subsidiaries to ensure that these risks are managed. Difﬁculties arising in the management of a speciﬁc risk are dealt with and/or give rise to speciﬁc action by the ﬁnancial control teams. This analysis and centralized risk management process are additional to the procedures described below to reduce the risks of deliberate or involuntary error in the accounting and ﬁnancial information published by the company. 2.3.1. Reporting and Budget Procedures The company produces comprehensive and detailed ﬁnancial reporting covering all aspects of the activities of each parent company unit and each subsidiary. This is based on a sophisticated ﬁnancial information system built around a market-leading software package. Reporting procedures are based primarily on the budgetary control system put in place by the Group. The Group’s annual budget is prepared centrally by the Finance division management control teams. This detailed, comprehensive process consists in analyzing and quantifying the budgetary targets of each subsidiary and Group unit under a very wide range of income statement and treasury headings, working capital requirements, together with indicators speciﬁc to each activity and the structure of operations. This system permits rapid identiﬁcation of any deviation in actual or forecast results, and thereby minimizes the risk of error in the ﬁnancial information produced. 2.3.2. Accounts Preparation and Veriﬁcation Procedures (a) Monthly Financial Results The actual results of each Group company are veriﬁed and analyzed on a monthly basis, and new forecasts for the current quarter are consolidated. Each deviation is identiﬁed and described in detail in order to determine its causes, verify that procedures have been respected and the ﬁnancial information properly prepared. This approach is designed to ensure that transactions recorded in the accounts fully reﬂect the economic reality of the Group’s business and operations. Assets and liabilities are subject to regular controls to ensure the accuracy of monthly reported results. These controls include physical counting of ﬁxed assets and reconciliation with accounts; a revolving physical count of inventories (the most important references being counted
four times a year); a comprehensive monthly review by the Finance Division of overdue accounts receivable; a monthly analysis of provisions for risks and charges, and provisions for asset impairment. (b) Quarterly Consolidation Group ﬁnancial statements (statement of ﬁnancial position, income statement, statement of cash ﬂows, and statements of changes in equity) are consolidated on a quarterly basis. The process of preparing the consolidated ﬁnancial statements comprises a large number of controls to ensure the quality of the accounting information communicated by each of the consolidated companies and of the consolidation process itself. All Group subsidiaries employ a single standard consolidation reporting package and the procedure is subject to a wide range of precise controls. Actual results are compared with forecasts received previously in the monthly reporting procedure. Discrepancies are analyzed and justiﬁed and, more generally, the quality of information transmitted is veriﬁed. Upon completion of the consolidation process, all items in the income statement, statement of ﬁnancial position and statement of cash ﬂows are analyzed and justiﬁed. The resulting ﬁnancial statements are reviewed by the Chief Executive Ofﬁcer, by the Chairman of the Board of Directors in the course of organizing the work of the Board of Directors, and then submitted to the Audit Committee, before being reviewed and approved by the Board of Directors, and published by the company.
2.4. Speciﬁc Mechanism to Guarantee the Reliability