In an effort to enhance the effectiveness of the internal control system and improve corporate governance, Gazprom Neft PJSC developed the Gazprom Neft PJSC Internal Control Policy, which is the primary document in matters of internal control and identifies the goals, objectives, components and principles for the establishment and operation of the Company’s internal control system.
The Policy was tentatively endorsed by the Audit Committee of the Gazprom Neft PJSC Board of Directors and approved by the Board of Directors in February 2017.
The Company succeeds in achieving its goals in the most optimal way possible due to the high level of involvement of the Company’s executive bodies and senior management as well as the heads of structural units and Company employees in organising and supporting the effective operation of the internal control system.
The internal control system ensures:
- the identification and assessment of risks affecting the achievement of the Company’s goals;
- the development, introduction, proper implementation, monitoring and improvement of control procedures at all levels of the Company’s business operations and management;
- awareness among the appropriate level of governing bodies about major shortcomings in control along with a suggestion for corrective measures to remedy deficiencies;
- the continuity of the Company’s operations, the most effective performance of the Company’s activities, its sustainability and development prospects, including the Company’s timely adaptation to changes in the internal and external environment;
- high-quality information, methodological and analytical support for the management decision-making process at the Company;
- the proper distribution of responsibility, powers and functions between the subjects of internal control and the prevention of duplicated functions;
- continuous improvement to the control system with respect to information technologies;
- the timely resolution of conflicts of interest that arise in the process of the Company’s activities.
The subjects of internal control at the Company and the distribution among them of the appropriate functions to organise and support the effective operation of the Company’s internal control system are primarily determined as follows.
As part of its day-to-day management of the Company’s operations, the
Board of Directorsperforms the functions of creating an appropriate control environment, introducing a culture of internal control and maintaining high ethical standards at all levels of the Company’s activities. The Board of Directors determines the principles and approaches used for the organisation and operation of the Company’s internal control system; analyses and assesses its effectiveness, including an annual review how effectively the internal control system is organised and operates and, if necessary, the preparation of recommendations on how to improve it.
Information concerning the effectiveness of the internal control system is provided to shareholders within the Company’s annual report and also as part of the Gazprom Neft PJSC Internal Audit Department’s report on its performance results.
Audit Committeeperforms the function of preparing recommendations for the Board of Directors on matters concerning the organisation, operation, effectiveness assessment and improvement of the Company’s internal control system, analyses the Company’s reporting and internal audit results for compliance with the legislation of the Russian Federation, International Financial Reporting Standards, Russian Accounting Standard and other regulatory legal acts and considers any established or alleged unethical practices by the Company’s employees.
senior managementperform functions that aim to organise the development and effective operation of the internal control system; create a proper control environment, introduce a culture of internal control and support high ethical standards at all level of the Company’s activities; distribute powers and duties and assign responsibility among the heads of structural units for establishing, introducing, supporting, monitoring and improving the effective organisation and operation of the Company’s internal control system; conduct a regular performance assessment of the Company’s employees and train personnel on internal control in connection with changes to the internal and external conditions of the Company’s operation.
heads of the Company’s structural units and employeesperform functions that aim to develop, document, introduce, fulfil, monitor (self-assessment) and improve control procedures within the framework of their relevant competencies and in the zone of their responsibility; and timely inform supervisors about incidents when it is impossible to perform control procedures for any reason and/or changes must be made to control procedures due to changes to the internal and external conditions of the Company’s operation.
Internal Audit Departmentperforms the following functions:
- an independent and objective assessment of the effective organisation and operation of the Company’s internal control system based on a risk-oriented approach;
- developing recommendations to eliminate deficiencies identified in the course of audits and monitoring their introduction;
- consulting support for stakeholders within the Company with respect to the organisation and operation of the Company’s internal control system;
- reporting the assessment results of the internal control system and proposals for its improvement to the Company’s Audit Committee and executive bodies.