The Board has set up an Internal Audit Committee within the Board itself, formed by the Director Roberto Cravero (Independent and non-executive) with the role of coordinator and by the Directors Leopoldo Conti (non-executive and not independent), Riccardo Conti (independent and non-executive) and Andrea Martin (independent and non-executive).

During 2010 the Committee met for 9 times, as shown in Table 2 attached to this Report, while, on average, meetings lasted one and a half hour. Five of the meetings were joint meetings with the Board of Statutory Auditors.

The coordinator Roberto Cravero and the member Leopoldo Conti attended all meetings. Andrea Martin was absent only in the case of the first two meetings (held on the same day), while the member Riccardo Preve (appointed by the Board as a member of the Internal Audit Committee on 29 April 2010) was absent only in the case of one meeting.

The Chairman of the Board of Statutory Auditors, either directly or (in one case) via a standing statutory auditor, took part in 7 of the 9 meetings.

During the current financial year, the Company has already met twice, doing so jointly with the Board of Statutory Auditors.

During its meetings the Committee also interacted, based on prior agreement and to address individual topics, with the General Manager, Corporate Accounting Reporting Officer and with the auditing firm. It systematically interacted with the Internal Auditing Officer and Compliance Manager, who normally attend the Committee’s meetings with a view to achieving synergy between the various players in the internal audit system.

In assessing directors’ compliance with the requirements of integrity, professional skill & repute and independence, the Board of Directors ascertained that Roberto Cravero, the Committee’s coordinator, has accounting and financial experience, deemed appropriate by the Board.

The Committee is attributed with functions vis-à-vis the Board that are consultative and propositive, i.e. it has to:

  • Aid the Board of Directors in performing its task of setting guidelines for the internal audit system and of periodically checking its appropriateness and operation, satisfying itself that the main corporate risks are properly identified and managed;

  • Evaluate the work plan drawn up by the Internal Auditing Officer and receive the latter’s periodically reports;

  • Assess the results set out in the auditing firm’s report and in any letter of recommendations prepared by the same;

  • Express its opinion on the “Work Plan” of the Compliance Department and on the reports concerning the plan’s implementation, in view of their presentation to the Board of Directors;

  • Evaluate, together with the Corporate Financial Reporting Office and external auditors, proper utilization of accounting standards and their uniformity for the purpose of drawing up consolidated financial statements;

  • Perform any further tasks assigned to it by the Board of Directors.

As regards related-party transactions, the Internal Audit Committee – or rather the part of it consisting solely of independent directors – also performs the functions attributed to it by the Board, as governed by the “Procedure for related-party transactions”.

During 2010 the Committee’s activity regarded some key guidelines, i.e.:

  • Examination of procedures concerning related-party transactions;

  • Review of the Committee’s functions in the light of the novelties introduced by Italian Legislative Decree no. 39 of 27 January 2010;

  • Anti-money laundering regulations – internal arrangements and safeguards;

  • Contingency Funding Plan;

  • Checking of implementation of the audit plan and analysis of reports consequently emerging;

  • Examination of the reports emerging from the 2010 audit plan;

  • Coordination of activities with the other corporate bodies and officers involved in control activities.

Upon conclusion of its 6-monthly reports to the Board of Directors, the Committee stated that it had not found any inadequacies in the internal audit system.

Committee meetings were properly documented in minutes.

In performing its functions, the Internal Audit Committee can access the information and corporate functions necessary to carry out its tasks. The Committee can also ask for the presence at its meetings of:

  • Experts if the technical content of transactions becomes particularly important, to be identified also among Board members. These experts can be called to take part in meetings on an advisory basis;

  • All members of company staff concerned, who can be called to take part in the meetings on an advisory basis.