Internal Audit

The objective of the internal audit is to assist the Board of Directors and executive bodies of the Company in improving the efficiency of the Company’s management and improving its financial and economic activities.

Such assistance is effected through a systematic and consistent review and assessment of risk management, internal control and corporate governance systems as tools to provide reasonable assurance of achieving the Company’s objectives.

The risk‑based approach is applied in organising the functioning of the internal audit system in the Company. Internal audit activities in the Company take into account information on ESG factors, risks and opportunities related to such factors that have a significant impact on the Company’s development and performance indicators, as well as other issues of the Company’s sustainable development.

The Internal Audit Function is a subdivision responsible for the implementation of the internal audit function in the Company.

The Internal Audit Function is functionally accountable to the Board of Directors, while the latter:

  • Establishes principles and approaches of organisation of the internal audit, as well as approves internal documents defining the Company’s policy in terms of the internal audit
  • Controls and organises the Internal Audit activities, among other things, approves the Regulation on Internal Audit Department, action plan, progress report on action plan, and internal audit budget, preliminary approves the resolutions of the Company’s sole executive body concerning the appointment or dismissal (at the employer’s initiative) of the Internal Audit Head, disciplinary penalties, approves employment contract and remuneration provisions for the Internal Audit Head, considers the quality assessment results for internal audit.

The goals and objectives, organisational and functional principles, roles and responsibilities of the Internal Audit Directorate are set out in the Internal Audit Policy of the Company approved by the resolution of the Board of Directors (Minutes No. 521/2023 dated 16 June 2023).

The function of the Company’s internal audit is regulated by the following key documents:

  • The Company’s Internal Audit Policy and the Code of Ethics for Internal Auditors approved by resolution of the Board of Directors on 15 June 2023 (Minutes No. 521/2023 dated 16 June 2023)
  • Regulations on the Internal Audit Function of the Company approved by the decision of the Board of Directors of the Company dated 18 April 2022 (Minutes No. 473/2022 dated 21 April 2022)
  • The Company’s Internal Audit Assurance and Quality Improvement Programme approved by the decision of the Company’s Board of Directors dated 18 April 2022 (Minutes No. 473/2022 dated 21 April 2022)
  • Corporate standards for the internal audit functions and the practical application standards elaborated in compliance with the international standards for the professional practice of internal auditing

The feedback from the Audit Committee is submitted to the Head of Internal Audit during the interactions with the Audit Committee including the participation in its meetings, the analysis of its resolutions/recommendations concerning the issues in the competence of the internal audit, and also by polling the members of Audit Committee.

The satisfaction index of the Audit Committee of the Board of Directors with the performance of the internal audit function for 2023 is rated as “fully compliant”. The satisfaction was rated under following the Programme on Assurance and Improvement of Internal Audit Quality in the Company by means of a questionnaire survey.

The Company put an action plan in place for the development and improvement of the Company’s internal audit activities for the period from 2020 to 2024, approved by a resolution of the Company’s Board of Directors dated 30 March 2020 (Minutes No. 383/2020 dated 2 April 2020) and amended by a resolution of the Company’s Board of Directors dated 19 February 2021 (Minutes No. 420/2021 dated 24 February 2021). In terms of events planned for 2023, the action plan for improvement of Company’s internal audit is implemented to the fullest extent.

In 2019, KPMG, JSC conducted an external independent assessment of the Company’s internal audit activity (conducted at least once every 5 years; the next one — in 2024). Based on the results of the above assessment, KPMG, JSC received an opinion, according to which the Company’s internal audit activity “generally complies” with the International Professional Standards for Internal Auditing, the Code of Ethics developed by the Institute of Internal Auditors and the Internal Audit Policy of the Company.