The Internal Control Policy of Gazprom Neft PJSC, approved by the Board of Directors in 2017, is the principal document specifying goals, objectives, components, and principles of organisation and functioning of the company internal-control system. Efficient operation of the internal control system is based on the involvement of top managers, heads of structural units, and all employees of the company.
The internal control system aims to:
- identify and assess risks that may prevent the company from achieving its goals;
- develop, adopt, properly execute, monitor and improve control procedures at all levels of business operation and the company management;
- inform the relevant governance bodies of material control weaknesses and suggest remedial actions;
- ensure business continuity and maximum efficiency, along with sustainability and evolution, including timely adaptation to changes in the internal and external environment;
- provide high-quality informational, methodological and analytical support for the management decision-making;
- ensure proper allocation of responsibility, authority, and functions among internal control units, with no overlapping of functions;
- continuously improve the control framework with respect to information technology;
- timely settle conflicts of interest emerging in the course of business.
Internal control units composition, and allocation of functions:
The Board of Directors of Gazprom Neft PJSC implements the following functions, as part of the general governance of the company business:
- establishing a proper control environment, adopting the internal control culture, maintaining high ethical standards at all levels of the company activity;
- specifying principles and approaches to organisation and operation of the company internal control system;
- analysing and assessing the efficiency of organisation and operation of the company internal control system, including annual consideration of respective issues, and preparing recommendations to improve it (if needed). Information on efficiency of the internal control system is disclosed to shareholders as part of the company Annual Report , and as part of the report of the Gazprom Neft PJSC Internal Audit Department on the company performance;
- monitoring of implementation of orders and resolutions of the Gazprom Neft PJSC Board of Directors and shareholders by the company executive bodies;
- controlling the company compliance with laws of the Russian Federation, corporate governance, and disclosure of complete and correct information on the company to stakeholders;
- approving the Internal Control Policy.
The Audit Committee implements functions aimed at:
- preparing recommendations for the Board of Directors of Gazprom Neft PJSC regarding organisation, operation, performance assessment and improvement of the company internal control system, and other issues within the competency of the Audit Committee (including preparation of recommendations after considering the Internal Control Policy);
- ensuring preliminary consideration of internal control issues;
- ensuring preliminary consideration of the Internal Control Policy (before approval by the Gazprom Neft PJSC Board of Directors);
- analysing and assessing the efficiency of the internal control system operation;
- analysing compliance of the company statements and external audit results with the Russian laws, international financial reporting standards, Russian accounting standards, and other regulations;
- considering detected or assumed facts of fraud on the part of the company employees.
Executive bodies and senior management of the company are implementing functions aimed at:
- organising development and efficient operation of the internal control system, through approval of local regulations regarding the content and rules for implementing internal control procedures by the company structural subdivisions within their lines of business;
- establishing the proper control environment, adopting the internal control culture, maintaining high ethical standards at all levels of the company activity, which ensures efficient organisation and operation of the internal control system;
- allocating authority, duties and responsibility among heads of structural subdivisions, related to establishing, adopting, maintaining, monitoring and improving the efficient organisation and operation of the company internal control system;
- conducting regular assessment of the company employees performance and personnel training, in the field of internal control due to changes in internal and external conditions of the company operation.
Heads of structural units and the company employees are implementing functions aimed at:
- developing, documenting, adopting, executing, monitoring (conducting selfassessment) and improving control procedures, as part of respective competencies within their responsibility;
- reporting to immediate supervisors in a timely manner about the cases when it was impossible to carry out control procedures, and/or when organisation of the control procedures needs to be changed, due to changes in internal or external conditions of the company operation.
The Internal Audit Department, part of the Internal Audit and Risk Management Directorate, is performing the following functions:
- doing independent and objective assessment of the efficiency of the company internal control system organisation and operation, based on the riskfocused approach;
- developing and monitoring adoption of recommendations for eliminating drawbacks revealed during audits;
- providing advice for stakeholders within the company, in relation to organisation and operation of the company internal control system;
- reporting about the results of the internal control system assessment, and of proposals for its improvement to the Audit Committee, the company executive bodies, and (if needed) the Gazprom PJSC structural subdivision responsible for internal audit.