GROUPAMA / 2019 Universal Registration Document

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

Consolidated financial statements 6.1.6.2 and combined financial statements The internal control procedures used to establish the reliability of the consolidated financial data for the shareholders of Groupama AssurancesMutuelles are based on five basic principles: checking the adequacy of skills (internal check), integrated control, parallel control tests, hierarchical control,and Group benchmarking. Security and Internal Checking Procedures (a) They are applied for the departments preparing the consolidated and combinedfinancialstatementsin the sameway as describedin the section on the parent company financial statements (see above). Integrated Control (b) The Group’s system for developing condensed financial data has been implementedthroughout the entities. It is based on a single consolidated data production base. All the entities supply this databasewith data throughsecure links. It containsa large number of controls designed to guarantee the quality of the financial data: the first level of verificationentails checkingthe standardisationof ● the data (all the Group’s data is presented in a format that follows a singlestandard); at a second level, a series of automatic checks is built into the ● entities’ individual data-gathering phase. These checks mainly relate to the overall accuracy and consistency of the items entered. Dependingon the types of control, the data input may either be blocked automatically (which can only be cancelled if the exact data is input),or else the controlreturns anerror, which must be corrected.An audit trail of these controls is maintained centrally. The software allows a fairly high level of automatic control through the developmentof interfaceswith the upstream systems; at the central level, additional controls are carried out. These ● mainly involvethe necessaryconsistencyof the data betweenthe different entities in the Group ( e.g. for internal reciprocal transactions) and central transactions (conversion of foreign subsidiaries,consolidationentries, etc.). The system has an audit trail that can run any cross-checksthat might be desired, to identify and monitor any data item and trace the source of any elementarydata, from the parent companyto the consolidated level. This set of parameters is tested regularly (particularly byrepublishingold scenarios). Control Tests (c) A set of verification and control tests has been put into place to ensure that transactions are executed reliably whether they are electronic or not. In addition to the electronic processes, these tests have two main objectives: checking the origin of the data (from the standpointof accuracy ● and applicationof the standards);this check is based mainly on consistencycheckswith the estimates,with the parent company analytical notes (or the managementreport) of each entity, and on a management questionnaire designed to ensure that the

Group’s most sensitive accounting standards and methods are properly applied; verification of central processing: accuracy checks are carried ● out to guarantee that central consolidation transactions are correctly processed (sharing of group's equity, dilutions/accretions, etc.). The control tests are documented in a review manual. Hierarchical Control (d) Hierarchical control seeks to ensure that the principal items affectingthe truthfulnessand accuracyof the financial data, as well as the asset position and the profit/loss (parent company and consolidated) disclosed to the shareholders, are captured in the data presented.This control involvesthe use of several procedures: checking for consistency with the estimates and with any item ● used to cross-check the data appearing in the financial statements; meetingsto approvethe financialstatementswith the employees ● producing the financial data (with a review of any problem subjectsencounteredduring the approvalprocess); approvalmeetingswith the statutoryauditorsof the consolidated ● financial statements; meetingswith the SteeringCommittee toreviewthe consolidated ● financial statements; meetings of the Audit and Risk Management Committee to ● review the consolidated financial statements. All of these tasks are aimed at enhancingthe quality of the financial data, particularly the consolidated financial statements as well as the management reporto the Boardof Directors. The Group Standard (e) The accountingstandardsfor the consolidatedfinancial statements are the IFRS. They are distributed at group level, and instructions for using them are given in a consolidation manual containing reminders of each line item in the balance sheet and the income statement: IFRS reference textand a summary of the standard; ● the area of application and possible options selected by the ● Group wherever the IFRS leave the possibility of applying options; methods of application. ● The consolidationmanual is availableonline. It can be accessedby all the entities in the Group (French and English versions). It is updated regularly based on any changes in the IFRS. This consolidation manual also includes instructions (French and English versions) issued at every closing to all Group entities. The instructions emphasise the specific items applicable to each approval process. These instructions are sent to the statutory auditorsfor information. Training in both methodologyand operationsis given regularlyto all the players involved in the Group so that the requirements introduced by the IFRS are properly understood and incorporated into the financial statements.

128

Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES