BPCE - 2020 Universal Registration Document

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FINANCIAL REPORT

CONTROLS OF ACCOUNTING AND FINANCIAL REPORTING QUALITY

To this end, the Accounting division: sets accountingand prudential standards at the Group level for • the production of individual and consolidated financial statements that meet French and IFRS accounting standards, and the production of regulatory reports for national or supranational oversight and control authorities; coordinates the accounting process, thereby increasing the • quality of level one controls; examines the reports covering accounting and regulatory data • that it receives by conducting multiple controls using data contained in the consolidationpackages sent by the entities in the Group’s scope of consolidation for the purposes of preparing the parent company and regulatory consolidated financial statements; conducts, 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 ACPR and in accordance with the rules agreed-upon with the ACPR (multiple consistency checks and analyses); controls, as part of the tax consolidation regime for mutual • banking groups (Article 223 A et seq. of the French General Tax Code), the tax consolidation packages sent to the central institution by the entities falling within the scope of this regime. Level two controls Within the Group, the system is managed by the Group Financial Control department. The Head of this department is a standing guest member of the Group Internal Control Coordination Committee and has been granted powers to set standards for the function. In conjunction with the shareholder institutions and Group subsidiaries, the department maintains functional ties between local Financial Control departments and the central institution to ensure the quality of the entire control system. Under its groupwide duties, the department’s primary activities are to: facilitate the sharing of best practices via a special-purpose • committee (Financial Controller Committee) and working groups; draft and distribute the body of standards and documentation • for the sector and ensuring its implementation; coordinate each entity’s system for reporting to the central • institution so that it can assess their system for producing and verifying accounting and financial information; carry out visits to entities and in particular those with financial • control systems that are less stringent than those of others; implement accounting controls to prevent and detect fraud, • corruption or influence peddling; verify, on behalf of the Audit Committee, the Group’s • regulatory audit system and in particular services other than certification of financial statements.

In addition to its groupwide duties, the department performs operational audits of the central institution, as it does for each Group entity. These audits cover the processes and publication of reports by the central institution (regulatory and oversight reports), in conjunction with other level two control teams. Level three controls These controls are implemented by: 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 compliancewith 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 recommendsthat each Group entity has at least one representativeof the Group’s Statutory Auditors certifying BPCE’s financial statements; BPCE's Group Inspection Générale division, which notably • ensures compliance in audits of the Group’s institutions and internal control procedures, including accounting and financial audits. CHANGES IN 2020 In 2020, efforts to enhance the accounting and financial information control system continued, with the update of the framework for the quality control of • accounting and financial information approved by the Group Internal Control Coordination Committee on June 17, 2020 intended to strengthen the independence of Financial Control and its missions in order to ensure better coverage of the scope in compliance with regulatory requirements (in particular on the control of reports and the control of fraud and corruption); the publicationof a standardwhich, on the one hand, specifies • the areas of risk and the most sensitive headings as well as the accounting controls to be implemented to help prevent and detect fraud and corruption or influence peddling (in compliance, in particular, with the requirements defined by the Sapin 2 Act) and, on the other hand, organizes its implementation within the Group; the drafting of a set of standard controls intended to verify the • content as well as the production, control and publication environment of the reports (management or regulatory), regardless of the regulations; in the context of the Covid-19 crisis and in particular in the first • half of the year, the adaptation of the second-level accounting control system to support accounting production during the health crisis while maintaining controls on the areas deemed to be the most at risk; the integration of Oney Bank into the direct scope of • management and supervision of the Financial Control division; lastly, the continuation of support or training for the • permanent controllers of each Group entity with, in particular, the introduction of a new training course dedicated to strengthening the independent review of reports.

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE

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