The Control and Risks Committee appointed by the Board of Directors on 24 April 2018 consists of three independent, non-executive directors:
- Cristina Rossello – chairperson, independent non-executive director
- Patrizia Giangualano – independent non-executive director
- Angelo Renoldi – independent non-executive director
Members of the committee hold office until the expiry of their mandate as directors and, therefore, until approval of the financial statements for the year ending 31 December 2020.
The Control and Risks Committee has consultative and advisory functions vis-à-vis the Board of Directors, with the task of supporting, through adequate preliminary analysis, the assessments and decisions of the Board of Directors with regard to adequacy of the internal control and risk management system and definition of its guidelines, as well as those regarding approval of the periodic financial reports.
Within the terms of its competence, the Committee coordinates its activity with that of the following persons and bodies: the Board of Statutory Auditors; the external audit firm; the Head of Internal Audit; the Director in charge of the system of internal control and risk management; and the Manager in charge of financial reporting.
In particular, the committee was assigned the following tasks:
- to assess the action plan drawn up by the Head of Internal Audit, and examine the periodic reports that the latter prepares on the assessment of the system of internal control and risk management, as well as any other reports of particular relevance that are prepared by the Internal Audit function;
- together with the manager in charge of preparing the corporate accounting documents, after hearing the legal auditor and the Board of Statutory Auditors, evaluates the correct use of the accounting principles used and their homogeneity for the purposes of preparing the consolidated financial statements;
- to monitor the independence, adequacy, effectiveness and efficiency of the Internal Audit function;
- to request the Internal Audit function to carry out checks on specific operational areas, and inform the Chairman of the Board of Statutory Auditors of such requests at the time they are made;
- to periodically report to the Board of Directors on the adequacy of the system of internal control and risk management in conjunction with the Annual Financial Report and the Half-Year Financial Report, on at least every six months;
- to provide counsel on specific aspects regarding the identification of the Group’s main risks, as well as on the designing, implementation and supervision of the system of internal control and risk management, should it be so requested by the Director of the system of internal control and risk management;
- to provide counsel to the Board of Directors on the findings of the external auditors, presented in the letter of recommendation and in the audit report on the key issues that emerged during the audit;
- provide the Board of Directors with an opinion on the appointment and revocation of the Internal Audit Manager, as well as the resources assigned to him/her and his/her relative remuneration;
- with adequate preliminary work, supports the assessments and decisions of the Board of Directors on the management of risks deriving from prejudicial facts of which the Board of Directors has become aware and performs the additional tasks assigned by it;
- to assist the Board of Directors in assessments and decisions relating to sustainability issues, with particular reference to the approval of the Non-Financial Statement;
- the definition of the guidelines of the internal control and risk management system, so that the main risks relating to the Company and its subsidiaries are correctly identified and adequately measured, managed and monitored, determining the degree of compatibility of these risks with company management as consistent with the strategic objectives identified;
- have the right to access the information and company functions necessary for the performance of their duties.
The Control and Risks Committee held 14 meetings in 2018, each duly recorded in their respective minutes. The meetings were attended at different times by members of the Board of Statutory Auditors, the Head of Internal Audit, the Supervisory and Oversight Body and the Head of Legal and Corporate Affairs, as well as by the audit firm Deloitte & Touche and the Heads of some corporate functions.
As far as the 2018 fiscal year is concerned, the Control and Risks Committee carried out the following activities worthy of note:
- approved the 2018 annual internal audit programme for the Company and its Subsidiaries prepared by the Internal Audit Manager, and verified its implementation.
The 2018 Audit plan provides for the following interventions for the Parent Company and its subsidiaries, which fall under the following:
1. Operational audit: an analysis of business processes and an assessment of their effectiveness (success rate in reaching objectives) and efficiency (costs, timing, resources employed);
2. Compliance audit: the application of some operational guidelines on the part of the Parent Company and companies in the Group;
3. 231 Compliance Audit: the application of Legislative Decree 231/2001, in support of Supervisory Bodies of the Parent Company and its subsidiaries;
4. Financial Audit: the application of Italian Law 262/05, in support of the Financial Reporting Officer;
- it examined the activities carried out by the Internal Audit department in 2018, agreeing with the recommendations made and proposing recommendations of its own; within this context, follow-ups to Internal Audit inspections were reviewed;
- it examined the activities and structure of the Internal Control Department, not only insofar as the internal audit as per the point above, but also to support the Supervisory Bodies of the Parent Company and the subsidiaries, risk management activities and operating processes;
- it acknowledged the operational guidelines implemented by the Company during the year;
- examined the preliminary analysis illustrated by corporate management, and approved the impairment test methodology as regards the financial statements as at 31 December 2017 adopted by the company, noting that the definitive findings and assessments on the potential reduction in the value of tangible, intangible assets and equity investments would be subject to specific examination and approval by the Board of Directors;
- examined the risk reporting at 31 December 2017 and the annual report of the Financial Risks Committee, without detecting anomalous issues;
- it reviewed the 2017 annual report and the report for July 2018 prepared by the Control and Risk Committee, which did not contain any irregularities;
- it analysed the results of the year’s Risk Assessment process, prepared and presented by the Head of Internal Audit. The activity focused on both the Parent Company and its associate companies in Italy and France;
- it acknowledged the report prepared by the Head of Internal Audit on the self-assessment of the Internal Control and Risk Management system of the Mondadori Group;
- it analysed the findings of the independent auditor as presented in the report on the key issues that emerged during the audit; no defects were observed in the internal control system in terms of financial disclosure, and there were no uncertainties worthy of note regarding business continuity;
- assessed the principles, methodologies and reporting methods of the Non-Financial Statement, Legislative Decree 254/16;
- it approved the Internal Audit Manual;
- it has held meetings with company management, examining issues relating to the businesses in question;
- it approved the updating of the operating provisions in force within the Mondadori Group.