Internal Control and Risk Management System

• 4.1 Main Documents Regulating the Internal Control and Risk Management System
• 4.2 Participants of the Internal Control and Risk Management System. Delineation of Responsibilities
• 4.3 Enhancement of the Internal Control and Risk Management System
• 4.4 Key Risks and Actions for their Minimization
• 4.5 Organization of Internal Control and Risk Management

Participants of the Internal Control and Risk Management System. Delineation of Responsibilities

Participants of the internal control and risk management system and the distribution of responsibilities between them are specified in the internal control policy of JSC "Lenenergo" and in the risk management policy of JSC "Lenenergo". Roles and responsibility are allocated as follows:

• The Board of Directors of the Company approves the internal control policy and states the estimation of its efficiency; it is responsible for approval and periodic revision of the general strategy of internal control.
• The Audit Committee (the Board of Directors), performs a general estimation of efficiency of internal control procedures in the Company (including, on the basis of messages and reports of Department for the internal control, audit and risk management).
• The Director General of the Company bears responsibility for realization of the present Policy approved by the Board of Directors, and for functioning and efficiency of internal control procedures in the Company. Responsibility for functioning and efficiency of internal control procedures at lower levels of management of the Company bear the directors of branches.
• The division of internal audit of the Company states a direct estimation of adequacy, sufficiency and efficiency of control procedures, and performs an estimation of observance of control procedures by participants of business processes of the corresponding levels of management. Furthermore, it states a general system appraisal of the internal control system, the degree of its standardization and optimization at all levels of management.
• The divisions which are carrying out functions on risk managements and the organization of the internal control of the Company (Coordinators of the internal control and risk management system), bear responsibility for the organization and standardization of business processes and methodical support of process of the establishment of control procedures, and perform interaction with the system coordinators in branches.
• Heads of structural divisions and other employees of the Company, according to the functional obligations, perform internal control through formalized standards and regulating documents. Structural divisions of the Company carry out monitoring and bear responsibility for execution of control procedures according to the standards.
• Heads of structural divisions and other employees of branches are responsible for the establishment and accomplishment of control procedures, and perform their own estimation of efficiency and enhancement of control procedures.