The Audit Committee’s role is to assist the Board of Directors in ensuring effective internal financial control and oversight and appropriate disclosure to shareholders and the financial markets.

The Audit Committee’s duties include:

• Recommending the appointment of independent auditors, their compensation and ensuring their independence;
• Establishing the rules for the use of independent auditors for non-audit services;
• Examining the accounting policies used to prepare the financial statements, examining the parent company annual financial statements and the consolidated annual, semiannual, and quarterly financial statements prior to their examination by the Board, after regularly monitoring the financial situation, cash flow statement and obligations of the Company;
• Reviewing the implementation of internal control procedures and the evaluation of their effectiveness with the assistance of the internal audit department;
• Reviewing the creation and activities of the disclosure committee, including reviewing the conclusions of this committee;
• Approving the scope of the annual audit work of internal and external auditors;
• Keeping regularly informed of completed audits, examining internal audit reports and other reports (independent auditors, annual report, etc.);
• Examining the appropriateness of risk oversight procedures;
• Examining the choice of appropriate accounting principles and methods;
• Examining the Group’s policy for the use of derivative instruments;
• Giving, if requested by the Board, its opinion regarding major transactions contemplated by the Group;
• Annually reviewing significant litigation;
• Implementing and monitoring compliance with the Financial Code of Ethics;
• Proposing to the Board, for implementation, a procedure for complaints or concerns of employees, shareholders and others, related to accounting, internal accounting controls or auditing matters; and
• Examining the procedure for booking the Group’s proved reserves.

Members

The Committee is made up of at least three directors designated by the Board of Directors. Members must be independent directors. In 2006, the members of the Committee were Mr. Jacques Friedmann, who served as chairman, until May 12, 2006, when he was succeeded by Mr. Antoine Jeancourt-Galignani, and Messrs, Bertrand Jacquillat and Thierry de Rudder, each of whom is an independent director. The Committee is chaired by Mr. Antoine Jeancourt-Galignani.

Operation

The Committee meets at least four times a year to examine the consolidated annual and quarterly financial statements.
The Audit Committee may meet with the Chairman or the Chief Executive Officer, perform inspections and consult with managers of operating or non-operating departments, as may be useful in performing its duties. The Committee meets with the independent auditors and examines their work, and may do so without management being present. If it deems it necessary for the accomplishment of its mission, the Committee may request from the Board the means and resources to make use of outside assistance. The Committee submits written reports to the Board of Directors regarding its work.