5.1.2. Work organisation
It meets when convened by the Chairman/Chairwoman of the Committee whenever he/she or the Board considers this appropriate.
The agenda of the meetings is set by the Chairman/Chairwoman of the Committee, in conjunction with the Board of Directors if the Board initiates the meeting.
The Strategy and Sustainability Committee reports on its work to the Board whenever necessary at least once a year.
5.2. Audit Committee
5.2.1. Remits
The Audit Committee, acting under the responsibility of the members of the Board, is responsible for monitoring issues relating to the preparation and control of accounting and financial and non-financial information, the Internal Control and risk management systems, and questions relating to the Statutory Auditors.
The Audit Committee must ensure that the General Management has the means to enable it to identify and manage the economic, financial, non-financial, and legal risks facing the Group inside and outside France in carrying out its normal or exceptional operations.
Without prejudice to the areas of authority of the Board of Directors, this Committee is responsible in particular for:
- carrying out the process for preparation of financial and non-financial information and, where applicable, making recommendations to guarantee the integrity thereof.
The Committee is informed of the accounting rules applicable within the Group. Any issues that may be encountered in the due and proper application of such rules are referred to it. It examines any proposal for a change in accounting principles or in accounting methods and stays informed, in particular with regard to accounting principles at the national and international level.
The Audit Committee’s review of the financial statements is accompanied by a presentation by the Chief Financial Officer describing the Company’s significant off-balance sheet commitments;
- monitoring the efficiency of the Internal Control and risk management systems, as well as Internal Audit, in order to obtain reasonable assurance with regard to their effectiveness and their coherent application.
It is also responsible for monitoring the Group’s main risk exposures and sensitivities. The Committee reviews, in particular, the programme and objectives of the Internal Audit Department and reviews the main topics that it identifies as well as the Internal Control systems methods and procedures used.
It conducts an annual review of the section of the Management Report on risk factors and Internal Control and risk management procedures. The Audit Committee’s review of the financial statements is accompanied by a presentation by the Chief Financial Officer describing the Company’s exposure to significant risks;
- monitoring the performance of the statutory audit in respect of the annual and, where applicable, the consolidated financial statements by the Statutory Auditors. It reviews the audit plan and the Statutory Auditors’ work programme, the findings of their audits, their recommendations and the follow-up action taken further to such recommendations. It reviews the breakdown of fees billed by the Statutory Auditors between audit services as such, audit-related work and any other services provided by them. It takes into account the findings and conclusions of the Haut Conseil du Commissariat aux Comptes(the Superior Council of Statutory Auditors) following the audits carried out pursuant to Articles L. 821-9 et seq. of the French Commercial Code;
- ensuring that the Statutory Auditors comply with their independence requirements. It makes a recommendation with regard to the Statutory Auditors proposed for appointment by the Annual General Meeting, and makes further recommendations for the renewal of such appointments, in accordance with Article L. 823-3-1 of the French Commercial Code;
- approving the provision of the non-audit services provided by the Statutory Auditors, referred to in Article L. 822-11-2 of the French Commercial Code, in accordance with the “Code of Conduct for the provision of services that may be entrusted to the Statutory Auditors of the L’Oréal Group and to their networks” approved by the Audit Committee at its meeting on 6 December 2016 and approved by the Board of Directors at its meeting on 9 February 2017. It decides on this point after analysing the risks weighing down on the independence of the Statutory Auditors and the safeguard measures applied by them. The Committee may approve each service other than the certification of the financial statements on a case-by-case basis or approve a set of services;
- reporting regularly to the Board on the performance of its remit. It also reports on the repercussions of the audit engagement, the way in which this engagement contributed to the integrity of financial information and the role that it played in this process. The Committee informs the Board of Directors without delay of any difficulty encountered.
This monitoring enables the Committee to issue recommendations, where necessary, concerning the improvement of existing processes and the possible setting up of new procedures.
The Audit Committee can be consulted for all questions relating to procedures for controlling risks of an unusual nature, particularly when the Board or the General Management considers it appropriate to submit such questions to it.
5.2.2. Composition
All the Directors who are members of this Committee have the necessary qualifications due to their professional experience and their good knowledge of the Group’s accounting and financial procedures.
As soon as they are appointed, the members of the Audit Committee must receive specific information on the Company’s accounting, financial or operational particularities.
The appointment or renewal of the Chairman/Chairwoman of the Audit Committee, proposed by the Nominations and Governance Committee, must be subject to a specific review by the Board.
The Chairman/Chairwoman and Chief Executive Officer or the Chief Executive Officer is not a member of the Audit Committee.
