Internal Control and Audit System
The internal control system created in the Company is focused on:
- revealing and assessing risks, recommendations for mitigating their adverse impact on the Company's activity;
- implementing and improving the internal control procedures.
This activity is a part of responsibility of Company's functional businesses managers and directors of its organisations. Independent evaluation of efficiency of internal control procedures and elabouration of recommendations to improve the internal control system is an important element of the internal control system. This activity is a part of responsibility of internal audit.
A corporate risk management system is always the point of attention of the Board of Directors, which does its best to make this system comply with the best world practices and operate effectively.
Metalloinvest Internal Control and Audit System
Metalloinvest's Board of Directors treats internal control and audit as the most important mechanism to ensure the Company's sustainable development. The experience of Galina Aglyamova, Chairman of the Audit Committee, and competence of Vladimir Manuilov, Director of Internal Audit Department of Management Company Metalloinvest, who also has an international certificate of CIA (Certified Internal Auditor), helps to achieve this goal.
The structure of internal audit system covers all levels of governance and consists of the Audit Committee of the Board of Directors of Management Company Metalloinvest, Internal Audit Department of Management Company Metalloinvest, and internal audit units of the companies under control.
The structure is established by the Internal Audit Regulation, and ensures the implementation of independence and objectivity principles (head of the Audit Committee of the Board of Directors is an independent director). The internal audit units of the companies under control are functionally subordinated to Director of the Internal Audit Department, which in its turn reports to the Audit Committee.
Heads of companies under control and structural units are in charge of efficient arrangement of control and management of risks and corporate governance processes in the units they manage. The said processes are assessed in terms of how they ensure:
- the efficiency of the Company's financial and economic activity;
- the safety of Company's assets from illegal actions of employees and third parties;
- the compliance of the activities with the internal regulations, laws and contractual obligations of the Company;
- the adequacy of the Company's financial and economic activities in the managerial and financial reporting.
Description of substantial risks discovered and the corresponding proposals on mitigating their adverse impact are delivered to different governance levels in accordance with the approved reporting system. Following the assessment results, the Company develops recommendations to improve the said processes and monitors the fulfillment of such recommendations.
The Audit Committee studies twice a year a consolidated internal audit report with the information on completed audits, discoveries and measures taken by the management to fulfill recommendations of internal audit. The most significant issues mentioned in the reports are discussed by the Audit Committee at the regular and extraordinary meetings.
To determine the priority lines of audits the Company uses a risk-oriented approach, which considers the Company's targets, proposals from the senior executive management and the Board of Directors.
In 2014, internal audit covered the most sufficient risks in the following fields:
- management of investment projects;
- repair and maintenance of property, plant and equipment;
- material flow control;
- purchase of commodities and supplies.
Metalloinvest prepares its financial statements in accordance with the Russian and international standards (IFRS and RAS). Since 2010 the Company has been engaging an external auditor to conduct an independent audit of financial and accounting statements. In 2014, the auditor of the Company's financial statements prepared in accordance with IFRS and accounting statements prepared in accordance with RAS was PriceWaterhouseCoopers.
The auditor is selected based on screening the candidates following the results of negotiations, with due consideration of their professional level and cost of services. The auditor is approved by the Company's General Meeting of Shareholders (Participants).