AUDIT COMMITTEE
| COMPOSITION AS OF AUGUST 31, 2020 | |
|---|---|
Sophie Stabile(1) | Chairwoman, Independent director |
Emmanuel Babeau(1) | Independent director |
François-Xavier Bellon | Director |
Soumitra Dutta(2) | Independent director |
Cathy Martin | Director representing employees |
(1) Deemed a “financial expert” as defined in article L.823-19 of the French Commercial Code
(2) Effective October 28, 2020, Soumitra Dutta was replaced on the Audit Committee by Véronique Laury
75 %
Independent *
100 %
attendance
5
meetings
All Audit Committee members have recognized competencies in finance and accounting, as confirmed by their professional background (see section 5.2.1.3). When Cathy Martin was appointed as a member of the Audit Committee, she was given specific in-house training on the Company’s accounting, financial and operating procedures.
The Audit Committee is responsible for ensuring that the Group’s accounting policies are appropriate and consistently applied, particularly with respect to material transactions. It also verifies that the procedures used for preparing and processing accounting information (both financial and extra-financial) are effective and it issues recommendations for ensuring the integrity of such information.
It examines the Company’s fraud detection procedures and its whistleblowing system. It is notably in charge of ensuring that a procedure is in place for dealing with complaints from third parties or employees (which may be anonymous) about any irregularities concerning accounting or internal control practices or any other area.
It issues observations and recommendations to the Company’s senior management team about risks, particularly the structure, scope and organization of risk management. Accordingly, it periodically reviews senior Management Reports on risk exposure (including social and environmental risks) and prevention and ensures that effective internal controls are applied. It also regularly reviews the Internal Audit Reports and is informed of the internal audit plan.
The Audit Committee performs an annual review of the fees paid to the Statutory Auditors of Sodexo and its subsidiaries, assesses auditor independence and pre-approves certain non-audit services. When necessary, it carries out the process for appointing and re-appointing the Statutory Auditors.
The Audit Committee also issues recommendations to the Board of Directors about the regular assessment of the conditions for entering into related-party agreements and other agreements within the Group. As part of its work in this area, it reviews the annual payment due under the service agreement signed between Sodexo and Bellon SA (described in section 5.3.2 of this Universal Registration Document), as well as any changes in its amount from one year to the next.
Lastly, the Audit Committee reviews and issues recommendations on requests made to the Board for pledges, endorsements and guarantees.
To perform its role, the Audit Committee is assisted by the Chief Executive Officer, the Chief Financial Officer, the Senior Vice President Group internal audit and the Statutory Auditors, who present their work to the Committee and answer any questions that it may have. The Committee may also make inquiries of any Group employee, without any Company executives being present, and seek advice from outside experts. It meets at least once a year with the Statutory Auditors without management.
The Audit Committee met five times in Fiscal 2020 and the attendance rate was 100%.
In addition to the above matters, the Committee’s work during the year concerned the following:
- assessing the impact of the first-time application of IFRS 9,IFRS 16 and IFRIC 23;
- reviewing the internal control process;
- reviewing the risk map, the audit plan and monitoring audit engagements;
- updating the Internal Audit charter;
- reviewing the Fiscal 2020 audit plan and the impact of Covid-19 on the annual audit plan;
- monitoring the Group’s financing;
- monitoring the guarantees issued by the Company and the related authorizations granted to the Chief Executive Officer by the Board of Directors, and, more generally, monitoring the Group’s off balance-sheet commitments;
- reviewing the non-audit services performed by the Statutory Auditors;
- reviewing the procedure for identifying related-party agreements;
- reviewing the amounts owed to Bellon SA under the service agreement with the Company;
- examining the alternatives for the implementation of a new supplemental pension plan which will notably be applicable to the Chief Executive Officer;
- reviewing the organizational structure of the finance function;
- examining the Group’s scope of consolidation, the integration process for newly acquired companies, and the accounting restatements carried out in relation to acquisitions.
The Audit Committee also reviewed the annual consolidated financial statements for Fiscal 2019 and the interim consolidated financial statements for the first half of Fiscal 2020. In addition, it examined the sections of the Fiscal 2019 Universal Registration Document relating to risk management and internal control procedures, as well as the content of the Half year Financial Report, and reviewed the draft financial press releases before they were submitted to the Board of Directors.
Part of the meetings dedicated to reviewing the Group’s annual and half-year results took place with the Statutory Auditors and without management.
In addition to formal Committee meetings, the Chair of the Audit Committee also had meetings during the fiscal year with the Chief Executive Officer, the Senior Vice President Group Internal Audit, the Chief Financial Officer and the Statutory Auditors.
* Excluding directors representing employees