2018 REGISTRATION DOCUMENT AND ANNUAL FINANCIAL REPORT

2018 Registration document and annual fi nancial report - BNP PARIBAS108

2 CORPORATE GOVERNANCE AND INTERNAL CONTROL

Internal Control

INTERNAL CONTROL PROCEDURES RELATING TO PREPARING AND PROCESSING ACCOUNTING AND FINANCIAL INFORMATION

ROLES AND RESPONSIBILITIES FOR PREPARING AND PROCESSING ACCOUNTING AND FINANCIAL INFORMATION Under the authority of the Chief Operating Offi cer, the Finance Function is responsible for preparing and processing accounting and fi nancial information. It also has an independent control mission which aims to ensure control of the risk related to this information. The missions, implemented with the contribution of all those working within the function, which are defi ned in a specifi c charter. These consist of:

■ defi ning accounting policies and standards as well as management information principles and standards;

■ preparing accounting information and ensuring their regulatory reporting;

■ producing information used in solvency and liquidity ratios calculating the ratios themselves and preparing the regulatory reporting of them;

■ preparing management information (realised and projected in accordance with various scenarios) and providing the necessary support for economic management;

■ managing the risk associated with accounting and fi nancial information (results, balance sheet, solvency and liquidity) by defining and implementing a permanent operational control system;

■ handling the Group s fi nancial communication, ensuring that it is of good quality and well-perceived by the markets;

■ managing the Group s fi nancial structure;

■ overseeing the architecture, design and deployment of the fi nancial information systems (results, balance sheet, solvency, liquidity);

■ defi ning and leading the organisation of the Finance Function;

■ determining the organisation and operational processing of activities related to the Finance Function;

■ exercising a duty to alert Executive Management.

All of its missions, whether carried out directly or with other functions and the ALMT, requires those involved to be fully competent in their particular areas, or, in other words, to understand and check the information they produce and to comply with the required standards and time limits. Particular attention is paid to compliance, quality and integrity of the information used and data protection. Under the authority of the Group CFO, the governance of the system as a whole relies on three basic principles : decentralising the Finance Function, separating the accounting and management information channels, and giving either operational areas (division/business line) or geographical areas (legal entities) responsibility for fi nance. In practice, the responsibility of the Finance Function is carried out as follows :

■ the Finance Function in each entity produces accounting and fi nancial information and carries out the controls to ensure its reliability. The entity s Finance Department sends the information produced to the division/business line to which it is operationally attached;

■ the divisions/business lines carry out a business analysis and check the data produced by the entities and improve its quality, for instance by reconciling, at their level, the accounting and management data;

■ centrally, Group Finance prepares the reporting instructions distributed to all divisions/business lines and consolidated entities in order to ensure that the data is homogeneous and complies with the Group s rules. It gathers all the accounting and management information produced by the entities and approved by the divisions/business lines and assembles and consolidates these data for use by Executive Management or for communication to third parties.

PRODUCING ACCOUNTING AND FINANCIAL INFORMATION

Accounting policies and rules

The local fi nancial statements for each entity are prepared following the accounting standards prevailing in the country where the entity carries on business, while the Group consolidated fi nancial statements are prepared under IFRS (International Financial Reporting Standards) as adopted by the European Union.

Within Group Finance, the Group Accounting Policies Department defi nes the IFRS-based accounting principles to be applied to the Group as a whole. It monitors changes to regulations and interprets them as necessary by issuing new principles. A manual of the Group s IFRS accounting principles is available for the divisions/business lines and entities on the internal network communication tools ( intranet ) of BNP Paribas. It is regularly updated to refl ect regulatory changes.

In addition, the Group Accounting Policies Department also responds to requests from the divisions/business lines or accounting entities for specifi c accounting studies, particularly when a new fi nancial product or transaction is designed or recorded in the accounts.

Lastly, another department within Group Finance is dedicated to the preparation of management principles and standards that take into account the needs identified by the management channel. These principles and standards can also be accessed using internal network tools (intranet).

The regulations relating to solvency fall under the RISK Function (with the contribution of the Finance Function), while regulations on liquidity fall under the ALMT (with the contribution of the Finance and RISK Functions).

Data processing system

The data processing system is structured around two distinct channels :

■ the accounting channel: this is more specifically responsible for preparing the fi nancial and analytical accounting of the entities and for preparing the Group s consolidated fi nancial statements in accordance with accounting policies and standards. It also produces related information on solvency and liquidity, ensuring that it is consistent with the accounting at each level. The channel certifi es the reliability of the information produced by applying internal certifi cation procedures (described below).