Internal control
Internal control is exercised by the Board of Directors, the Audit Commission, executive bodies and all employees of the Company and aims to provide reasonable guarantee of achieving objectives in the following areas:
- with regard to effectiveness, economical and performance efficiency of the Company’s activities:
- ensuring investors’ confidence in the Company, its subsidiaries and affiliates and their management bodies;
- ensuring the achievement of strategic development goals, performance of financial and business plans of the Company and its subsidiaries in the most efficient and economical manner (by building effective business processes, including through corporate governance);
- ensuring effective prevention, timely detection and response to threats in the activities of the Company, its subsidiaries and affiliates;
- ensuring effective prevention, timely detection and elimination of violations in the financial and business operations of the Company, its subsidiaries and affiliates;
- ensuring effective use of resources of the Company, its subsidiaries and affiliates.
- with regard to fulfillment of requirements applicable to the Company’s activities:
- ensuring reliable, high-quality and affordable power supply to consumers;
- ensuring safety of the environment and personnel;
- ensuring compliance with the current legislation, both Russian and foreign, in the activities of the Company and its subsidiaries and affiliates which are subject to regulation; compliance with internal policies, regulations and procedures of the Company, its subsidiaries and affiliates.
- with regard to prevention of wrongful actions:
- with respect to the Company’s assets: ensuring safety of the Company’s assets;
- ensuring transparency of the Company’s activities.
- with regard to reliability, completeness and timeliness of preparation of all kinds of reports: ensuring completeness, reliability, accuracy and timeliness of preparation and distribution of financial, accounting and managerial information and all kinds of reports of the Company and its subsidiaries and affiliates.
Risk management
Company objectives in the area of risk management:
- reducing the probability and/or consequences of events that have a negative impact on the Company’s achievements;
- setting priorities in the Company’s activities on the basis of awareness about the existing risks, including financial ones;
- safety of assets and efficient use of available resources;
- achievement of planned performance indicators;
- continuous efficiency improvement in all areas through the analysis and evaluation of existing risks;
- ensuring reliable technical functioning of the integrated power grid of the Russian Federation;
- achieving optimal efficiency of the risk management system of the Company, its subsidiaries and affiliates;
- timely and full informational and analytical support to the process of managerial decision-making and planning with regard to activities of the Company, its subsidiaries and affiliates.
Internal audit
Internal audit represents activities aimed to provide reliable and independent guarantees and consulting services in order to improve the Company’s operations.
The purpose of the internal audit is to contribute to the achievement of the Company’s objectives in the most efficient and economically sound way, by using a systematic and step-by-step approach to the evaluation and improvement of risk management, internal control and corporate governance effectiveness.
Objectives of internal audit
- providing the Board of Directors / Audit Committee of the Board of Directors and executive bodies of the Company with independent and reliable guarantees that the Company and its subsidiaries and affiliates have adequate systems of internal control, risk management and corporate governance;
- assistance to the Company’s management in building effective systems of internal control, risk management and corporate governance by providing consultations: recommendations, opinions and other practical assistance of non-regulatory nature.
Auditing Commission
The Company’s financial and business operations are monitored by the Auditing Commission, which is elected by the General Shareholders’ Meeting for the period until the following Annual General Shareholders’ Meeting and acts under the Federal Law on Joint Stock Companies, Art. 24 of the Company’s Charter and the Regulations on the Auditing Commission (Minutes of the Annual General Shareholders’ Meeting No. 01/14 dated June 30, 2014).
Responsibilities of the Auditing Commission
- Control the Company’s financial and business operations.
- Ensure compliance of the Company’s financial and business operations with Russian legislation and the Company’s Charter.
- Perform an independent assessment of data on the Company’s financial situation.
Meetings of the Auditing Commission
The Auditing Commission held five meetings in 2014, where the following issues were put under consideration: approval of the Auditing Commission Activity Plan, election of the Chairman and the Secretary of the Auditing Commission, as well as issues directly related to inspections.
Remuneration to the Auditing Commission members
Remuneration to IDGC of Centre Auditing Commission members is paid under the Regulations on Payment of Remuneration and Compensation to the Auditing Commission members. In accordance with the Regulations, the Auditing Commission members involved in business inspections (auditing) are paid the remuneration equal to 25 minimum tariff rates of a 1st grade worker. The Auditing Commission Chairman is paid the remuneration multiplied by 1.5.
In 2014, IDGC of Centre paid to the Auditing Commission members the remuneration of RUB 1.4mln for holding business inspections for 9 months of 2013 and 2013.
Members of the Auditing Commission
The current Auditing Commission was elected at the Annual General Shareholders’ Meeting on June 26, 2014. The Auditing Commission consists of five members, who are neither members of the management bodies nor Company employees, which ensures objective and independent judgements.
Members of the Auditing Commission as at December 31, 2014:
| Marina A. Lelekova (Chairperson of the Auditing Commission) |
Director of the Internal Audit and Control Department, JSC ROSSETI. Born in 1961, Russian citizen.
In 1982, she graduated from the Far Eastern Institute of Soviet Trade with a degree in Economics.
|
| Elena Yu. Guseva |
Lead Expert, Investment Audit Division, Inspections and Internal Audit Office, Internal Audit and Control Department, JSC ROSSETI.
Born in 1970, Russian citizen.
In 1992, she graduated from the Academy of Labour and Social Relations with a degree in Economics.
|
| Yelena P. Kuznetsova |
Born in 1972, Russian citizen.
In 1993, she graduated from the Moscow University of Consumer Cooperation with a degree in Economics. In 2001, she graduated from the Finance Academy under the Government of the Russian Federation with a degree of Financial Manager.
|
| Sergey V. Malyshev |
Lead Expert, Investment Audit Division, Inspections and Internal Audit Office, Internal Audit and Control Department, JSC ROSSETI.
Born in 1965, Russian citizen.
In 1986, he graduated from Yaroslavl Higher Military Financial School with a degree of Financial Economist.
|
| Sergey I. Ochikov |
Lead Expert, General Audit and Inspections Division, Inspections and Internal Audit Office, Internal Audit and Control Department, JSC ROSSETI.
Born in 1983, Russian citizen.
In 2004, he graduated from the Krasnoyarsk State Technical University with a degree in Power Stations and Substations; in 2007, he graduated from the Siberian Federal University with a degree in Economics and Company Management in the Energy Sector.
|
Members of IDGC of Centre Auditing Commission do not hold the shares of the Company or its subsidiaries and did not execute any transactions relating to purchase or disposal of the Company’s shares in 2014. The Auditing Commission members and the Company did not enter into any other transactions either.
Auditor
IDGC of Centre accounting statements for 2014 under RAS and the consolidated financial statements for 2014 under IFRS were audited by an independent auditor, Ernst and Young LLC.
The candidacy of the auditor was determined by the results of a competitive selection and was proposed by the Audit Committee. Subsequently, the candidacy received preliminary approval by the Board of Directors.The cost of the auditor’s services was approved by the Board of Directors of the Company in the amount of RUB 4.7mln including VAT.
