Internal Audit System
The Transneft internal audit policy is stipulated in the Regulations on Internal Audit. As per the given document, internal audit is the activity performed in order to assist managing bodies of the Company and its subsidiaries in raising the efficiency of governance of the Transneft system, the Company and Transneft subsidiaries, to improve their financial and operational activities through consistent and systemic approach to analysis and assessment of the risk management system, internal control system and the corporate governance of the Transneft system, the Company and its subsidiaries.
Internal audit within the Company and its subsidiaries is performed by the Department of Internal Audit and Analysis of Core Business Activities
In 2018, Transneft’s Department of Internal Audit and Analysis of Core Business Activities operated in accordance with Transneft’s General Guidelines (Plan) for Internal Audit for 2018 approved by the Board of Directors of the Company on 20 December 2017. In pursuance of this plan, 132 audits were conducted in relation to the Company and its subsidiaries in the following spheres:
- Execution of certain provisions of the Long-Term Development Programme
- Organisation and conduct of procurement and contract execution procedures
- Capital investments in fixed assets
- Fixed assets and inventories
- Operations with crude oil and petroleum products
- Financial management and budgeting
- Forming the financial results and the use of revenue
- Information systems
- Comprehensive assessment of the internal control and risk management systems
Such audits result in recommendations on improvement of the business processes, elimination of the existing shortcomings and remarks, followed by checking whether the recommendations are executed.
The Audit Committee under the Board of Directors of the Company annually assesses the efficiency of the internal audit function, considers the matters of essential limitations and threats to the independence in performing internal audit. The Company’s Board of Directors annually approves a report on the performance results of the internal Audit Unit.
Based on the 2018 performance, the Audit Committee under the Company’s Board of Directors recognised:
- The internal audit function as efficiently executed at the Company and its subsidiaries
- Absence of substantial restrictions and threats to independence of internal audit, as well as to the credibility of the internal auditors at the Company and at Transneft subsidiaries in 2018
The Company’s Board of Directors approved the report on the internal audit unit’s performance results for 2018.
List of internal documents governing the internal audit functions, the RMS and internal control issues:
- The Regulations on Internal AuditApproved by the resolution of the Board of Directors of Transneft on 16 November 2015, Minutes No. 28;
- The Regulations on Transneft’s Department of Internal Audit and Analysis of Core Business ActivitiesNo. 08-03/001 dated 8 December 2015;
- The Internal Auditors’ Code of EthicsApproved by the Transneft order No. 87 dated 21 April 2016;
- The Internal Audit Quality Assessment and Improvement ProgrammeApproved by the Transneft order No. 136 dated 14 July 2016;
- The Regulations on Planning Internal Audits and Analysing the Core Business Activities of Transneft and its subsidiaries Approved by the Transneft President on 24 November 2016.
|Internal Control System Efficiency Assessment|| |
|Assessing the RMS Efficiency|| |
|Assessing Corporate Governance|| |