Internal Audit and Audit Commission

In accordance with Rosneft’s Charter, the Audit Commission is entrusted with the control over the Company’s financial and economic activities.

The Audit Commission is an integral part of Rosneft’s financial and economic control system, along with the Board’s Audit Committee, the independent auditor, the executive bodies, the Company management, and the Internal Audit. The Commission’s primary function is to control the execution of the Company’s financial and economic plan approved by the Board of Directors.

The Audit Commission’s activities are governed by the following documents:

Rosneft’s Charter

Regulations on the Audit Comission

Rosneft’s Corporate Governance Code

Более подробную информацию о деятельности Ревизионной комиссии и иных органов, входящих в систему внутреннего контроля и аудита можно посмотреть в Годовом отчете ОАО «НК «Роснефть».

The Internal Audit function in Rosneft is performed by Rosneft Internal Audit Service directly reporting to the Vice President - Head of Internal Audit Service

The key objectives of Internal Audit Service are:

• assistance to the executive bodies of Rosneft and Group Subsidiaries and the Company’s employees in the development and monitoring of fulfilling the procedures and activities aimed at improvement of the Company risk management and internal control system and corporate governance by assessing the reliability and efficiency of risk management and internal control system (further – RMICS), corporate governance, including as related to ensuring:
• truthfulness and integrity of information provided on financial and business operations of the Company, including Group Subsidiaries;
• efficiency and performance of the activities performed by the Company, including Group Subsidiaries;
• identifying internal reserves for improvement of financial and economic performance of the Company, including Group Subsidiaries;
• safety of the Company assets, including that of Group subsidiaries;
• coordination of activities with the external auditor, Rosneft Audit Commission, audit commissions of Group Subsidiaries, and with the persons providing consulting services in the areas of risk management, internal control and corporate governance of the Company;
• performance of internal audit of Rosneft and Group Subsidiaries;
• audit of compliance by the members of executive bodies of Rosneft and Group Subsidiaries and employees of the Company with applicable legal provisions and internal regulations of the Company related to insider information and countering corruption, and observance of Rosneft Code of Business and Corporate Ethics;
• preparation and submission to Rosneft Board of Directors and executive bodies the reports on the Internal Audit activities results (including information on material risks, violations/deficiencies, results and efficiency of fulfilling internal audit recommendations and proposals based on the internal audit findings as related to addressing violations/deficiencies identified, results of the internal audit activity plan delivery, results of assessment of actual condition, reliability and efficiency of the risk management and internal control system and corporate governance);
• improving the quality of internal audits and internal audit activities and timely response to changes associated with Rosneft business development.

The key functions of Internal Audit Service are:

• assess the reliability and efficiency of the risk management and internal control system, its conformance to the scale and complexity of the Company’s business;
• assess the corporate governance;
• organize and carry out internal audits and activities based on the internal audit activity plan;
• conduct other audits and activities, and fulfill other assignments as requested/instructed by Rosneft Board of Directors (recommendations of the BoD Audit Committee) and (or) Rosneft Chief Executive Officer within their terms of reference, including the internal audits based on the information received at Security Hot line;
• perform comprehensive internal audits of the audited entity performance, which involve the documentary and physical check of legality of financial and business operations, reliability and correctness of their recording in the accounting (financial) reporting, and follow-up control of financial and business operations of the audited entity;
• perform the analysis of audit items in order to examine specific aspects of the activity and to assess the condition of a certain sphere of the audit item;
• provide consultations to executive bodies of Rosneft and Group Subsidiaries on the matters related to risk management, internal control and corporate governance (subject to retaining independence and objectivity by internal audit);
• monitor implementation of recommendations and proposals of internal auditors aimed at improvement of RMICS, corporate governance, remediation of violations and deficiencies identified during the internal audits and internal audit activities;
• assist the executive bodies of Rosneft and Group Subsidiaries in investigating improper / illegal acts of employees and third parties, including negligence, corporate fraud, corrupt practices, wrongdoings and various illegal acts causing damage to the Company.

Internal Audit Service subordination and reporting lines

The Vice President - Head of Internal Audit Service of Rosneft is appointed and dismissed by the Chief Executive Officer of Rosneft on the basis of a decision by the Board of Directors of Rosneft. The Vice President - Head of the Internal Audit Service of Rosneft administratively reports directly to the Chief Executive Officer of Rosneft and functionally to the Board of Directors of Rosneft.

