AFT has elected to comply with the applicable obligations stipulated in the Order of 3 November 2014 on the internal control of businesses in the banking sector. In addition, the legislation governing AFT requires it to submit an annual audit report to Parliament on financial risk management and the prudential procedures implemented.
All these measures mean that AFT has permanent mechanisms for assessing and controlling all the risks generated by market and cash transactions.
In recent years, AFT has relied on the expertise of a specialized external audit firm to conduct the audit. In accordance with the performance indicators put before Parliament when the budget act is being drawn up, the audit firm focuses more particularly on the quality of the control mechanism by considering five aspects:
- transaction and internal procedures supervision system;
- accounting organisation and information processing;
- risk and result measurement systems;
- risk supervision and management systems;
- documentation and reporting systems.
The assessment gives ratings ranging from one to four:
- one: the existing mechanism satisfactorily covers identified risks generated by AFT’s transactions;
- two: the existing mechanism needs to be extended to cover identified risks;
- three: the existing mechanism has substantial shortcomings requiring immediate corrective action to cover the identified risks;
- four: the existing mechanism does not cover the identified risks generated by AFT’s transactions.
CONTROL SYSTEM QUALITY
Source: External audit firm; Agence France Trésor
A word about our methodology
Number of incidents or violations of the general activity framework This qualitative and quantitative sub-indicator tracks different incidents, which are classified under the following three categories:
- violations of powers of signature;
- violations of risk limits;
- violations of transaction procedures.
This sub-indicator is an internal quality measurement of AFT’s organisation and compliance with requirements.
A second set of indicators measures the number of execution incidents occurring in AFT’s transactions to ensure rapid detection of problems or incidents that could disrupt the proper execution of debt and cash transactions.
None of the incidents recorded in 2017 had an impact on the financial continuity of the government.
DEBT AND CASH TRANSACTION EXECUTION INCIDENTS
Source: Agence France Trésor
A word about our methodology
The indicator relies on daily recording of transaction execution incidents.
The “Other incidents” item mainly records incidents relating to internal and external information systems used to manage transactions.
The recording process has improved significantly in recent years with more comprehensive supervision and the use of more refined risk indicators, resulting in steady improvements in the quality of external and internal operations.
It should also be noted that in most cases, the origin of the incidents lies in external bodies and service providers and that AFT has no direct control over their occurrence.