Annual report 2010 - Dexia.com

Declaration of corporate governance2. Organisation of an audit functionWhen Dexia SA controls a subsidiary or, if there is no suchaudit, when the prudential control authorities expressly askfor one, an audit function is established in that subsidiary. Ifthe creation of an audit function is not considered pertinent,Dexia SA assumes the function of local audit and if necessarya service level agreement is concluded between Dexia SA andthe subsidiary concerned.3. Role of Dexia SA audit departmentDexia SA audit department is charged with ensuring theadequacy of the organisation of internal audit put in placethroughout the Dexia Group and the quality of its operation.Dexia SA audit department is responsible for:• audit strategy and its appropriate implementation in allaudit departments within the Dexia Group;• definition and application of a common risk analysismethodology;• definition and application of a common auditmethodology;• definition and application of a common recommendationfollow-up methodology;• optimum allocation of competences within the function;• determination of the level of training required of auditorsthroughout the Group;• coordination and assessment of training programmes;• circulation of necessary information within the function;• implementation of quality control;• management of central projects and the provision of audittools;• attribution and monitoring of the operating budget of eachlocal audit department.4. GovernanceThe organisational structure of internal audit is aligned tothe organisation of the Dexia Group by business lines andsupport functions. Each “segment” thus defined is run by aGroup Head of Audit who is responsible, in liaison with theoperational directors concerned, for the identification andsurveillance of risks relating to the segment with which heis entrusted, as well as supervision of all the audit tasks inrelation to that segment.The segments are as follows:• Public and Wholesale Banking• Retail and Commercial Banking, Asset Management andInvestor Services• Private Banking• Market activities, Balance Sheet Management, Risk etFinance• Operations, IT and other support functionsThis organisation, by transversal segment, is superimposed onthe organisation by entity, so as to maintain a global viewof risks.The General Auditor of Dexia SA sees to the adequate coverof risks over the entire scope of the Dexia Group: head office,subsidiaries and branches. It also plays an interface role withthe management of Dexia SA and the Regulator.Compared to 2009, final implementation of the transformationplan within the audit support line resulted in the followingchanges:• The post of head of audit for the Public and WholesaleBanking segment was combined with that of General Auditorof Dexia Crédit Local, the post of head of audit for the Retailand Commercial Banking segment with that of GeneralAuditor of Dexia Bank Belgium and the post of head of auditfor the Private Banking segment with that of General Auditorof Dexia Banque Internationale à Luxembourg.• The human means of the audit support line were regroupedin shared service centres (IT, Belgium, France, Luxembourg,Turkey), the scope of action of which is not limited to theborders of their respective countries.• A single audit plan was introduced for the Group and themonitoring of audits is ensured by segment in a transversalmanner for the entire Group.As the internal audit support line is integrated, themanagement and guidance of that support line relies on twostructures, the Audit Management Committee (AMC) and theInternal Audit Executive Committee (IAEC), as well as on a“support” team.Composed of the General Auditor of Dexia SA, who chairsit, and the General Auditors of the main entities (Dexia BankBelgium, Dexia Crédit Local and Dexia Banque Internationaleà Luxembourg), the General Auditor of DenizBank and thehead of audit in charge of IT systems and other supportfunctions, the AMC manages audit strategy and its financialand human means.For its part, the IAEC is composed of the members of theAMC, plus segment heads of audit as well as the head ofAudit Process Management and Organisation (APMO) whochairs it. This committee defines the audit universe andupdates it regularly, validates the risk map prepared by eachof the segment heads, defines the Group’s global auditplan, ensures the optimum planning of audit tasks, proposesnecessary developments in terms of means of the support line,methodology and tools, defines audit team training policy,analyses results from monitoring the performance of thesupport line and validates internal and external reporting.The Audit Process Management and Organisation (APMO)unit has the role of supporting the audit support line. It thushas the objectives of defining and updating methodologyand the audit process, elaborating and/or coordinatingthe different activity reports produced by the support line(internally and externally), implementing and maintainingthe tools necessary for the proper functioning of the auditsupport line, coordinating the work with operational risk andcompliance teams, producing performance indicators for therealisation of tasks and organising the auditor training plan aswell as quality reviews in order to ensure correct applicationof the audit method and processes. The APMO unit organisesand also participates in the Audit Committee and, in an effortto strengthen control of subsidiaries and branches, monitorsthe surveillance bodies of the entities and their subsidiaries/branches as well as the tasks performed by the local regulators.Finally, the APMO unit is responsible for management of theaudit plan, which means that it plans all the tasks under theaudit plan as well as any tasks outside the plan.Audit workThe work of internal audit rests on tried and tested methodstranslated directly from international good audit practices.Both the audit tasks and risk analysis through all the entitiesof Dexia rely on common methodologies. These are regularlyadapted to reflect both the evolution of standards andreturns of experience on the ground and the evolutions ofstructures.Management reportConsolidatedfinancial statementsAdditional information Annual financial statementsAnnual report 2010 Dexia53