Control and Audit Department

The purpose of the Control and Audit Department (CAD) is to provide professional support to the Board of Directors and Company management in construction of an efficient system of internal control, and to help raise the efficiency of the Company and its capitalization.

The tasks of the CAD are:

creation of a unified system of control over finances and operations in subdivisions, representative offices and subsidiaries of Rosneft;
conduct of control measures (investigations, complex audits, thematic and specialized checks, expert assessments, and other corporate investigations) in order to identify areas which require improvement or better use of Company potential and resources;
informing Company management bodies of the results of control measures, and the state of systems and processes;
design of corrective measures and drafts of corporate decisions as a result of control measures;
ensuring full, proper and timely execution of decisions by the Board of Directors, Management Board and President, and by the Board Audit Committee as a result of control measures in the competence of the CAD;
assessing, classifying and minimizing potential risks which arise in the course of Company business, including the business of subdivisions, branches and representative offices;
procedural and methodological support for the activities of audit commissions and of control and audit divisions of subsidiaries.

The CAD is directly subordinate to the President of the Company and reports to the Board of Directors through the Board Audit Committee and also to the Management Board. The CAD has all required organizational and functional independence. Activity of the CAD is governed by Regulations on the Control and Audit Department, on business control, and on cooperation with Company subdivisions in conduct of control measures.

Members of the Control and Audit Department are qualified auditors, tax consultants, and a valuation specialist. The Department members belong to the Institute of Internal Auditors and other professional associations. The activity of the CAD is governed by the annual control and audit plan approved by the Company President. The plan is prepared by prioritizing control tasks using a factor method, and current planning uses a risk-oriented approach.

Control is carried out to ascertain the reliability of accounting and book-keeping and efficiency and achievement of business operations, safety of assets, with due account for the requirements of Russian law and local normative documents.

Control measures are carried out at the level of subsidiaries and structural subdivisions of the Company’s central management. The objects of investigation may be management and control systems, business processes, business operations, spheres of business, transactions, reporting, etc. All key areas of Company business and processes are subject to control.

Materials and results of each control procedures are brought to the notice of management and the Company President. Drafts of corporate decisions and measures for eliminating violations and faults, and for preventing them, and for reducing risks and improving the system of internal control are designed jointly with interested parties. Corporate decisions and corrective measures based on results of control procedures are monitored to ensure their full implementation.

The Head of the CAD reports periodically to the Board Audit Committee, the Management Board and the President concerning the activities of the Department, the results of control and audit work, the state of internal control and of measures to raise the efficiency of the internal control system.

The CAD works closely on issues of internal control with all structural subdivisions and governing bodies of the Company, as well as working with the Institute of External Auditors, service providers and professional associations on issues of improving the efficiency of control procedures and qualifications, and with the external auditor on assessment of the Company’s system of internal control.