BPCE - 2019 Universal Registration Document

FINANCIAL REPORT

CONTROLS OF ACCOUNTING AND FINANCIAL REPORTING QUALITY

The organization of the consolidation system is based on a combined solution for the Group’s business lines: for the majority of Group entities and in particular Caisses • d’Epargne and the Banques Populaires: information is communicated on an individual basis to ensure a more detailed view of each entity’s contribution to Groupe BPCE’s financial statements and ratios. The system is based on a single consolidation tool specific to these entities and to all sub-consolidation work. This ensures internal consistency as regards scopes, accounting treatment and analysis; the Natixis sub-group has a consolidation tool that produces its • financial statements and ratios on a consolidated basis, ensuring the consistency of data and providing a transparent overview of its subsidiaries. For the production of Group financial statements, Natixis submits a consolidation package that represents its financial statements and ratios. The central consolidation tool has archiving and security procedures including the daily back-up of the consolidation database. System restoration tests are regularly carried out. BODY OF DOCUMENTS To ensure the reliability of the production processes for accounting and financial information, the central institution has drawn up and deployed a comprehensive body of documents in line with requirements set out in Articles 3 e), 11 e), 255 and 256 of the Ministerial Order of November 3, 2014 on Internal Control. This body of document includes: macro-processes and/or processes that describe activities • from beginning to end, identifying the persons and tools involved; procedures that document workflows to implement • processes; working methods used by the business lines in their daily • activities and which provide details of transactions under their GENERAL SYSTEM Groupe BPCE’s internal control system contributes to the management of all types of risk and enhances the quality of accounting and financial information. It is organized in accordance with legal and regulatory requirements, including those arising from the Ministerial Decree of November 3, 2014 on internal control and texts governing BPCE. It concerns all Group companies, which are monitored on a consolidated basis. The system is governed by an Umbrella Charter addressing the organization of Group internal control, which sets out the main principles, defines the scope of application, and lists all contributors along with their role, with the aim of ensuring that the internal control system of each company and the Group works effectively. This charter is supplemented by frameworks, including the framework on controls of accounting and financial information. DEPLOYMENT OF THE CONTROL SYSTEM FOR ACCOUNTING AND FINANCIAL DATA The Group has established and implemented a system for verifying the quality of accounting and financial information in

responsibility, self-checks, or level one operational controls (including hierarchical controls) that must be carried out.

CHANGES IN 2019 In 2019, the Group continued its efforts to standardize its accounting processes and streamline working methods for the production of consolidated accounting and financial data, while adapting them to internal and regulatory changes, in particular by: adapting software for the application of IFRS 16 on Leases • from 2019; harmonizing the treatment of impairment of financial • instruments under IFRS 9 and improving related documentation; completing the groupwide EDGAR program to improve the • accuracy of governance data, analysis and reporting, aimed at meeting the requirements of Basel Committee Recommendation 239 on Banking Control, dated January 9, 2013 (implementing 11 principles to enhance risk data aggregation and risk reporting). This program is now operational under the responsibility of the Finance and Strategy division (Architecture and Reporting division) and a Steering Committee attended, inter alia, by the Risk division and the IT and Operational Excellence division; in terms of financial transactions, the migration of the • Banques Populaires to the services center and the Group’s technical platform was completed in the first half of 2019. This migration harmonized the processing of financial transactions, improved control of these transactions, and facilitated the production of standardized reporting statements. The Caisses d’Epargne, BPCE SA, CASDEN, Crédit Coopératif and Crédit Foncier de France completed their migration in 2018; producing the FSB Institution-to-Aggregate report, intended to • safeguard against systemic risk and report the Group’s consolidated position broken down by currency, country, maturity, counterparty sector and instrument. accordance with the requirements of the Ministerial Decree of November 3, 2014 on internal control, and particularly Article 11c), which requires the “verification of accounting and financial reporting quality, related to information addressed to either the executive managers or the supervisory body, whether submitted to the supervisory and control authorities or appearing in documents intended for publication.” This system is implemented by various participants at three levels, ensuring a strict separation between the different lines of defense: level one controls are performed by all persons involved in the • production and publication of accounting and financial information (controls of accounting information are coordinated by the Accounting division); level two controls are carried out by a specialized function (the • Review function), working with other level two control participants, as applicable; level three controls are primarily conducted by the Statutory • Auditors as part of their regulatory audit assignments (financial audit). The Group Corporate Secretary’s Office works with the Review function in the Financial Review department to apply this system based on rules and principles set out in three frameworks:

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Accounting and financial data control process 5.8.3

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE