SFIL Annual financial report 2018

Management report I 1 19 Annual Financial Report 2018 SFIL Management report Report on corporate governance Consolidated financial statements in accordance with IFRS Annual financial statements in accordance with French GAAP Shareholders’ Meeting of May 29, 2019 General information balance sheet also contributes to this process. Cross-cutting controls are also carried out between the financial statements and the notes to the financial statements. Throughout this process, reviews and controls are carried out pursuant to the hierarchical delegations that exist. 2.1.3. Financial statements approval process The financial statements (including balance sheet and income statement) and the related notes are subject to par‑ ticular scrutiny during the preparatory phase and in their final form by the head of the Accounting division and the Chief Financial Officer. The financial statements are pre‑ sented quarterly to the Financial Statements Committee. The Board of Directors approves the financial statements annually. The Statutory Auditors review only the annual and semi-an‑ nual financial statements. 2.1.4. Publication of financial statements This accounting and financial information is disclosed to the public in several ways. In addition to the BALO regula‑ tory publication, the semi-annual and annual financial state‑ ments, together with the corresponding reports, are publicly available on the internet site www.sfil.fr . Since SFIL’s listing as an issuer, its financial statements have been submitted to the AMF via the AMF-registered regulated information pro‑ vider, West. 2.1.5. Statutory Auditors’ role Statutory audit for the SFIL-CAFFIL Group is carried out by two auditing firms working together to audit the statutory financial statements of both SFIL and Caisse Française de Financement Local. The Statutory Auditors are regularly con‑ sulted throughout the process of preparation of accounting and financial data in order to ensure efficiency and transpar‑ ency. Their duties involve analyzing the accounting procedures and evaluating the current internal control systems to deter‑ mine their audit scope, having established the main areas of risk. During these analyses, they may make recommendations to the Company’s management on areas for improvement that could enhance and increase the reliability of the financial and accounting information production processes. They have access to all documents and memos drafted by the staff in charge of accounting principles and standards, and also review the accounting manuals and the summary analyses produced by the Accounting division teams. They have access to the Internal Audit and Inspection division’s reports. They verify the consistency of the data in the management report with the financial statements, as well as the consistency of the man‑ agement report and the financial statements with all audited information. Their contribution includes a review of all regu‑ lated agreements. They provide a full and complete account of their work in a specific report at the end of their statutory assignment. These tasks enable them to obtain reasonable assurance that the financial statements are free of any mate‑ rial misstatement. 2.2 – MANAGEMENT INFORMATION The financial statements (balance sheet, off-balance sheet, income statement, cash flow statement and notes) that SFIL communicates to its shareholders and the general public The internal control system in the operating divisions ensures the completeness and accuracy of accounting entries. The team in charge of accounting standards ensures compliance with standards, validates automated business accounting procedures and individually examines complex or unusual transactions. When certain transactions cannot be com‑ pletely incorporated into the available management tools, the accounting teams process them using specific internal control procedures. A first-level control is conducted by accounting teams spe‑ cialized by business line, in particular through the analysis of accounting and management data reconciliations, and through bank reconciliations and technical suspense account checks. Monthly comparisons with management data and reconcilia‑ tions of micro-hedged transactions make it possible to ensure that financial structuring is correctly replicated. In order to verify the consistency of interest expense and income from one period to another, this data is compared with average outstanding amounts to produce average rates that are easier to compare from one period to the next. Lastly, these teams also draft a summary work report highlighting areas that need particular attention and process improvements needed ahead of future account closings. Additional controls are carried out by other teams from the Accounting division at the monthly, quarterly and annual clos‑ ings. Through specific reviews, the teams in charge of pre‑ paring the financial statements check the quality of the work done by the teams responsible for first-level control. These teams also reconcile the net banking income data with the management data produced by separate teams. This cross-ref‑ erencing is done at least once a quarter and consistency from one period to the next is verified using analytical controls. The main changes must be accompanied by an explanation. The work and resources deployed during the year made it possi‑ ble to stabilize the management data collected both for the validation of the current period’s results and for the estimates required within the framework of the forecasts requested by the Finance division. To carry out its control plan, the Accounting division has a monitoring tool at its disposal with which it can verify the deployment and validation of key controls. This information and any comments on discrepancies are subject to review by the head of Accounting with the main team managers. The preparation of the financial statements is carried out by aggregating the accounts thus produced using an automated process. This function requires parameters administered by a dedicated and independent team. Consolidation operations are included in a set of developments contained in the SFIL Group’s accounting information system. Internal transaction reconciliations are facilitated by keeping the contributions of both Group entities in the same system. The notes to the con‑ solidated financial statements are drafted using an accounting database containing management information related to the underlying transactions, thus making it possible to produce accurate, detailed information. Stability in reporting, which represents a key point in terms of communication, is thereby verified. The notes to the annual and statutory financial statements are generally produced from accounting data, in some cases rounded out by man‑ agement information. The Accounting division then carries out qualitative analyses through cross-cutting controls of summary data. The team in charge of monitoring the Group’s