NATIXIS - 2018 Registration document and annual financial report

5 FINANCIAL DATA

Statutory Auditors’ report on the consolidated financial statements

Provisions for legal and compliance risks

Risk identified and main judgments

Our audit approach

The Natixis Group is involved in litigation before the courts and is the subject of investigations and requests for information from regulatory and tax authorities in different jurisdictions. The assessment of the resulting legal and compliance (including tax) risks reflects management's estimates as of the reporting date. The recognition of a provision and determination of its amount as well as the financial information disclosed require, by their very nature, the exercise of judgment, not least because of the difficulty of estimating the outcome and financial consequences of ongoing proceedings. We therefore considered provisions for legal and compliance risks to be a key audit matter given the sensitivity of these provisions to the assumptions and options adopted by management. Provisions for litigation amounted to €768 million at December 31, 2018. Please refer to Notes 6.23, 7.8, 7.10 and 8.17 to the consolidated financial statements for more details.

We examined the identification, assessment and provisioning arrangements for legal and compliance risks. We took note of the status of ongoing proceedings and the main risks identified by the Natixis Group, mainly through regular discussions with management (and more specifically Natixis S.A.'s legal, compliance and tax departments) and by reviewing the documentation made available to us. Our work also involved assessing the reasonableness of the assumptions and data used by management to estimate the amount of provisions recognized at the reporting date. In particular, we engaged tax law specialists to conduct a critical review of analyses of the tax risks identified by Natixis and the related provisions. We also carried out confirmation procedures with the Group’s legal advisors regarding ongoing proceedings. Finally, we checked that the provisions thus measured were correctly recognized and verified the related disclosures in the notes to the consolidated financial statements.

398

Natixis Registration Document 2018