Internal controls - process carried out by the Board of Directors, the Board and the rest of the company's personnel, designed to provide "reasonable assurance" regarding the achievement of objectives in the following categories:
1. The effectiveness and efficiency of operations;
2. The reliability of financial reporting;
3. Compliance with applicable laws and regulations.
The internal control system (hereinafter - ICS) is defined as the set of policies, processes and procedures, standards of conduct and actions that promote effective and efficient operations, enabling the organization to respond appropriately to significant risks in terms of achieving the Company's goals.
ICS comprises five interrelated components:
The control environment - determines the atmosphere of the organization. This component is the foundation for all other components of internal control, providing discipline and structure.
Risk assessment - Principles and methods of risk management, order of monitoring and control of efficincy of the risk management system.
Control procedures - documentary fixed system of measures and actions to ensure effective internal control over the implementation of goals, objectives and plans of the organization and risk management.
Information System and the exchange of information - timely and effective identification data in order to provide and share information about events and conditions that may affect the achievement of objectives.
Monitoring - the process of evaluating the performance of the ICS during the period of time.
ICS in accordance with the approved Regulations on the internal control system in the Company is based on the following principles:
1. consistently smooth functioning - constant and proper functioning of the internal control system allows the Company to promptly identify any deviations from the norm, and to prevent them from occurring in the future;
2. accountability of all actors of the internal control system - the quality of the performance of control functions by each person is controlled by another entity's internal control system;
3. the division of responsibilities - the Company seeks to avoid duplication of control functions, and these functions should be distributed among the officials and employees of the Company so that the same person has not united functions associated with the approval of transactions with certain assets, accounting of operations, safeguarding of assets and performing inventory count;
4. proper acceptence and approval of the transactions - the Company seeks to establish a procedure for the approval of all business transactions by authorized bodies and by persons within their respective mandates;
5. the responsibility of all subjects of the internal control work in the community, for the proper performance of control functions;
6. implementation of internal controls based on a clear interaction between all agencies and units of the Company;
7. Continuous development and improvement - The Company aims to provide conditions for flexible adjustment of the internal control system, so that it can be adapted to the need to meet new challenges and to expand and improve this system itself;
8. timeliness of sending messages of any significant deficiencies and weak points of control - the Company must be installed as soon as possible transfer of relevant information to bodies and / or persons authorized to make decisions on elimination of any significant deficiencies and control weaknesses;
9. correspondence between the level of complexity of the system of internal controls and the level of complexity of the controlled object;
10. identifying priority areas of activity of the Company, which is getting better control - highlighting the strategic directions covered by the internal control system, even if their efficiency (ratio "cost - economic effect") is difficult to measure;
11. complex and systematic nature of the internal control system.
The efficiency of internal control system monitored by The Board of Directors of the Company.
The Board is responsible to the Board of Directors for the continuous monitoring of internal control systems and for providing assurance to the Board of Directors on the implementation of monitoring.
The Internal Audit Service is involved in continuous monitoring of internal control system and directly estimates the internal control system for its compliance with goals, objectives and specified criteria, and provides recommendations for improving the internal control system.