2018 REGISTRATION DOCUMENT AND ANNUAL FINANCIAL REPORT

2018 Registration document and annual fi nancial report - BNP PARIBAS 109

2CORPORATE GOVERNANCE AND INTERNAL CONTROL

Internal Control

Moreover, as part of the Single Channel programme, systems for generating accounting refunds were enhanced with specifi c credit risk and liquidity data in addition to the accounting and analytical data already present. This development, coupled with the implementation of a shared reporting platform, currently being rolled out, will ultimately facilitate the achievement of financial and regulatory reporting requirements;

■ the management channel: this channel prepares the management information (especially that from the divisions/business lines compiled from the data per entity) that is relevant to the economic management of activities, complying with the established internal principles and standards. It ensures the consistency of the management data with the accounting data, at every level. This channel is responsible for the preparation of solvency and liquidity ratios and for their analysis.

Group Finance designs, distributes and administers the reporting tools for the two channels. These tools are designed to suit the channels individual objectives and necessary complementarity, and provide information for the entire Group. In particular, Group Finance promotes the use of standard accounting systems in Group entities. The systems are designed at Group level and progressively rolled out. This approach promotes the sharing of information and facilitates the implementation of cross-functional projects in the context of the development of pooled account processing and synthesis within the Group.

For the preparation of liquidity-related data, the Group has adopted the principle of integrating internal management data and those required for regulatory reporting, which is based on the following system:

■ governance involving Finance, ALMT and the Risk Function, at Group level and at the level of the divisions/business lines and entities;

■ policies and methodologies applicable as required by regulations;

■ permanent tools and processes at the Group level and at the level of the divisions/business lines and entities;

■ a dedicated Group tool ensuring data collection and the production of internal and regulatory reports.

This system ensures the production of regulatory reports on liquidity as well as internal monitoring indicators and contributes to reporting relating to the bank resolution.

PERMANENT CONTROL OF ACCOUNTING AND FINANCIAL INFORMATION

Internal control within the Finance Function

Group Finance has a Group Control & Certifi cation Department to enable it to monitor the control of accounting and fi nancial information risk in a centralised manner. Its main tasks include:

■ 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 fi nancial information functions properly within the Group, in particular via the procedure for internal certifi cation of accounts described below; to report quarterly to Executive Management and the Board s Financial Statements Committee on the quality of the Group s fi nancial 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 specifi c certifi cation system and quality indicators;

■ 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 dedicated tools that enable 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.

For the Accounting channel, independent central control teams pass these tasks to the Finance Departments in the divisions/business lines, which supervise the entities closely and, if necessary, implement accounting controls geared to their specifi c 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 effi ciency 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 :

■ providing a link between Finance and the back offi ces that sends data to the accounting system, for instance, by verifying that the back offi ces have the information they need for their accountancy work (e.g. training in the accounting tools provided; knowledge about the accounting structure, etc.);

■ implementing the second-level accounting controls within all entities within their scope. In a decentralised accounting framework, these controls complete the fi rst level controls carried out by back offi ces, 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 justifi cation 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 certifi cation process (described below) requiring an entity s different departments to report on the controls that they have carried out;