2018 Registration document and annual fi nancial report - BNP PARIBAS506

6 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 31 DECEMBER 2018

6

Statutory Auditors report on the fi nancial statements

Analysis of legal risk with respect to regulatory and administrative investigations and to class actions (See Notes 2.f and 3.k to the fi nancial statements)

Description of risk How our audit addressed this risk

In each of the countries where it is present, BNP Paribas is subject to the regulations applicable to the sectors in which it operates. If the Company does not comply with the applicable laws and regulations, it may be exposed to signifi cant fi nes and other administrative and criminal penalties. It may also incur losses as a result of private legal disputes in connection with or unrelated to these penalties. Any provision recognised to cover the consequences of investigations into non compliance with certain regulations requires judgement due to the diffi culty in estimating the outcome of regulatory procedures. Any provisions with respect to class actions or other private legal disputes also requires management to exercise judgement. In light of the increase in regulatory and administrative investigations and class actions brought against fi nancial establishments in recent years and of the signifi cant judgement exercised by management to determine the amount of provisions recognised, we deemed this risk to be a key audit matter.

We familiarised ourselves with the procedure for identifying and assessing legal risk with respect to regulatory and administrative investigations and to class actions, in particular through quarterly interviews with BNP Paribas SA s legal functions.

Our work consisted primarily in:

■ obtaining an understanding of the analyses prepared by the fi nancial and legal departments at the end of each quarterly accounting period;

■ obtaining confi rmations from the specialised law fi rms with which BNP Paribas works when subject to legal disputes.

General IT controls

Description of risk How our audit addressed this risk

The reliability and security of IT systems plays a key role in the preparation of BNP Paribas SA s fi nancial statements. We thus deemed the assessment of the general IT controls and the application controls specifi c to the information processing chains that contribute to the preparation of accounting and fi nancial information to be a key audit matter. In particular, a system for controlling access rights to IT systems and authorisation levels based on employee profi les represents a key control for limiting the risk of inappropriate changes to application settings or underlying data.

For the main systems used to prepare accounting and fi nancial information, assisted by our IT specialists, our work consisted primarily in:

■ obtaining an understanding of the systems, processes and controls which underpin accounting and fi nancial data;

■ assessing the general IT controls (application and data access management, application changes/developments management and IT operations management) on material systems (in particular accounting, consolidation and automatic reconciliation applications);

■ examining the control for the authorisation of manual accounting entries;

■ performing additional audit procedures, where applicable.