2020 Universal registration document and annual financial report - BNP PARIBAS116
2 CorPorate GovernanCe and internal Control
2
Internal control
Data processing system
The data processing system is organised around two channels, the first structured according to entities, and the second according to businesses:
■ Measure, Control and Explain (MCE) is the Finance channel dedicated to the expert and industrialised preparation of the actual financial data, organised around shared regional platforms and multi- businesses, meeting any need for financial reporting related to the actual data produced (financial statements, regulatory, management, solvency, liquidity, taxes), at Group or local level;
■ Monitor and Foster Performance (MFP) is the Finance channel which has an analysis and advisory role in terms of strategic management of the businesses, based on the financial data provided by the MCE channel. It is also responsible for preparing forecast financial reports (estimate, budget, three-year plan, financial information in stressed scenarios) by interacting closely with the Business heads. This is why this channel is structured according to the Division, Business, Function.
PERMANENT CONTROL OF ACCOUNTING AND FINANCIAL INFORMATION
Internal control within the Finance Function
In order to enable it to centrally monitor risk management related to accounting and financial information, the Finance Function has an Financial Control, Certification and Audit Affairs team which carries out the following main missions:
■ defining the Group s policy as regards the accounting internal control system. This system requires accounting entities to follow rules in organising their accounting internal control environments and to implement key controls ensuring that the information in their consolidation packages is reliable. The Group has issued internal accounting control guidelines for use by the consolidated entities and a standard accounting control plan listing the major mandatory controls aimed at covering the accounting risk;
■ ensuring that the internal control environment for accounting and financial information functions properly within the Group, in particular via the procedure for internal certification of accounts described below; reporting quarterly to Executive Management and the Board s Financial Statements Committee on the quality of the Group s financial statements;
■ together with the Risk Function, overseeing the proper functioning of the system for collecting and processing consolidated credit risk reporting, including by means of a specific certification and quality indicator system;
■ ensuring the proper functioning of the data collection and processing system so that liquidity reports can be prepared, in particular by means of a specific certification and quality indicator system;
■ monitoring the implementation by entities of recommendations from the Statutory Auditors and from General Inspection relating to the accounting risk, with the support of the divisions/business lines. This
monitoring is facilitated by use of a dedicated tool that enables each entity to monitor the recommendations made to it and to regularly report on the progress made on the various action plans. Centralised monitoring of these recommendations enables Group Finance to identify improvements to the accounting internal control system made within the consolidated entities, identify any cross-functional problems and, if necessary, revise the Group-level procedures and instructions.
Independent central control teams pass these tasks to the Finance Departments in the divisions/businesses, which supervise the entities closely and, if necessary, implement accounting controls geared to their specific situation.
Lastly, within the entities Finance Departments, the Group s accounting internal control principles have led to dedicated and independent accounting control teams or representatives, depending on the size of the entities, being set up. As such, the Group s established approach, in which the reporting production tasks are consolidated on regional platforms (improving the harmonisation of the reporting and control processes and increasing their efficiency for the entities concerned), also ensures that the accounting control teams are the appropriate size and have the necessary expertise. The main missions of these local teams are as follows:
■ implementing the second-level accounting controls within all entities within their scope. In a decentralised accounting framework, these controls complete the first level controls carried out by back offices, and particularly rely on accounting control tools that, for example, make it possible, in the case of each account, to identify the department responsible for its justification and control, to reconcile the balances recorded in the accounting system with the balances in the operational systems for each business, and to identify, justify and monitor the clearing of suspense accounts;
■ coordinating the elementary certification process (described below) requiring an entity s different departments to report on the controls that they have carried out;
■ to ensure that the accounting internal control system enables the entity s Finance Department to have sufficient oversight of the process of preparation of account summaries, and in particular over all the elements necessary for the Group s certification process (described below). To assist in achieving this objective, the tasks involved in accounts closure are formally defined. The use of tools to map the processes and associated risks and to document the checks as well as the coordination with other control channels contributes to improving the quality.
Internal Certification Process
At Group level The Finance Function uses FACT (Finance Accounting Control Tool) for the internal certification of the quarterly data produced by each entity for the consolidation package; for the validation performed within the Finance Departments of divisions/businesses; and for the consolidation process for which the Group Reporting Department within Group Finance is responsible.
