BPCE - 2018 Registration document

FINANCIAL REPORT Controls of accounting and financial reporting quality

Control of the central institution’s accounting and financial information production system In addition to monitoring and coordinating the Review process, the Financial Review division is also tasked with: second-level control of the work of the Accounting function and in ● particular financial and regulatory statements published under the responsibility of the Group Finance and Strategy division; coordinating the permanent control mechanism for key reports ● and/or key steering indicators produced by the central institution including, on one hand, the organization and updating of the document library for these reports and indicators (report mapping, key steering indicators, key report handbook) and, on the other hand, the definition and implementation of controls to be carried out on the latter; monitoring the Statutory Audit system and on behalf of the Audit ● Committee, tracking the services of the Statutory Auditors and publishing their fees (Audit Committee and registration document). In addition to the self-checking and external control procedures performed in the entities responsible for preparing individual or consolidated financial statements, the quality of accounting and financial controls is verified by: the Group Accounting division, which coordinates the system for ● producing accounting and financial information. In this respect, this division: sets accounting and prudential standards at the Group level for - the production of individual and consolidated accounts to French and IFRS accounting standards and the production of regulatory reports to national or supranational oversight and control authorities, coordinates the Accounting function, thereby increasing the - quality of the first-level control system, examines the reports covering accounting and regulatory data - that it receives as part of the production of statutory accounts and regulatory consolidated financial statements, by conducting multiple controls using data received through the consolidation packages sent by the entities that fall within the Group’s scope of consolidation, conducting, as part of the duties of the central institution that - fall under Article L. 511-31 of the French Monetary and Financial Code, a routine review of the regulatory reports of affiliates before they are submitted to the Autorité de contrôle prudentiel et de résolution and in accordance with the rules agreed to with that Authority (multiple consistency checks and analyses), checking, as part of the tax consolidation regime for cooperative - banking groups (Article 223 A et seq. of the French General Tax Code), tax consolidation packages sent to the central institution by entities that fall within the scope of that regime; the Group’s Statutory Auditors, which work on a panel basis and ● base their opinions partly on the conclusions of each consolidated entity’s Statutory Auditors, particularly regarding compliance with the Group’s standards as laid down by BPCE and partly on the effectiveness of local internal control procedures. To make the certification process as efficient as possible, the “Framework for Statutory Auditor Assignments at Groupe BPCE” recommends that each fully-consolidated entity in the scope of consolidation has at least one representative of the Group’s Statutory Auditors on its panel;

Groupe BPCE’s Inspection Générale division as part of its ● assignments at Group institutions. Finally, under the Ministerial Order of November 3, 2014 governing internal control, Groupe BPCE’s Inspection Générale division presents to the Audit Committee and the Supervisory Board an annual report summarizing Group internal control. On the basis of detailed questionnaires, this report assesses internal control procedures, particularly in the accounting and financial areas. CHANGES IN THE MECHANISM IN 2018 In 2018, actions intended to strengthen the accounting and financial information control system continued with: the first visits of Group institutions in line with the supervision and ● alert procedure introduced in 2017 and which relies on key indicators from the reporting mechanism. This procedure enables an assessment, for each institution, of accounting and financial information quality control system risks (Quantitative Risk Assessment); efforts to strengthen the mechanism for second-level controls of ● regulatory reports with, in particular, the continued collection of the results of controls of local modifications in certain areas (solvency and leverage ratios, FINREP, scope, etc.); the introduction of a project aimed at defining controls as part of ● the fraud, corruption and influence-peddling prevention and detection plan; the implementation of a project aimed at improving the control ● mechanism on the application of IFRS 9 which includes: an assessment of the internal control environment and controls - carried out under the first-time application of the standard, the introduction of a standardized second-level accounting - review framework for financial instruments; in relation to the Statutory Audit, the effective implementation of ● new European rules and the completion of a qualitative survey of the Group’s Statutory Auditors. ROLE OF SUPERVISORY BODIES IN ACCOUNTING AND FINANCIAL DISCLOSURE Once per quarter, the BPCE Management Board finalizes the consolidated financial statements and presents them to the Supervisory Board for verification and control. Individual financial statements are prepared once per year, in accordance with regulations in force. The Supervisory Board of BPCE checks and controls the individual and consolidated financial statements prepared by the BPCE Management Board and presents its observations about the financial statements for the fiscal year at the Ordinary General Shareholders’ Meeting. For this purpose, the Supervisory Board has set up a specialist committee in charge of preparing its decisions and formulating recommendations: the Audit Committee. Details on this committee’s duties, including monitoring the process for preparing accounting and financial information, the statutory audit of the annual and consolidated financial statements, as well as the Statutory Auditors’ independence, are defined in Chapter 2 “Corporate governance”. The Finance Committee is composed of executives from each of the two networks and is tasked with reviewing all financial subjects relating to the shareholder community. It examines these subjects in keeping with Group committees covering these areas and provides an advisory opinion.

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Registration document 2018