Patch 5:

Final assignment – students to prepare a critical review of the success of their chosen
organization in demonstrating effective control to their stakeholders and make
recommendations as to what further could be done in terms of reporting to provide
assurance to stakeholders that the organization is delivering on its corporate objectives
in a manner that demonstrates effective control, risk management and governance.
(1500 words – assessed 50% of mark)
EURO DISNEY S.C.A

I. Who is EURO DISNEY?

Euro Disney S.C.A is the company that owns and operates Disneyland Paris
which is no 1 tourist destination within Europe. From the official site of Disneyland we
find out that Euro Disney S.C.A is `` the holding company of the Group and is the listed
company. The main asset of the Company is its investment in 82% of the share capital of
its subsidiary, Euro Disney Associés S.C.A. ("EDA"). ``1

2. EURO DISNEY `s Internal Environment

Euro Disney S.C.A operates in France so its legal structure must comply with the
French law. The company is a limited partnership (societe en comandite per action)
which makes a clear distinction between the following bodies:
a) Gerant – is responsible for operating the company;
b) Supervisory Board- overseas the management of the organization;
These two bodies work together in order to provide assurance to company’s
stakeholders. The strategy developed by the company for providing an efficient and
effective assurance was to divide each operating segment into business units that have a
specific executive team. The company has adopted a matrix organizational structure
which means that it is flexible and responsive to any external changes. Another benefit of
the matrix structure is the fact that can be motivating for individuals as well as for team
leaders and can lead to effectiveness and greater productivity.2

3. Internal Control Management

Euro Disney S.C.A adheres to the COSO Framework which provides its
definition of internal control structure. The goal of this framework is to provide a
reasonable assurance that company’s objectives were achieved in an efficient and
effective way. However, the assurance is underlined by optimal functioning of
operations, reliability of financial data, compliance with current laws and regulations and
safeguarding of company’s assets.
The internal control responsibilities are clearly divided among departments and
business units. In order to sustain this strategy, specific functions were assigned to
specific departments. Within the company we have the following 4 different departments
that underline the authority and responsibility of the management:
a) Internal Audit Department;
b) Operational Audit Department;
c) Business Planning and Control Department;

1
http://corporate.disneylandparis.com/corporate-responsibility/corporate-governance/index.xhtml#contentj
2
IIA Manual. Internal Audit Environement
 d) Corporate Controllership Department;

a) Internal Audit Department

The main role of this department is to ``undertake specific financial and non-financial
assignments to ensure that the Processes are operating effectively and efficiently ``3 in
other words it provides the assurance that everything inside the company was
performance without problems.
What it actually does is to provide annual reports/assignments to FAC (Financial
Accounts Committee) where are specified all identified problems within the
company.

b) Operation Audit Department

The main role is to `` monitor the daily compliance with the Group’s operational
procedures to control transactions at all points of sale and the safeguarding inventory
at the Resort``4. It provides the assurance that by the end of the day all operations
were registered into a specific document which can be used by Management for
providing information to its stakeholders.

c) Business Planning and Control Department

It is responsible for `` the establishment of the annual budget and monthly forecast an
coordination of the five-year plan together with the strategic planning
department``5.The department also prepares /reviews contracts ,investment decisions
and analyses to support certain adjustments to the accounts. It provides assurance to
Euro Disney’s shareholders that are interested in maximizing profit.

d) Controllership Department
It is responsible for ``centralizing the Group’s documentation and annual evaluation
on financial and accounting internal controls``6.Moreover it provides technical
support for IFRS interpretation and gives assurance that the company complies with
SOX program.

Each of the department that I have described above has its own objective and
responsibility. However, the company had to develop a certain framework to be
assured that all departments will successfully work together and in the end all
objectives will be achieved. Euro Disney’s control framework includes specific tools
and procedures such as:
A. Code of Business Conduct
B. Processes
C. Internal Control Procedures concerning accounting and financial information:
-Organization of the finance function;
3
Euro Disney S.C.A Reference Document ,2008 , page 128
4
Euro Disney S.C.A Reference Document ,2008 , page 128
5
Euro Disney S.C.A Reference Document ,2008 , page 128
6
Euro Disney S.C.A Reference Document ,2008 , page 128
 -Financial disclosure control procedures;
-Compliance with the Processes Impacting the Reliability of Financial Information

4. Need of controls

Generally speaking a control can be defined as ``the process a manager takes to

assure that actual performance conforms to the organization's plan, or more broadly as
anything that regulates the process or activity of an organization``7.
Euro Disney` s management needed to put in place controls because:
 Controlsmake plans effective. Managers need to measure progress, offer feedback,
and direct their teams if they want to succeed.
 Controls make sure that organizational activities are consistent. Policies and
procedures help ensure that efforts are integrated.
 Controls make organizations effective. Organizations need controls in place if they
want to achieve and accomplish their objectives.
 Controls make organizations efficient. Efficiency probably depends more on
controls than any other management function.
 Controls provide feedback on project status. Not only do they measure progress, but
controls also provide feedback to participants as well. Feedback influences behavior and
is an essential ingredient in the control process.
 Controls aid in decision making. The ultimate purpose of controls is to help
managers make better decisions. Controls make managers aware of problems and give
them information that is necessary for decision making.
There are different control techniques used by Euro Disney` s Management. One can
summarize them on a specific area category such as:
- Financial controls: financial statements, financial ratios, financial audits, budget
controls;
-Marketing controls: market research, test marketing, marketing statistics;
-HR controls: performance appraisals, disciplinary programs, observations, and
training and development assessments;

7
http://www.cliffsnotes.com/study_guide/Organizational-Control-Objectives.topicArticleId-8944,articleId-
8924.html
 5. Effective control to Stakeholders

Stakeholders mapping

A  Environmental Campaigners

BLocal Community, NGOs, Competitors, Charities Causes, Hotel Resorts.

CShareholders, Customers, Employees.

DShareholders, Customers, Suppliers, Banks;

a) Shareholders
According to Euro Disney` s Reference document, Shareholders have a general
annual meeting .