BPCE - 2018 Registration document

5 FINANCIAL REPORT

Statutory Auditors’ report on the consolidated financial statements

Provision for restructuring

Risk identified and main judgements

Our response

As part of the integration of the activities, redeployment of the know-how and expertise of Crédit Foncier within Groupe BPCE, the Crédit Foncier group recorded provisions for restructuring. These provisions concern employee costs which must be incurred due to the implementation of collective bargaining agreements negotiated with the representative trade unions. These provisions also cover the estimated costs notably of property charges and breach of contract costs for the exclusive sales agents. The valuation of provisions requires the exercise of judgement based on assumptions relating to the various aspects of the employee protection plan. We considered these provisions to be a key audit matter due to: the importance of the impacts of this project; ● the potential impact on the amount of these provisions regarding ● uncertainties relating to achieving certain assumptions adopted by Management regarding the complexity of the agreements and their analysis with respect to labor law and accounting standards. At December 31, 2018, the expense related to Crédit Foncier Group's restructuring plan amounts to € 334 million. Please see Notes 1.3 and 5.13 to the consolidated financial statements for further details.

As part of our work, we performed tests on the appropriateness of the provision calculation base, employee costs and other costs incurred by the plan. We have verified that the estimates made by Crédit Foncier including all of the measures appearing in the redundancy plans negotiated with trade union representatives. We also assessed the amount of costs incurred and likely to be provided for with respect to accounting standards. We also assessed the reasonableness of the main assumptions with respect to available information. We have tested the provision calculations at December 31, 2018 on the basis of sampling. Finally, we have examined the appropriateness of the disclosures presented in the notes to the consolidated financial statements.

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Registration document 2018