Internal audit department

Internal control over the Company’s financial and business activities is carried out by the Internal Audit Department.

Main functions of the Internal Audit Service:

Internal audits, including:

  • Assessments of the effectiveness of the business’ processes and internal control system;
  • Audits of construction activities;
  • Audits of corporate procedures;
  • IT audits;
  • Efficiency audits of the system to ensure an ongoing supply of petroleum products to tank farms and filling stations;
  • Confirming compliance with legislative requirements and internal regulations, including an annual audit of corporate procedures for compliance with insider information laws;
  • Controlling the integrity of OJSC Gazprom Neft assets;
  • Monitoring the implementation of corrective measures.

Organising an integrated risk management system (Integrated risk management systemIRMS), including:

  • Identifying, analyzing, assessing, revising and updating the risks of OJSC Gazprom Neft
  • Developing and updating IRMS procedures (analysis of individual and inherent system risks, development and issuing recommendations);
  • Monitoring and assessing the efficiency of implemented procedures related to managing key risks and other risks of OJSC Gazprom Neft business units (blocks);
  • Integrating IRMS into key managerial business processes (business planning, management of project risks, management objectives).

Carrying out activities to prevent fraud, including:

  • Organising and maintaining a fraud prevention hot line;
  • Carrying out special inspections designed to identify any fraud;

Developing a methodology for internal audit, including:

  • Developing methodology documents to regulate the activities of the Internal Audit Department;
  • Automating internal auditing processes (including planning and time keeping, management of audit resources, auditing procedure documentation, monitoring of auditing teams’ activities);
  • Ensuring continuous professional growth and training for IAD employees;
  • Implementing a programme to control the internal auditing function, and carrying out related quality control.

Accountability of the Internal Audit Service, interaction with the issuer’s executive management bodies and the issuer’s Board of Directors (Supervisory Council)

The Internal Audit Department is directly accountable to the Company’s Chief Executive Officer; the Board of Directors approves the appointment and dismissal of the Director of the Internal Audit Department.

Interaction of the Internal Audit Department with the issuer’s external auditor

The Internal Audit Department regularly reports on the results of its activities to the Company’s Board of Directors and submits information to the Audit Committee about any material violations revealed in the course of the auditing of OJSC Gazprom Neft’s financial and business activities.

Company’s compliance with RF laws on combating abuse of insider information and market manipulation

OJSC Gazprom Neft’s activities to ensure compliance with the requirements, restrictions, and sanctions that exist under Russian law to prevent the abuse of insider information and market manipulation by the Company or its employees and structural subdivisions are organised according to the current legislation.

In 2013, Gazprom Neft’s Board of Directors approved a new version of the Regulation on Insider Information, which took into account main changes in Russian Federal law.

The Company approved its List of Insider Information based on the official Federal Service for Financial Markets (FSFM) List, and set out a procedure covering the access of insider information and rules to keep insider information confidential and ensure compliance control.

As recommended by the FSFM, in 2013 the Company expanded its insiders list, by including, in addition to Level 1 insiders (members of the Board of Directors, members of the Audit Committee, members of the Management Board, the Auditor, Registry Keeper, and appointed Communications Agency), employees in executive positions (Level 2 insiders) and Company employees authorised to access insider information (Level 3 insiders). As of 31 December 2013, 375 individuals were listed as insiders of OJSC Gazprom Neft.

The Internal Audit Department, whose department head is appointed by the Board under the Company’s Articles of Incorporation, has the role of ensuring legal compliance.

As required by law, the Company has a named, designated authorised subdivision – the Corporate Regulation Department – whose function it is to keep the insiders list, communicate it to stock exchanges, notify insiders who are added to and deleted from the list, and to disclose insider information under respective Federal Law.

The Company’s corporate website has an “Insiders” section where the following information is disclosed: Regulation on Insider Information, List of Insider Information, Updated List of Gazprom Neft Stock and Securities Transactions Required to be Reported by Insiders to the Company and the FSFM, and Insider Report Forms.

Insider information is disclosed on the Company’s website http://ir.gazprom-neft.com, on the “Essential Facts and Insider Information” pages.

The insider list is maintained by using a registration form that enables rapid compliance with regulatory instructions (e.g. if requests are made for a list of insiders on a specific date or period), as well as efficient internal control to enforce legal compliance by the insiders.

Financial instruments in relation to which the Company qualifies as an insider, and transactions which are reportable by individuals on the insider list to OJSC Gazprom Neft, other corporate entities, and the FSFM, include the ordinary shares and bonds issued by OJSC Gazprom Neft.