Interaction of the Internal Audit Service with the executive bodies and the Board of Directors of Rosneft

The purpose of Internal Audit is to provide assistance to Rosneft Board of Directors and executive bodies of Rosneft and Group Subsidiaries in improvement of the Company’s activities and efficient achievement of the goals set to the Company.

Rosneft Internal Audit Service fulfills this purpose by providing unbiased assurances, evaluations and recommendations.

Rosneft Internal Audit Service contributes to increasing the sustainability and value of the Company, which, in turn, leads to increased public trust and confidence in the Company.

The Board of Directors reviews the reports on the Internal Audit activities results. The existing scheme of the Vice President – Head of Internal Audit Service subordination to the Board of Directors and Chief Executive Officer of Rosneft ensures sufficient independence for fulfilling the internal audit functions and conforms to the Global internal audit standards and best practices in the field of internal audit.

The key documents regulating the Internal Audit activities are:

• Company policy on internal audit;
• Company policy risk management and internal control system;
• Regulation of Rosneft Oil Company On Rosneft Board Committees  as related to the interaction of Board Audit Committee of Rosneft with the Internal Audit Service.

Более подробную информацию о деятельности Ревизионной комиссии и иных органов, входящих в систему внутреннего контроля и аудита можно посмотреть в Годовом отчете ОАО «НК «Роснефть».

Ernst&Young LLC  is selected  as the Auditor of Rosneft Oil Company (a legal entity) for  2019-2021.

Ernst&Young LLC was selected as an Auditor for Rosneft for 2019-2021 based on the outcome of the tender procedure performed at the end of  2018  for «Provision of services of statutory audit of RAS accounting (financial) statements and IFRS consolidated financial statements for Rosneft and its Subsidiaries material for the purposes of consolidation in 2019-2021", arranged in accordance with the current legislation of Russia and internal normative documents of the Company.

In accordance with Subclause 10, Clause 1, Article 48 of the Federal Law On Joint Stock Companies and Subclause 9.2.2 (3), Clause 9.2, Article 9 of Rosneft Charter, approval of the Company's Auditor is within the authority of the Annual General Shareholders Meeting.  The Annual General Shareholders Meeting approved Ernst&Young LLC as the Auditor of Rosneft Oil Company on June 1, 2021.

Ernst&Young LLC, the participants are Russian residents, was incorporated under the laws of the Russian Federation. Ernst&Young LLC is an independent member of the global EY network providing the audit and consulting services, consultations on taxation and business practices.  Ernst&Young LLC is the member of the “Big Four” largest audit companies.

Rosneft and Ernst&Young LLC have been successfully cooperating since 2004. The Auditor of Rosneft Oil Company (legal entity) currently provides the following services:

• statutory audit of accounting (financial) statements of Rosneft (legal entity) prepared under the Russian Accounting Standards (RAS);
• statutory audit of consolidated financial statements of Rosneft (Group reporting) prepared under the International Financial Reporting Standards (IFRS);
• quarterly overview audits of Rosneft IFRS interim consolidated financial statements;
• providing audit-related services.

Ernst&Young LLC is also the auditor of a number of Rosneft major domestic and international subsidiaries.

Information on Rosneft's external auditor's remuneration for 2020

The amount of remuneration for the services rendered by the Auditor in 2020 amounted to 105,777,630 rubles, all amounts include VAT, (which is below the amount of such expenses for 2019), including:

• for the audit of accounting (financial) statements of Rosneft (legal entity) for 2020 prepared under the Russian Accounting Standards (RAS) – 7,200,000 rubles;
• for the audit of consolidated financial statements of Rosneft for 2020prepared under the International Financial Reporting Standards (IFRS) including quarterly overview audits of IFRS interim consolidated financial statements  79,412,550 rubles;
• for other services rendered by the Auditor during the reporting year  – 19,165,080 rubles (18.1% оf the total amount of the auditor's remuneration).

Более подробную информацию о деятельности Ревизионной комиссии и иных органов, входящих в систему внутреннего контроля и аудита можно посмотреть в Годовом отчете ОАО «НК «Роснефть».