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Data on the Structure and Terms of Reference of the Bodies of Control over Financial and Economic Operation of the Issuer
Description of the structure and terms of reference of the bodies of control over financial and economic operation of the Issuer in accordance with its Charter.
According to Article 17 of the Issuer’s Charter:
“17.1. To exercise control over financial and economic operations, the Company shall form the Auditing Commission, the Internal Audit Department and shall engage an independent auditor.
17.2. Auditing Commission is an independent control body of the Company elected at the annual General Shareholders Meeting for the period till the next annual General Shareholders meeting and comprises 5 persons.
17.2.1. The authority of individual members or all members of the Auditing Commission can be prematurely terminated by resolution of the General Shareholders Meeting.
In case of early termination of the authority of members of the Auditing Commission the authority of the new members of the Auditing Commission shall be valid till the next annual General Shareholders Meeting.
If the number of members of the Auditing Commission becomes less than one half of the number of elected members of the Auditing Commission, the Board of Directors shall convene an extraordinary General Shareholders Meeting for electing new members of the Auditing Commission. The remaining members of the Auditing Commission shall exercise their functions till election of the new members of the Auditing Commission at the extraordinary General Shareholders Meeting.
17.2.2. The following matters fall within the competence of the Auditing Commission:
- check of the reliability of data contained in the statements and other financial documents of the Company;
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revealing facts of infringements of accounting standards and procedures for presentation of financial statements determined by legal acts of the Russian Federation;
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checking the observance of legal norms when calculating and paying taxes;
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revealing facts of violation of legal acts of the Russian Federation, in accordance with which the Company conducts the financial and economic activities;
- assessment of the economic reasonability of financial and economic operations of the Company.
17.3. The Company shall set up a special structural subdivision, independent of the Company’s executive bodies, Internal Audit Department, the activity of which shall be controlled directly by the Board of Directors.
Functions of the indicated structural subdivision, its operation, procedure of appointment of its workers and their responsibilities shall be determined in the internal document approved by the Company’s Board of Directors.
Data on the system of internal control over financial and economic activity of the Issuer:
Data on Internal Audit Department:
Period of work: created on 27.05.2003.
Key specialists:
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Podgornaya Ljubov Yurievna – Director of the Internal Audit Department.
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Demchenko Marina Ivanovna – Head of the internal audit section.
Basic functions of the Internal Audit Department:
Organization of integrated audit of financial and economic activity of the Company, its branches and structural units according to the standing orders approved by the Management Board. Integrated audit in the Company’s branches shall be planned so that the specialists of the General Management can visit all branches of the Company minimum once in 3 years.
Performing audit in the General Directorate and the branches of the Issuer in accordance with the schedule of audit approved by the Board of Directors.
Experts of the Internal Audit Department and specialists engaged for carrying out audit must reveal mistakes, discrepancies and illegal actions during financial and economic operations transacted by the Company.
Sampling audit of financial and management reports of the Company, analysis of their reliability, estimation of timeliness of the reporting and its presentation.
Carrying out of unannounced inspections of cash departments and cash discipline in order to strengthen the system of internal control over safe keeping of money resources.
Performing sampling audit according to the programs approved by the director of the Internal Audit Department as well as sampling inventories to exercise control over safe keeping and effective usage of the Company’s assets.
Participating in audit of subsidiaries as engaged specialists.
Working out recommendations and instructions on performing audit, specialized checks and integrated audit of financial and economic activity.
Preparation of proposals on elimination of infringements revealed during audit, inspections of tax and other state authorities (information of all sections of the internal audit Department, services and departments of General management and branches is integrated).
Control over fulfillment of plans aimed at elimination of the revealed infringements.
Carrying out of the independent analysis of financial and economic activity of the Company, its branches and structural divisions in all directions determined by the internal audit department.
Development of the programs of training and information seminars in order to eliminate typical infringements revealed during audit, integrated and tax inspections. Preparing information for realization of actions aimed at optimization of taxation.
Monitoring of expenditures of means, funds for different projects or programs, sampling analysis of incomes and costs.
Preparing consultations on tax matters addressed to Chief Accountant, work check-up by the accounts services.
Preparation of the Company for external audit within its term of reference; analysis of work reports of external Auditors of the Company; making recommendations on elimination of the infringements revealed by auditors.
Regular work within the framework of any projects. Definition and analysis of possible external and internal risks during development and introduction of new projects in the Company and during the conclusion of contracts. Development of recommendations allowing to reduce the risk of separate operations or to minimize possible losses.
Gathering and analysis of information on the state of risk management system. Risks database maintenance.
Carrying out sampling inspections aimed at revealing and liquidation of debts and deficiencies, periodic control over fulfillment of obligations by the Company and its contractors.
Supervision of work of the personnel in the sphere of finances; control over the work of internal audit department in the branches.
Making reports on the done work, analytical and staff reports, opinions of experts.
Accountability of the Internal Audit Department:
The Internal Audit Department is functionally subordinate to the Board of Directors and administratively – to the General Director of the Company.
Interaction of the Internal Audit Department with the executive bodies of the Issuer and with the Board of Directors:
Presentation of the results of audits to the Management Board and results of work – to the Board of Directors of the Company, preparation of documents for work of the Board Audit Committee, informing the management on the audit results after and during the audit.
Interaction with the external auditor of the Issuer:
Measures on elimination of the infringements affecting reliability of the accounting reports, conducting meetings, discussing the results of audit performed by the Auditor of the Company and informing the branches on typical infringements.
Data on availability of the Issuer’s internal document on protection of internal (inside) information.
Full text of the current version of the “Provisions on the procedure for using information on the activities of Public Joint –Stock Company "Southern Telecommunications Company" or on its securities and transactions with them, unavailable to the general public, whose illegal use or disclosure may have a material effect on the market value of securities of Public Joint –Stock Company "Southern Telecommunications Company", approved by the Board of Directors of "UTK" PJSC, Minutes № 40 of June 29, 2005, can be viewed on the corporate website http://www.stcompany.ru. .
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