Internal control and risk management system

Provision of efficiency and constant perfection of internal control and risk management is one of the Company’s priorities. The ICRM system is focused on monitoring and timely prevention of inte rnal and external risks influencing achievement of strategic and operating goals of the Company. Its main goals are:
  • Improvement of corporate governance system to ensure rational assurance in observation of interests and rights of shareholders and investors (efficient and successful resource usage, asset preservation, compliance control as well as authenticity and objectivity of management and financial reporting and reliability of its preparation).
  • Increase of efficiency and effectiveness of activities related to the implementation of the development strategy of the Company using risk management system and efficient control procedures.
  • Facilitation of timely adaptation of the Company to changes in external and internal environment.
Performance principles, processes and procedures of Internal control and risk management system (hereinafter referred to as ICRMS) of IDGC of Urals are regulated by the following internal documents:
  • Risk Management Policy of IDGC of Urals, OAO (approved by the BoD resolution, protocol #70 dd. 04.06.2010).
  • Internal Control Policy of IDGC of Urals, OAO (approved by the BoD resolution, protocol #70 dd. 04.06.2010).
To support the documents the following regulations were approved:
  • The Regulations on Control Environment and Risks of Business Process – Commercial Metering and Transmission Sales (approved by the BoD resolution, protocol #85 dd. 01.06.2011).
  • The Regulations on Control Environment and Risks of Business Process – Exploitation (approved by the BoD resolution, protocol #85 dd. 01.06.2011).
  • The Regulations on Control Environment and Risks of Business Process – Purchase Management (approved by the BoD resolution, protocol #85 dd. 01.06.2011).

The Regulations on Control Environment and Risks of Business Process – Connection sales (approved by the BoD resolution, protocol #89 dd. 05.08.2011).

Besides, Decree #229 dd. 26.07.2011 approved the Methodic recommendations on risk management to determine approaches and methods for risk discovering, evaluation and minimization on all governance levels.

According to the approved local regulatory documents on ICRMS perfection, directors and specialists on all management levels (both in our branches and HQ) are involved into risk management and internal control processes. The Board of Directors determines required levels and directions for ICRMS development. The Audit Committee evaluates ICRMS efficiency, including messages and reports of Internal Control and Audit Department, analyses financial (accounting) statements and contributes to the preparation of recommendations on significant financial and operating issues. General Director arranges efficient ICRMS functioning, ensures internal control procedure implementation and bears responsibility for their completion. Internal Control and Risk Management Department directly evaluates the adequacy, sufficiency and efficiency of internal control procedures, coordinates risk management processes, arranges the implementation of internal control system in business processes and evaluates the compliance of accomplished financial operations to the current legislation and shareholder interests. Structural divisions, within their competence, reveal and evaluate risks, monitor, elaborate and implement measures taken to minimize the risks as well as accomplish control procedures.

In future we plan to continue ICRMS improvement transiting from standardized to optimized ICRMS maturity level on other business processes as well as automation of control procedures and risk management processes. ICRMS normative base will be improved using experience and best Russian and foreign practices.