EDF / 2020 Universal Registration Document

2 RISK FACTORS AND CONTROL FRAMEWORK Risk management and control of activities from the Group’s Accounting and Tax Director based on the various elements of assessment (results of internal controls, indicators of the accounting quality dashboard, letter certifying the compliance of the CSP2C accounts, specific actions) to highlight the progress made and determine the improvement actions to be undertaken or continued. An indicator reference framework is used within EDF. It makes it possible to measure areas of conformity of the accounting information for each process. With regard to subsidiaries, each legal entity is responsible for the implementation of the Group’s Accounting and Financial Internal Control Directive. Procedures for preparing and controlling the consolidated financial statements The consolidated financial statements are prepared by the Consolidation Department of the Consolidation Accounting Division on the basis of data entered locally by each entity (parent company entities and subsidiaries) in accordance with Group standards and closing instructions, following a single chart of accounts. The scope of consolidation is closed after noting all companies of significance that are controlled, jointly-controlled or under significant influence. The non-significant nature of entities for which EDF holds an interest and which might fall within the scope of consolidation is examined regularly and submitted annually for the assessment of the Statutory Auditors. The half-year consolidated financial statements are presented to the Audit Committee and then approved by the Board of Directors. The annual consolidated financial statements are reviewed by the Audit Committee, then closed at 31 December of the fiscal year by the Board of Directors and lastly approved by the Shareholders’ Meeting. Each half-yearly and annual closing gives rise to the preparation of instructions specifying the main deliverables expected from each party involved in the publication of the financial statements as well as the preparation of the management report and the Universal Registration Document (URD) for the annual financial statements. Meetings with EDF departments and the subsidiaries facilitate the preparation of these financial statements and make it possible to anticipate changes with regard to certain treatments thereby increasing the reliability of the accounting and financial information published. An analysis of the conditions of preparation (compliance with deadlines, quality of information, etc.) after the event allows for regular improvement of the consolidated financial statements preparation and analysis process. Quaterly reporting of information on the EDF group balance sheet accounts and the income statement can anticipate the processing of complex operations and contribute to making the results more reliable. Forecasts and management acts are implemented using a single reference framework and tools shared between accounting and management. This system contributes to the coherence of Group management and facilitates dialogue at all levels of the organisation and helps promote exchange of information between actors and the quality of the information produced. Procedures for preparing and auditing the corporate financial statements The corporate financial statements are prepared annually and semi-annually by the Parent Company Financial Statements Department of the Accounting Consolidation Division. The annual corporate financial statements are closed on 31 December of the fiscal year, approved by the Board of Directors of EDF and then approved by the Shareholders’ Meeting. The condensed half-year corporate financial statements are closed on 30 June of the fiscal year by the Board of Directors. EDF’s transactional accounting (excluding the Nuclear Fuel Division, the Insular Energy Systems Division, the Decommissioning and Waste Projects Division and the Executive Talents Training Managers Department for the payroll accounting aspect) is entrusted to the Shared Accounting and Consulting Services Center (CSP2C) of the Tertiary Services Department, which also handles the transactional accounting for certain French subsidiaries. The treatment of transactional accounting is organised by process. “Governance pacts” set the respective responsibilities of the Operational and Functional Departments, of the CSP2C or, where applicable, the accounting operators in the operational business lines and the Accounting Consolidation Division. Meetings are organised on a quarterly basis with the EDF departments to prepare the financial statements and anticipate changes with regard to certain treatments to increase the reliability of the accounting and financial information published.

managing the investments and acquisitions and disposals as well as the listed ❯ or unlisted dedicated assets. The Group Risk Division prepares an annual risk mandate and specific working frameworks which define the principles for managing risks and the risk limits that are acceptable for this portfolio; appraising the investment projects presented to the CECEG meetings to ❯ anticipate impacts and improve the reliability of the financial trajectories on the Group’s balance sheet and profit and loss accounts, as defined by the Commitments policy; contribute to portfolio reviews and economic and financial optimisation ❯ analyses; ensuring that the Group is financed in accordance with the Financing, Treasury ❯ and Financial Risk Management policy; verifying the proper application of the policy’s principles (drafting of frameworks, methodology, monitoring of exposures, regular calculation of risk indicators and checking that risk limits are complied with). The positions of the trading room in charge of cash management are monitored by the Group Risk Management Department. The policy on Financing, Treasury and Financial Risk Management requires all entities of the Group to continuously and systematically identify financial risks (in particular, liquidity, interest rates, foreign exchange and counterparty). The Group Risk Department exercises 2nd level control of these risks via : verification that the principles of the policy have been properly applied ❯ (preparing work management frameworks, methodology, monitoring exposures, regular calculation of risk indicators and checking compliance with risk limits); the control of positions in the trading room in charge of cash management. For ❯ these activities, a system of indicators and risk limits checked on a daily and a weekly basis is in place. The Markets Committee (a body that brings together the Finance and Investment Department and the Group Risk Department) checks and reviews on a quarterly basis, where necessary, requests for exemptions to the work management framework and requests for investment in new financial products. The policy on the constitution, management and control of the financial risks involving Dedicated Assets of EDF applies to the portfolio of dedicated assets which are managed by the Financial Department. The Group Risk Department prepares an annual risk mandate and specific working frameworks which define the principles for managing risks and the risk limits that are acceptable for this portfolio. Reference frameworks The accounting standards used by the EDF group (the scope of the Group’s consolidated financial statements are included in the appendix to the consolidated financial statements (see section 6 “Financial statements”) comply with the international standards published by the International Accounting Standards Board (“IASB”) approved by the European Union and applicable as at 31 December 2020. These international standards include the IAS (International Accounting Standards), IFRS (International Financial Reporting Standards) and the SIC and IFRIC interpretations. The accounting rules and methods are specified in the Group’s accounting principles manual and summarised in the notes to the consolidated financial statements. The principles applicable to the preparation and reporting to the Group’s Finance Department are defined in the Accounting and Financial Reporting policy. The specific internal control provisions are described in the Group guideline entitled “Accounting and Financial Internal Control”, and the control objectives to be implemented in the entities are specified and updated each year in the Group’s Internal Control Guide. The Finance Management Directors of the Departments of the Business Lines and Subsidiaries sit on the Management Committee of the entities to which they belong. With the exception of the operators of regulated infrastructure, they are appointed and evaluated jointly by operational management and the management of the Finance function. A network of correspondents from the Operational Departments and subsidiaries facilitates dissemination of the instructions and harmonised implementation throughout the various Group entities. Each EDF operational and functional Director makes a commitment each year with regard to the quality of the Internal Control system in the Accounting and Financial areas, the improvement goals for the coming period and the truthfulness and exhaustiveness of the accounting information for which they are responsible by preparing a commitment letter sent to the Group Accounting and Tax Director. In return, each Director receives a letter of appreciation of accounting and tax quality

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EDF - UNIVERSAL REGISTRATION DOCUMENT 2020