AFD - 2018 Registration document

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RISK MANAGEMENT

Risk management

4.3.2 Internal control procedures and organisation of audit trail for accounting and financial information (Article L.225-100-1-5) The AFD Group’s accounting is handled by the Regulatory Accounting Consolidation department (RCC) of the AFD Finance Department (DEF). The activities of this department include: P the accounting registration of transactions initiated at the Head Office on the accounts payable, fixed assets, investments and services functions; P the auditing of local office accounts and the entry of expenses related to seconded agents; P the recognition of market transactions (loans, derivatives and investment securities); P the control of the centralisation in the general accounting of ancillary accounts and the implementation of second-level controls on all sectors; P tax returns with the exception of those relating to wages and the building; P the preparation of individual company financial statements using French standards; P SURFI, Balance of Payments, FINREP and COREP regulatory reporting; P and, for the subsidiaries, Sogefom, Proparco and Soderag: P bookkeeping using French standards, the production of the half-year financial statements and of fiscal and regulatory declarations (SURFI – Balance of payments). The division is also in charge of preparing consolidated half-year financial statements under IFRS. The accounting recognition of loans, grants and guarantees granted is carried out by the Funding Financial Management department (GFC). Accounting controls are carried out by the Regulatory Accounting Consolidation department (RCC). The separation between the engagement, accounting and execution functions for treasury operations is maintained by both the organisation of services and the implementation of procedures. Accounting entry is largely decentralised (branches, other Head Office services). Accounting control is split between banking operations and general expenses. The Group’s accounting is audited by two statutory auditors appointed by the Board of Directors. Their terms of office were renewed by the Board of Directors on 30 April 2014 for six fiscal years (2014-2019).

In its “Compliance” configuration, the New Products and New Activities committee (Coconap) examines (i) any changes to French or local laws or regulations which affect AFD Group, (ii) any significant compliance events in the respective areas of activity, (iii) the list of operational non-compliance incidents, (iv) the updated compliance, fraud and corruption risk mapping and (v) the progress of corrective measures. For “Compliance” matters, the Coconap is chaired by the director of the AFD Executive Risk Department (DXR). The role of the Accounting, Finance and Management Control committee (Cofico) is to examine and monitor AFD’s financial, accounting and management control activities. It is chaired by the Deputy Chief Executive Officer or the Chief Financial Officer. The role of the Partnership committee (Copar) is to centralise and collate all the Group data on its partnerships with French development operators (French regional collectivities, NGOs, companies, foundations), inter-state organisations, international foundations and NGOs, bilateral or multilateral donors and stakeholders in the developing countries, and to investigate the merits of entering a new partnership or renewing an existing one. It is chaired by the Associate Chief Executive Officer or the Executive Director for Strategy, Partnerships and Communication (SPC). The role of the Credit committee (CCR) is: P to verify all the due diligence carried out at the time of project appraisal; P to examine the financing proposals prior to their submission to the AFD decision-making bodies; P to validate the terms of the resolution proposals or decision to grant funds; P to log any reservations expressed by the Compliance Department (DOC), the Second Opinion Unit or any other member of the committee; P to record the sustainable development appraisal and the final opinion of the Second Opinion Unit and log any follow- up rights issued. The chair of the CCR will be appointed according to the value of the applications submitted, with provision for three levels of delegation (director of the regional department, director of the executive operations department (DOE) or general management). Information is also passed on to executive officers via memos which formally record, for example, the verdicts of the Second Opinions Unit or compliance opinions, legal warnings or notification of thresholds being exceeded.

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REGISTRATION DOCUMENT 2018