Fraud control policy
1. OBJECTIVEBarilla has a zero-tolerance attitude toward fraudulent behaviors and a strong commitment to the high ethical standards stated in the Company Code of Ethics. All persons concerned by this policy (“Policy”) are expected to share this attitude and commitment.
Barilla promotes consistent organizational behavior by providing guidelines and assigning roles and responsibilities in the prevention, detection and investigation of potential and actual frauds against Barilla Group (Barilla hereinafter).
This Policy is established to strengthen the fraud risk awareness and knowledge, and improve the internal control system for the prevention and detection of frauds.
2. SCOPEThe Policy applies to all Barilla’s employees and to consultants, vendors, contractors, customers, and any other company stakeholders.
3. DEFINITION OF FRAUDFraud is defined as any illicit and intentional act characterized by deceit, concealment, or violation of trust perpetrated with the purpose of obtaining an unauthorized and unjust benefit and/or damaging Barilla, mainly through:
- Asset misappropriation;
- Commercial frauds;
- Fraudulent statements and misrepresentations.
All company’s stakeholders are expected to report their suspicions of potential frauds or irregularities through the dedicated e-mail box [email protected].
4. REPORTING SYSTEM AND CONFIDENTIALITY
Please refer to Annex1 for fraud reporting instructions.
All information received, as well as the identity of the reporting individual will be treated in the most confidential way; anyone who reports suspected or known fraudulent activity will be protected by the Company from any possible retaliatory actions.
5. ANNEX 1 – FRAUD REPORTING INSTRUCTIONSInformation on potential frauds or irregularities have to be reported through the dedicated and confidential line [email protected].
Reporting individuals have to consider the following:
- Language: the communication can be in the language of the reporting individual.
- Content: at a minimum, individuals should provide, when possible, key information such as:
- Description of the fact;
- Individual(s) involved;
- Value of the irregular / fraudulent transaction, if known.
Asset misappropriation: Asset misappropriation is the theft of an entity’s asset. It can be accomplished in various ways, including embezzeling receipts, stealing assets, or causing an entity to pay for goods or services not received.
6. ANNEX 2 – GLOSSARY
Examples of asset misappropriation are:
- Theft, destruction, removal, misappropriation, misuse or personal use of funds, data, materials, equipment or other Barilla assets.
- Disclosure of confidential and proprietary information to outside parties.
Commercial frauds: Examples of commercial frauds are: counterfeiting, food quality and consumer frauds. They are intentional and deceptive practices aimed at product tampering, trademark and design counterfeiting, and/or food quality misrepresentation, so as to threaten consumers' health and damage Barilla’s brands and reputation.
Corruption: offering, giving, receiving, or soliciting any item of value (money, gifts, or benefits with monetary value beyond the limits set by the Code of Ethics and the corporate policies on receiving and offering Gifts and Entertainment) to influence the action of a public officer or the action of any private person who operates at any level within a private entity to gain an unjust advantage; fostering Barilla’s investment in businesses where employees have financial or family interests (conflict of interest).
Employee: Any individual working full-time or part-time, under a contract of employment, permanent or temporary, and who is hired to provide services to Barilla on a regular basis in exchange for compensation.
Fraud: Fraud can be defined as:
any intentional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the perpetrator achieving a gain.
Any illegal act characterized by deceit, concealment, or violation of trust. These acts are not dependent upon the threat of violence or physical force. Frauds are perpetrated by parties and organizations to obtain money, property, or services; to avoid payment or loss of services; and/or to secure a personal or business advantage2.
Fraudulent statements and misrepresentations:
- Fraudulent statements: the intentional misstatements or omissions of amounts or disclosures in financial statements to deceive financial-statement users where the effect causes the financial statement not to be presented in all material repects, in conformity with generally accepted accounting principles (GAAP). Fraudulent financial reporting may be accomplished by the following:
- Manipulation, falsification, or alteration of accounting records or supporting documents from which financial statements are prepared;
- Misrepresentation in, or intentional omission from, the financial statements of events, transactions, or other significant information;
- Intentional misapplication of accounting principles relating to amounts, classification, manner of presentation or disclosure
Fraudulent financial reporting need not be the result of a grand plan or conspiracy. It may be that management representatives rationalize the appropriateness of a material misstatement, for example, as an aggressive rather than indefensible interpretation of complex accounting rules, or as a temporary misstatement of financial statements, including interim statements, expected to be corrected later when operational results improve3.
The above definition of fraudulent statements applies also to managerial accounting and reporting.
- Fraudulent misrepresentation: the intentional misrepresentation of material facts made with knowledge of its falsity, inducing others to act, and upon which others rely with resulting damage. Misrepresentation can also be carried out by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.
Definition provided by the report “Managing the Business Risk of Fraud: a Practical Guide” – 2009 -, issued and sponsored by the Institute of Internal Auditors, the American Institute of Certified Public Accountants and the Association of Certified Fraud Examiners.
Definition from the “International Standards for the Professional Practice of Internal Auditing” – 2012 -,issued by the Institute of Internal Auditors.
Definition from the AICPA Statement on Auditing Standard – SAS nr. 99, Consideration on Fraud in a Financial Statement Audit.