GROUPAMA / 2019 Universal Registration Document

6 EARNINGS AND FINANCIAL POSITION Management report of the Board of Directors

6.1.5

DEBT

ceiling based on the type of expense; payment of these expenses is initiated by the Group Financial Control Departmentonly after a signature different from that of the authorising officer, monitoring of bankingauthorities: - delegation of signature authority for banking transactions, granted to some employees, is subject to administrative monitoringand regular updating;these functionshave been the responsibility, since 1 July 2014, of the Group Legal Department, in close liaison withthe Group Financial Control Department, within inventory managementand preparation of the financial ● statements: regular review meetings between the Group Financial - Control Departmentand the other departmentsdesignedto provide an overview of all the flows for the year and anticipate theirintegration into the financial statements, measurement of the consistency between the parent - company statements and the estimated statements in collaborationwith the various teams of the Group Financial Control Department, buildingup a set of supportingdocumentationfor the year’s - financial statementsunder the supervisionof the reviewer’s direct superior,then the departmenthead, review of parent company and Group tax income/expense - with theGroup Tax Department, internal meetings within the Group Finance Department to - deal with differentoperationaland functionalviews and thus to ensure the validity of the Groupama Assurances Mutuelles auxiliary and parent company financial statements, approval of the financial statements by the Executive - Management. In accordancewith its position as parent company of the Group, Groupama Assurances Mutuelles handles the accounting for a certain number of subsidiaries through its Service Sharing Centre (operating SCIs GIE Groupama Support & Services, holding companies and other subsidiaries); it also handles investment accounting for theFrench subsidiaries. The Group Financial Control Department prepares the financial portion of the financial statements(securities and real estate, plant and equipment)for the profit centres, using an auxiliary accounting system. For those entities in particular, it works with the Group Tax Department to calculate the financial taxable income/expense (securities and real estate) and drafts the statutory financial statements to be sento the ACPR. The tools and procedures used to keep investment auxiliary accounts (back-office securities and accounting tool) and the accountingsystems of the entities without the means to have their own Accounting Departments comply with the same internal control criteria as those described previously for the Groupama Assurances Mutuelles parent company statements (see above). With regard to the investment accounting system, it should be noted that standardised controls, which are subject to written procedures, can be used to guarantee the reliability of the information regarding investments.

The Group’s debt ratio is assessed at the combined scope level (ratio now calculatedaccordingto the methodchosenby our rating agency) and was 27.2%at the end of 2019, comparedwith 28.4% at 31 December 2018.

6.1.6

RISK MANAGEMENT

AND RELIABILITY OF FINANCIAL INFORMATION

Risk management is addressed in section 3 of the universal registrationdocument.

Reliability of financial data The Group Financial Control Departmentwithin the Group Finance Department is responsible for preparing the financial statements and the notes to the shareholders,sponsoring authorities and tax authorities.

6.1.6.1

Corporate financial statements

of Groupama Assurances Mutuelles The parent company statements are prepared with an ongoing objective of identifyingall funds flows in detail, assigninga value to themand accountingfor them in accordancewith the regulationsin force. The types of internalcontrolprocedureimplementedto that end are listed below: security procedures and internal checks: every area Manager ● guaranteesthe appropriatenessof the work load for the skills of his or her staff and ensures their compatibilitywhile at the same time ensuring theseparation of dutiesamongemployees; integrated control and control tests: this refers to all operations ● guaranteeing the reliability and existence of an audit trail when data are charged to the accounting, tax and regulatory information system, notably: the functions and applicationsused to perform reliability tests ● and tests to check on the accuracy and consistency of accounting transactions, other non-electronic actions and tests, mainly focusing on ● consistency checks carried out by random sampling on large-volume transactions, with very low unit amounts ( e.g., balancingof policyholder balances, tax statements); hierarchical control: aimed at distributing information and ● allowing the cross-checking required for the reliability of the parent company financial statements. This is done through several routine management procedures and in inventory: within routine management: ● separationof the functions of commitmentand payment of - expenses: expenditure of a technical, general or financial nature is in principle ordered by persons outside the Group Financial Control Department who are authorised up to a certain

127 Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES