BPCE_REGISTRATION_DOCUMENT_2017

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-levelcontrol of the work of the accountingfunction 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 implementationof 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 publishingtheir 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 productionof individualand consolidatedaccountsto French and IFRS accountingstandards and the productionof regulatory reports to national or supranational oversight and control authorities, coordinates the accounting function, thereby increasing the - quality of the first-levelcontrol system, examines the reports covering accounting and regulatory data - that it receives as part of the production of statutory accounts and regulatory consolidatedfinancial statements, by conducting multiple controls using data received through the consolidation packagessent by the entitiesthat fall within the Group’sscope of consolidation, conducting, as part of the duties of the central institution that - fall under Article L. 511-31of the FrenchMonetaryand 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 accordancewith the rules agreed to with that Authority (multiple consistency checks and analyses), checking, as part of the tax consolidationregime for cooperative - banking groups (Art. 223 A et seq. of the French General Tax Code), tax consolidationpackages 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 conclusionsof 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 Assignmentsat Groupe BPCE” recommendsthat each fully-consolidatedentity in the scope of consolidationhas 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 InspectionGénérale division presents to the Audit Committee and the SupervisoryBoard an annual report summarizing Group internal control. On the basis of detailed questionnaires, this report assesses internal control procedures, particularly inthe accounting and financial areas. CHANGES IN THE MECHANISM IN 2017 In 2017, actions intended to strengthenthe accountingand financial information control system and the supervision of the Review function continuedwith: the introduction of a supervision and alert procedure for ● institutions which rely on key indicators from the reporting mechanism. This procedure enables an assessment, for each institution,of accountingand financial informationquality control system risks (QuantitativeRisk Assessment).It defines three levels of supervision(standard,moderateand high) and helps identify the corrective measures to apply to institutionswhose review systems are falling behind those of others and carry out, where necessary, on-site visits and diagnostics; the reinforcement of reporting on the results of analyses and ● second-levelcontrols(Flash reports),with submissionto the central institution of: a summary to be submitted each quarter by each institution’s - review function to obtain highlights and material irregularities identifiedover the period, as well as watch points for the periods ahead, the result of second-level controls carried out by each - institution’sreview function on regulatoryreports (solvencyratio initially) via the Group’s permanent control tool (PILCOP) which supplementsthe existingcollectionof reportsfrom previousyears on the correct application of accounting regulations at the reporting date; the implementationof a working group on one of the eight pillars ● of the Sapin II Act on transparency,prevention of corruption and economic modernization which covers “internal and external accountingcontrols aimed at ensuring that the books, records and accounts are not used to conceal cases of corruption or insider influence”. In line with instructions defined by the French Anti-CorruptionAgency, work, which should be completedin 2018, aims to provide an operational response to the implementationof this pillar; the implementation of a project relating to the internal control ● system with the implementationof IFRS 9 to ensure the efficiency and reliability of procedures governing the classification, measurement and impairment of financial instruments; the developmentof IS solutions to support second-levelcontrol in ● the organization and performance of tasks which could be automated with the deployment of an automated control and analytical review tool (DCS – data control system) based on the Group’s consolidationtool; the adaptation of the Group Statutory Audit system to the new ● requirements of the European audit reform adopted on June 17, 2014 by the European Commission, enacted into French law by ordinance 2016-315 and applicable since June 17, 2016. To meet these new requirements, BPCE’s Supervisory Board approved the update to the “Framework for Statutory Auditor Assignments at Groupe BPCE” onNovember 7, 2017.

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Registration document 2017