Internal Control System

The Company’s Internal Control System (further referred to as the ICS) is an element of the overall management system of the Company. The ICS covers all the fields of the Company activities, control procedures are applied continuously to all the Company processes (fields of activities) at all management levels in order to ensure reasonable guarantees for achievement of objectives in the following areas:

  • Efficiency and effectiveness of Company operation, integrity of the Company assets;
  • Compliance with legal requirements applicable to the Company and local regulatory acts of the Company, including in connection with performance of business activities and financial accounting;
  • Ensuring accurate and timely preparation of accounting (financial) and other reports.

Internal Control System


Function of ICS Elements

 

Description Function of ICS
Auditing Commission
  • controls the Company’s business activities; based on the control results, the Committee prepares proposals/recommendations for ICS improvement;
  • independent assessment of the accuracy of the Company’s annual report and the Company’s annual financial reports
  • Board of Directors
  • determines principles of and approach to ICS organization as well as the strategy for development and improvement of the Company ICS;
  • controls and organizes the internal audit activities;
  • controls the activities of the Company’s executive bodies in the main (priority) areas
  • Audit Committee assigned to the Board of Directors
  • preliminary review of internal Company documents which define the organization and the strategy for development and improvement of the Company ICS prior to approval of such documents by the Board of Directors;
  • preliminary review of results of ICS efficiency assessment results based on the data in the internal auditor’s report on the ICS efficiency and reports on the results of external independent ICS assessment prior to their review by the Board of Directors, prepares proposals / recommendations on ICS improvement;
  • preliminary review of the matters in connection with organization and results of internal audit prior to their review by the Board of Directors;
  • supervision over reliability and efficiency of ICS in terms of review of the matters associated with the supervision over the accuracy of the Company’s accounting (financial) reports, selection of external auditor and performance of external audit, ensuring compliance with regulatory legal requirements and in terms of review of the matters associated with analysis and assessment of Internal Control Policy implementation
  • Other committees assigned to the Board of Directors
  • supervision over fulfillment of the established financial and operational indicators, compliance with applicable law, rules and procedures implemented in compliance with the local regulatory acts and over the accuracy and timely preparation of Company reports (within the framework of their competence as defined by the Board of Directors)
  • Director General,
    Management Board of the Company
  • ensure establishment and daily functioning of the Company’s ICS
  • Heads of Departments and Structural Divisions
  • organize effective control environment for the supervised processes (areas of operation), bear responsibility for efficiency of operation objectives’ achievement in the framework of supervised processes (areas of operation) and performance of control procedures
  • Employees of the Company’s structural divisions who perform control procedures in compliance with their professional duties
  • perform control procedures in the framework of ICS functioning in compliance with their professional duties and adopted regulatory documents;
  • ensure timely notification of their direct supervisors about cases where performance of control procedures for some reason became impossible and/or the control procedure design needs to be changed in connection with changes in internal and/or external conditions of the Company functioning, including development of proposals on implementation of control procedures in the corresponding operation areas and submission of such proposals to the executives for review
  • Specialized control Departments

    (Division of Operation Control, Division of Economic Security and Corruption Control, Division of Anticorruption Compliance Procedures, Quality Management and Operation Efficiency Department, Division of Legal Support, etc.)
  • perform internal control activities and internal investigation in the field of technical control, anticorruption control of business processes, monitoring over the current condition of compliance procedures, legality of Company operations and prevention of violationwith the effective RF law in the field of the main Company activities;
  • perform internal audit of the Company’s quality management system;
  • prepare recommendations on improvement of control procedures based on the results of internal control activities
  • Control and Risk Department
  • develop and ensure implementation of the main and methodological documents on ICS establishment and improvement;
  • coordinate activities on support and monitoring of the ICS target status;
  • prepare information on the status of ICS for interested parties
  • Internal Audit Department  
  • prepare recommendations on improvement of control procedures, certain components (elements) of internal control and ICS based on the results of internal audit activities;
  • perform independent internal assessment of ICS efficiency and issue recommendations on improvement of ICS efficiency and effectiveness
  • Commentary-interview of the Audit Director E. A. Schegoleva

    In 2015, the Internal Audit Department took active part in the methodological activities of PJSC «Rosseti»: the Company developed a range of local regulatory documents on organization of internal audit activities (some of these documents are already approved), such as Internal Audit Glossary, Guidelines on Performance of Internal Audit, Guidelines on Monitoring over Fulfillment of Anticorruption Action Plan, Guidelines on Internal Audit Planning, etc. These documents were developed based on the global professional practices in the field of internal audit and following the recommendations of Rosimushchestvo (Federal Agency for State Property Management) and the Bank of Russia for joint-stock companies and holding structures with participation interest of the Russian Federation. Even before official approval of the documents, in the course of its activities in 2015, the Company’s Internal Audit Department already pilot-tested the application of approach and regulations included into the draft documents, in particular, in order to receive feedback form the audited Company divisions, which had positive impact on the quality and efficiency of the Department’s operation.

    The following activities are planned for 2016 in order to contribute to organizational independence and objectivity in the course of internal audit performance and improve the quality of activities:

    • complete the methodological documents on the internal audit procedures;
    • implement the project for internal audit automation.

    Corrective Actions

     

    Results of Control Activities Performed by Internal Audit Department in 2015

    My Report

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