FEE - 25/10/2005

Where is the demand for internal control and risk management reporting coming from ?

Jean-Paul Servais

Vice Chairman CBFA (Financial Regulator, Belgium)

Chairman CSPE (High Council for Economic Professions, Belgium)

Lecturer ULB (University of Brussels, Belgium)

FEE - 25/10/2005

Risk management and internal control in the EUAmerican approach European Approach

- Strong regulation - Best practices (CG Codes)i.e. soft law (potentiallyimplemented at nat. level)

- Section 302 & 404 SOX - New 8th directive (art. 39) - Proposal to amend

4th and 7th EU Directives

Regulators point of view In Belgium

At European level

FEE - 25/10/2005

Risk management and internal control in the EU

A priority for the regulators ?Current practice in framework of bank, insurance

companies and pension funds.Quid about the implementation of new regulatory

supervision of financial information of listed companies ?

Regulators point of view In BelgiumAt European level

FEE - 25/10/2005

CBFA

External audit

Internal audit

Internal control

Concentric circles of supervision

FEE - 25/10/2005

Risk management and internal control in the EU

Answer to some of FEE’s questionsDo you agree with FEE’s proposal that there should be a

basic EU requirement for all companies to maintain accounting records that support information for published financial statements ?

Why not …. But it depends on the status of listed companies ….

FEE - 25/10/2005

Risk management and internal control in the EU

Answer to some of FEE’s questionsWhat role should regulatory requirements play in

promoting improvement in risk management and internal control ?

- Exhaustive information has to be published just in time by these companies ….- Does the enforcement need to be performed by the regulators during field inspections ?

FEE - 25/10/2005

Risk management and internal control in the EU

A cost/benefits approach

Regulators point of view In BelgiumAt European level

FEE - 25/10/2005

Conclusions