AFD_REGISTRATION_DOCUMENT_2017

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RISK MANAGEMENT

Risk management

4.3.2 Internal control procedures and organisation of audit trail for accounting and financial information (ArticlebL.225-100-1-5) The AFD Group’s accounting is handled by the Accounting Treatment division (DTC) of the AFD Finance and Accounting Department (DFC). The activities of this division include: P the accounting registration of transactions initiated at the Head Office on the accounts payable, fixed assets, investments and services functions; P the auditing of local office accounts and the entry of expenses related to seconded agents; P the recognition of market transactions (loans, derivatives and investment securities); P the control of the centralisation in the general accounting of ancillary accounts and the implementation of second-level controls on all sectors; P tax returns with the exception of those relating to wages and the building; P the preparation of individual company financial statements using French standards; P SURFI, Balance of Payments, FINREP and COREP regulatory reporting; and, for the subsidiaries, Sogefom, Proparco and Soderag: P the keeping of accounting using French standards, the production of the half-year financial statements and of fiscal and regulatory declarations (SURFIb–Balance of payments). The division is also in charge of preparing consolidated half-year financial statements under IFRS. The accounting recognition of loans, grants and guarantees granted is carried out by the Accounting Section of the Back- Office division (BOD). Accounting controls are provided by the Accounting Treatment division (DTC). The separation between the engagement, accounting and execution functions for treasury operations is maintained by both the organisation of services and the implementation of procedures. Accounting entry is largely decentralised (branches, other Head Office services). Accounting control is split between banking operations and general expenses. The Group’s accounting is audited by two statutory auditors appointed by the Board of Directors. Their terms of office were renewed by the Board of Directors on 30 April 2014bfor six fiscal years (2014-2019).

The DTC division is in contact with external auditors (statutory auditors, tax authorities, Prudential Control and Resolution Authority). An accounting procedures manual that includes procedures and accounting schematics for all transactions is available on the intranet site. It includes a procedure for accounting controls. With regard specifically to the audit trail, its functioning is described below. The accounting system is structured around a multi-company (AFD-Proparco-Sogefom) and multi-currency accounting software package powered by business applications and auxiliary accounting systems. The conversion of foreign currency transactions is performed by a specific module of the accounting software package, which publishes control reports at each step of the conversion and calculation of translation adjustments. A procedure describes the controls to be performed at each stage of the conversion treatment for the exchange positions until the determination of translation adjustments. An “Infocentre” application makes it possible to retrieve the accounting information for balances and accounting movements for each transaction or at the desired aggregated level. In accordance with Articleb85bof the Decree of 3 November 2014, the audit trail allows the unitary event to be traced back to the accounting aggregate or, conversely, from the accounting aggregate to the corresponding unit events. In the case of a grouping of accounting movements within an upstream interface, the audit trail also makes it possible to retrieve the unit events that make up those grouping movements. 4.3.3 Credit risk 4.3.3.1 Credit risk measurement and monitoring The system in place to measure and monitor credit risks is described in Paragraphb6.2.6 Risk information. 4.3.3.2 System of operational limits The system of operational limits is described in Paragraphb6.2.6.1 4.3.3.3 Monitoring the risks of sovereign counterparties Monitoring the risks of sovereign counterparties is described in Paragraphb6.2.6.1 4.3.3.4 Monitoring the risks of non-sovereign counterparties The monitoring of the risks of non-sovereign counterparties is described in Paragraphb5.5.2.3.3

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REGISTRATION DOCUMENT 2017

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