group systems and procedures in the country, helping maintain

Financial Officer.

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Registration Document 2016 — Capgemini