The self assessment of Internal Control is a mature process within the Group.
Each country, in which Sodexo is present, with revenue of greater than 10 million euros completes an annual compulsory self-assessment questionnaire of strategic controls in the risk management tool, which generates a detailed report (Company Level Control Report) on their control environment.
The assessment is based on the five components of the reference framework and includes an evaluation of the subsidiary’s principal risks, a description of risk management measures and an assessment of their effectiveness. The self-assessment is signed off electronically by the country CEO and CFO.
Over and above the Company Level Control assessment, regional and local Internal Control managers define an annual scope of more detailed controls (Process Level Controls) to be tested per country. The testing scope is determined using a risk-orientated approach based on the country risk assessment, and guidelines given by Group Internal Control. Group Internal Control may also stipulate compulsory controls to be tested. The results of the internal control testing are reported and monitored using the tool.
An executive summary of the status of internal controls is submitted to the Audit Committee at the end of the fiscal year.
Group Finance is responsible for ensuring the reliability of financial and accounting information. A process is in place to produce and analyze financial information locally and at the Group level.
Local Finance teams produce a monthly income statement, balance sheet, and cash flow statement. On a quarterly basis, they also produce forecasts for the full year. Financial statements are consolidated on a monthly basis by the Group Consolidation Team.
At the half-year, the external auditors conduct a limited review of the interim financial statements.
At the end of the fiscal year, the Region Chief Executive Officers and Chief Financial Officers certify the reliability of their financial statements, prepared in accordance with IFRS standards, in the form of a representation letter.
The external auditors of the main entities express a view on these financial statements in accordance with their mandate from Sodexo’s shareholders.
Group Finance monitors changes to IFRS standards and interpretations and ensures that the accounting treatments applied by all entities are compliant with Group rules.
Twice a year, Group Finance identifies the events that may have led to one or several assets being impaired, notably goodwill and intangible assets (in accordance with IFRS). Where appropriate, the carrying amount of the asset concerned is written down in the financial statements.
Procedures are in place to identify off-balance sheet commitments. This term covers all rights and obligations that may have an immediate or future impact on Sodexo’s financial position but are not recognized (or are only partially recognized) in the balance sheet or income statement. These include items such as assets pledged as security; guarantees relating to operating contracts (for example bid bonds or performance bonds), to borrowings, or to claims and litigation; lease obligations not recognized in the balance sheet; commitments under call or put options. Off-balance sheet commitments are presented regularly to the Board of Directors.
The Sodexo Tax Department defines the Sodexo Group Tax policy. The policy is designed to achieve tax consistency worldwide and to ensure that appropriate taxes are paid in line with local tax rules in the various geographic regions in which Sodexo operates. The Tax Department ensures that significant changes in local, European & worldwide tax laws are anticipated and correctly applied at country level, with the cooperation of the operational teams.
Region Chief Executive Officers and their Leadership Teams, review operational and financial reporting (including metrics for client retention, sales development and net new signings) before presenting it to the Sodexo Leadership Team.
In addition, quarterly business reviews with each of the Group’s regions give the Group Chief Executive Officer and Chief Financial Officer insight into performance trends for the regions based on the financial reporting and operational information.
Finally, using the financial information reported and consolidated, the Chairwoman and Chief Executive Officer, assisted by Group Finance and the Group Investor Relations team, prepares the Group’s financial communication. The Chairwoman and Chief Executive Officer also relies on the operating data required to prepare the Universal Registration Document. The interim and annual results press releases are submitted to the Board of Directors for approval.
To enable the Chairwoman and Chief Executive Officer to provide reliable information on the Group’s financial situation, a Disclosure Committee comprising representatives from the Group’s corporate functions reviews all financial information prior to publication. Members represent the following functions: Financial Control, Investor Relations, Strategic Planning, Legal, Internal Control, Human Resources, Sustainability, Communications, and the Board Secretary.
