The Internal Control System:
Reference framework
Cadre

Presentation of the work performed by the Working Group set up by the AMF

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CONTENTS

I - INTRODUCTION PREAMBLE 1.1 THE CONTEXT 1.2 THE APPROACH

2 2 4 4

II - THE GENERAL PRINCIPLES OF INTERNAL CONTROL 2.1 SUMMARY 2.2 DETAILED EXPOSÉ

7 7 8

III - APPLICATION GUIDE FOR INTERNAL CONTROL PROCEDURES RELATED TO THE ACCOUNTING AND FINANCIAL INFORMATION PUBLISHED BY THE ISSUERS

APPENDICES

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APPENDIX 1: ACCOUNTING AND FINANCIAL INTERNAL CONTROL QUESTIONNAIRE RISK ANALYSIS AND CONTROL QUESTIONNAIRE APPENDIX 2: AMF ASSIGNMENT LETTER AND COMPOSITION OF THE AMF WORKING GROUP APPENDIX 3: LIST OF THE WORKING GROUP MEMBERS APPENDIX 4: MAIN TEXTS RELATED TO CORPORATE GOVERNANCE

1

INTRODUCTION

PREAMBLE
According to articles 225.37 and 225.68 of the commercial code which are based on the Financial Security Act (LSF) dated August 1st 2003 (article 117), in companies whose financial instruments are listed on a regulated financial market in France, the Chairman of the Board of Directors or of the Supervisory Board gives an account, on the internal control procedures that the company has implemented . For these same companies, in accordance with article L225-235 (article 120 of the LSF): the external auditors present in a report, their observations on the report (of the Chairman) in respect of the internal control procedures regarding the elaboration and processing of accounting and financial information . In its 2004 report on corporate governance and internal control, the Financial Markets Authority (AMF) notes that unlike corporate governance, which now benchmarks standards against which issuers can compare themselves, the absence of a unanimously accepted reference framework for internal control makes the task of describing it much more difficult and can be an obstacle if one eventually wishes to assess the adequacy and effectiveness of the systems . In this context, in April 2005,