Annual report 2010 - Dexia.com

Declaration of corporate governanceplan is regularly monitored by audit on the basis of a declaredprogress statement and supporting documents provided bythe parties audited. Internal audit keeps a database of allrecommendations arising from audit reports and has defineda consistent procedure for monitoring the implementation ofthose recommendations.3. MonitoringTwice a year, the General Auditor of Dexia SA presentsthe Audit Committee and/or the Board of Directors with areport on the activities of internal audit. This report containsa summary of the principal observations made during audittasks, an annotated statement of the completion of auditplans, particularly in the case of a significant departure fromplanning, and an assessment of the sufficiency of means(from a qualitative and quantitative point of view).To support the recommendation monitoring process, twiceyearly monitoring of the action plans associated with the auditrecommendations is presented to the management boards ofthe various Group entities, and any delay in completing theaction plans responding to the recommendations is dealt withthere.A new recommendation monitoring tool was commissionedsuccessfully at the end of January 2010. This tool enablesthe auditors and the audited parties constantly to exchangeviews on the evolution of action plans responding to theaudit recommendations. It is planned in 2011 to deploy thetool in the subsidiaries of the Dexia Group and to integraterecommendations from the Regulators.TrainingIn addition to the training organised by human resources, anaudit-specific training plan has been introduced. It has varioussections to be followed depending on the role and seniorityof the auditor. Furthermore, at a human risk control level, theorganisation of internal audit into shared service centres willprovide better cover for Group activities by mitigating the riskof a lack of means (both qualitative and quantitative) whilstensuring the required reactivity in the case of urgency.Projects for 2011In 2011, correspondents must allocate some of an evengreater part of their time compared to 2010 to monitoringrisks in the scope under their responsibility (includingmonitoring action plans responding to recommendations frominternal audit, the regulators and the corporate auditors). Inthis way, the internal audit support line wishes clearly, beyondthe completion of tasks enabling new risks to be identified, toplace the emphasis on strengthened monitoring of the actionsagreed with the audited parties at the end of the previoustasks and having to remedy risks identified in the past. Thismechanism should, when it appears necessary, allow thetriggering of a warning procedure from management onthe areas of weakness which might appear significant andlasting.Several methodological projects are provided for 2011,including:• Revision of the audit universe. This new revision will integratethe transformation plan as well as all the organisationalchanges and associated movements of members of staff.This revision of the universe will have an impact on therecommendation monitoring tool.• Introduction of a more robust tool for reporting on thestate of progress made on action plans associated withrecommendations, a tool which will be provided both toauditors and to the parties audited. This tool will permit thesharing of reporting between the internal audit support lineand the operational support lines. It should be in operation atthe end of 2011.• Recasting of the intranet site for the internal audit supportline with more detailed access management rules. First ofall, the site will enable the audit support line to obtain allnecessary information on the audit methodology and alsoto gather in one single place all the audit reports and keydocuments for each of the phases of an audit task. Secondly,it will enable the flows of each audit task to be automatedand therefore performance indicators to be automaticallycalculated on the good operation of the support line.• A self-assessment of internal audit in line with the QualityAssurance Review standards of the Institute of InternalAuditors, with the aim of preparing for external validationby an independent body. This process is recommended byinternational standards.Activities in 2010A major part of the Dexia Group audit plan was implementedin the form of “transversal tasks”, namely tasks performedsimultaneously in Dexia SA and in the Group’s mainoperational entities: Dexia Crédit Local, Dexia Bank Belgium,Dexia Banque Internationale à Luxembourg and DenizBankas well as certain of their subsidiaries/branches, in relationto the subjects dealt with. In 2010, those tasks related inparticular to risk management, the Finance, Balance SheetManagement, Operations and IT support lines as well asmarket activities. The other support functions were also theobject of regular tasks.The audit tasks performed in 2010 gave rise to theestablishment of plans to remedy weaknesses detected inthe internal control system. Each action plan was approvedby the Management Board of the entity concerned and,depending on its importance, reported to the ManagementBoard of Dexia SA, and subject to regular monitoring, toensure that the recommendations formulated are effectivelyimplemented.In terms of implementation of the audit plan (number oftasks) over the year 2010, the performance rate of local andjoint tasks is considered good, and slightly up on the rate fortransversal tasks.The year 2010 was marked by a strengthening of themonitoring of contacts with the Regulators.In fact, contacts with the different Regulators of the DexiaGroup, whether through inspection tasks or meetings, tendedto be intensified, and this mobilised an increasing amount ofthe time of internal audit staff in 2010.When the Regulator performs a task within the Dexia Group,the role of audit consists of monitoring its progress ensuringthat the elements requested are properly transmitted to theInspectors, at the end of the task, coordinating the formulationof action plans responding to the recommendations by theRegulators (applying the principle of strengthening the roleof audit in these matters), then to likewise monitoring theresponse to its own recommendations.Management reportConsolidatedfinancial statementsAdditional information Annual financial statementsAnnual report 2010 Dexia55