According to the legislation of the Russian Federation, the Group’s General Shareholders’ Meeting selects auditors on an annual basis. The Audit Committee advances candidates for Group auditor who are recognized independent auditors with strong professional reputation for consideration by the Board of Directors.
The Audit Committee is guided by the following core principles when making its recommendations:
AO PricewaterhouseCoopers Audit was selected at the Annual General Shareholders’ Meeting held in June 2017, to conduct an audit of the Company’s Russian Accounting Standards (RAS) and International Financial Reporting Standards (IFRS) financial statements. Address: 125047, 10 Butyrsky Val, Moscow, Russia.
Internal Audit Commission
The Internal Audit Commission is a full-time internal control authority exercising continuous supervision over the financial and business activities of the Company.
The Internal Audit Commission operates under the Charter and the Internal Audit Commission Regulations. It audits NLMK’s financial and business activities in order to confirm the accuracy of information contained in reports and other financial documents.
The Internal Audit Commission is elected by the General Meeting of Shareholders for a term of one year.
Composition of the Internal Audit Commission (elected on 2 June 2017)
The Audit Committee’s main objectives are to draft and submit recommendations to the Board of Directors regarding effective performance of functions related to the supervision of the Company’s financial and business activities by the Board of Directors. These recommendations include priority matters in annual independent audit of accounting (financial) statements, the quality of the Auditor’s services and its compliance with the independence requirements; as well independent property appraisal in cases specified in the Russian legislation among others.
The Audit Committee is fully accountable to the Board of Directors of NLMK and is its advisory body.
The Audit Committee constitutes a part of the risk management system and has the following risk management, internal control and corporate governance functions:
NLMK Audit Committee is responsible for reviewing the effectiveness of the Group’s internal control, risk management and corporate governance systems. It evaluates the risk management and internal control efficiency, corporate governance practices and develops proposals on how they can be improved.
The Audit Committee analyses and evaluates the compliance with the risk management and internal control policy.
It controls the procedures that ensure compliance with existing laws, ethical norms, rules and procedures of the Company, and stock exchange requirements.
The Audit Committee analyses and evaluates the compliance with the conflict of interest management policy.
Analyses the efficiency of internal control system in the Company’s affiliates and subsidiaries, considers candidates to become their Auditor and reports it to the Board of Directors.
The Committee members comprise:
Internal Audit department
Internal auditing is performed in order to provide members of the Board of Directors (Audit Committee), the President (Chairman of the Management Board) with independent and objective guarantees and consultation aimed at improving NLMK Group’s performance, through a systematic and consistent approach to assessing and increasing the efficiency of risk management, control and corporate governance processes.
Goal: To maintain or increase the value of the Company through a set of objective internal audits based on a risk-oriented approach, recommendations and exchange of knowledge.
The main goal of risk management for the Group is to minimize the possible negative impact of changes in the external environment and internal processes on the Company’s business.
The risk management policy is aimed at protecting the interests of shareholders, stakeholders and the Company in general through an efficient risk management system. Risk mitigation is a key element in creating shareholder value and achieving the strategic goals of the Group.
In 2008–2009, together with Marsh, a risk management consultant, we evaluated the effectiveness of our existing risk management system, developed recommendations to improve it and drafted internal documents regulating the Company’s risk management procedures. Since 2010, the risk management process is implemented independently.
Risk management is a continuous, integral and transparent process that involves all employees of the Group at various stages: