RepoRt on - BNP Paribas

internal
control
the information below concerning the
group’s internal control system has been
provided by executive management.
the chief executive officer is responsible
for internal control systems and
procedures, and for all the statutory
information in the report on internal control.
this document was prepared using
information provided by the following
group functions: compliance, risk
management, finance-development,
legal affairs and the general inspection
unit. it was validated by the decisionmaking
body.
bnp paribas internal
control references
internal controls in the banking sector
in france and internationally are at the
centre of banking and financial regulations
and are governed by a wide range
of laws and regulations.
in this sector, the main regulation
applicable to bnP Paribas is cclrf
regulation no. 97-02 (1) as amended,
which defines the conditions for implementing
and monitoring internal control
systems in banks and investment firms.
these rules lay down the principles relating
to control systems for transactions
and internal procedures, accounting
systems and information processing,
risk and performance measurement
systems, risk supervision and control systems,
and internal control documentation
and reporting systems. under article
42 of this regulation, banks are required
to prepare an annual statutory report
on internal control for the attention of
the board of directors.
as required by regulation no. 97-02,
bnP Paribas has set up an internal control
system (referred to herein as internal
control) in which distinct organisations
and managers are in charge of permanent
controls and periodic controls. the
internal control system must also take into
account, as appropriate, the general
regulations of amf (french financial
markets authority), regulations applicable
to branches and subsidiaries outside
france and to specialised operations
such as portfolio management and
insurance, the most widely accepted
industry practices in this area and the
recommendations of international bodies
dealing with the capital adequacy
framework issues, foremost among
which are the “basel committee” and
the “senior supervisory group.”
internal control,
definition, objectives
and standards
the executive management of the
bnP Paribas group has set up an internal
control system whose main aim is to ensure
overall control of risks and provide
reasonable assurance that the bank’s
goals in this area are being met.
this system is defined in the group’s
internal control charter, which serves as
its basic internal reference document.
widely distributed within the group and
freely available to all group employees,
this charter defines internal control as a
mechanism for ensuring:
— the development of a strong risk
control culture among employees;
— the effectiveness and quality of the
group’s internal operations;
(1) This document is frequently amended so as to improve the efficiency of internal control mechanisms.
118 <strong>RepoRt</strong> on CoRpoRate SoCial and enviRonmental ReSponSibility
— the reliability of internal and external
information (particularly accounting
and financial information);
— the security of transactions;
— compliance with applicable laws,
regulations and internal policies.
the charter lays down rules relating to
the organisation, lines of responsibility
and remit of the various players involved
in internal control, and establishes the
principle that the different control functions
(compliance, general inspection
unit and risk management) must be
exercised independently.
scope of internal control
one of the fundamental principles of
internal control is that it must be exhaustive
in scope: it applies in the same
degree to all types of risk and to all entities
in the bnP Paribas group, whether
operational (core businesses, business
lines, functions and territories) or legal
(branches and consolidated subsidiaries),
without exception. it also extends
to core services or operational activities
that have been outsourced, in accordance
with regulatory requirements,
as well as to companies for which the
group ensures operational management,
even if not integrated in the scope
of consolidation.
implementing this principle requires
a precise overview of the allocations
of responsibilities and must factor in
the ongoing growth in the group’s
businesses.