Without prejudice to the authority of the Board of Directors, this Committee is responsible in particular for:
- monitoring the process for developing financial information and sustainability reporting, including in digital format, where applicable, and making recommendations to ensure the integrity of these processes.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 this Committee. It examines any proposals for a change in accounting principles or in accounting methods and stays informed, in particular of accounting principles at the national and international level.The Audit Committee’s review of the financial statements is accompanied by a presentation from 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, with regard to the procedures for developing and processing accounting and financial information and sustainability reporting, including in digital format, without its independence being undermined;
- 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 methods and procedures used by Internal Control systems.It conducts an annual review of the risk factors section of the Management Report and of Internal Control and risk management procedures.The Audit Committee’s review of the financial statements is accompanied by a presentation from the Chief Financial Officer describing the Company’s exposure to significant risks.
- monitoring the performance of the statutory audit of the annual and consolidated financial statements by the Statutory Auditors and the independent third-party (OTI) of its remit to audit the annual and consolidated financial statements, as well as the certification of sustainability information.It reviews the audit plan and the work programme of the Statutory Auditors and, where applicable, the independent third-party, 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 and, where applicable, the independent third-party.It takes into account the findings and conclusions of the French regulatory body for statutory auditors (Haute Autorité de l’Audit) following the audits carried out;.
- ensuring that the Statutory Auditors and, where applicable, the independent third-party, comply with their independence requirements.It makes a recommendation with regard to the Statutory Auditors and, where applicable, the independent thirdparty, proposed for appointment by the Annual General Meeting, and makes further recommendations for the renewal of such appointments.
- approving the provision of services, in accordance with the "Code of Conduct for the provision of services that may be entrusted to the Statutory Auditors of the L’Oréal Groupe and to their networks." The Committee decides on this point after analysing the risks related to the independence of the Statutory Auditors and of any independent third-party, and the safeguards applied by them. The Committee may therefore approve each service on a case-by-case basis or approve a set of services as a whole.
- reporting regularly to the Board on the progress of its work. It also reports on the repercussions of the audit and sustainability reporting certification, as well as on the way in which this audit contributed to the integrity of financial information and sustainability reporting. It reports on the role that it has played in this process. The Committee informs the Board of Directors without delay of any difficulties encountered.
This monitoring makes it possible for 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 General Management considers it appropriate to submit such questions to this Committee.
5.2.2. Composition
All Directors who sit on 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 re-appointment 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 where the roles are separated, is not a member of the Audit Committee.
5.2.3. Work organisation
The Chairman/Chairwoman of the Audit Committee issues guidelines for the Committee’s work each year, based on an assessment of risk exposure, in agreement with General Management and the Board.
The Committee meets when convened by its Chairman/ Chairwoman, whenever the Chairman/Chairwoman or Board deem it necessary.
The agenda of the meetings is set by the Chairman/ Chairwoman of the Committee, or together with the Board of Directors where the Board calls the meeting. The agenda is sent to the Committee members before the meeting, together with the information which will be useful for their debates.
To carry out its remit successfully, the Audit Committee may also, subject to approval from General Management, obtain information from people who are able to assist it in the performance of its tasks, and in particular senior managers in charge of economic and financial issues and those in charge of information processing.
