Internal control and audit
Russian Railways works to improve and develop internal audit and control in accordance with the Organisational Development Programme of the Russian Railways Group until 2015, which was updated and approved in April 2014, and the Action Plan for the Functional Strategy to Build a Unified Audit and Control System at the Russian Railways Group until 2015.
At the annual conference of the National Association of Internal Auditors and Inspectors, Russian Railways was given the national prize “Best company in terms of the effectiveness of the internal control and audit system — 2014”.
Measures are carried out in three strategic areas:
- establishment of vertical control as part of the transition to the targeted management system of the Russian Railways Group;
- building a risk-oriented functionally structured system of internal control and audit under the conditions of centralisation and strengthened vertical control;
- creating a control mechanism to prevent and combat abuses in financial and economic activities.
Internal control and audit functions at Russian Railways are based on the current organisational and methodological framework prepared in accordance with the best international and national professional practices and meet the ethical standards in matters of internal audit and control adopted in the modern Russian and global business communities. A number of corporate and functional level documents have been approved, including:
- the Regulation on the Internal Audit Organisation at the Russian Railways Group, which specifies its purposes, powers, responsibility and work principles as well as rights for access to documents, personnel and assets as part of preparing for and conducting audits.
In accordance with the Regulation, the purposes of internal auditing are to systematically conduct inspections, analyse information and monitor the reliability of procedures in the internal control and risk management systems in order to maintain financial sustainability and improve the efficiency of financial and economic activities and the business processes of the Russian Railways Group.
Internal audits are organised taking into account the following principles: independence, objectivity, observance of confidentiality, professionalism, a responsible approach to work and quality control.
The quality control of the internal audit involves periodic assessments of the quality of work by internal audit divisions.
- the Regulation on the Internal Control System at the Russian Railways Group, which was drawn up taking into account the recommendations of the Russian Ministry of Finance and using the provisions of the framework “Internal Control. Integrated Model” of the Committee of Sponsoring Organisations). The document specifies the purposes, objectives, functions, main requirements, operational structure and the distribution of responsibility among internal control entities.
The internal control system was established to provide reasonable assurance that Russian Railways will achieve its goals.
The main objectives of the Russian Railways internal control system are:
- to ensure the efficiency and effectiveness of financial and economic activities;
- to safeguard assets and use resources in a cost effective manner;
- to identify and manage risks;
- to ensure the accuracy and completeness of accounting (financial) and other types of reporting;
- to observe the law and regulatory legal acts of the Russian Federation and the regulatory documents of Russian Railways.
The internal control system at Russian Railways is determined by a combination of subjects and objects. The objects of the internal control system are the financial and economic activities of Russian Railways divisions and business processes. The subjects of the internal control system are determined by the organisational structure of Russian Railways.
The heads of Russian Railways divisions are responsible for establishing, introducing, monitoring and improving the internal control system in accordance with their functional duties.
The system of internal audit corporate standards, which is the conceptual methodological framework for internal audit and control, is continuously being developed in accordance with the requirements of the regulatory documents of the Russian Federation and best professional practices.
In order to maintain the desired level of efficiency, assign status and powers, draw up a strategy and coordinate measures in the monitoring of financial and economic activities, the administrative structure has been modified to include the position of Russian Railways director for internal control and audit, who is directly in charge of the Zheldorkontrol Internal Control Centre and the Zheldoraudit Internal Audit Centre — structural divisions of Russian Railways. The Zheldorkontrol Centre includes regional offices located in the railway operating domains and has audit divisions.
The Zheldorkontrol and Zheldoraudit Centres have a total of 727 employees.
The main objectives of internal audits and control are:
- to organise and conduct an internal audit that aims to improve the efficiency and effectiveness of business processes at Russian Railways, safeguard assets and comply with the requirements of the laws of the Russian Federation and the internal documents of Russian Railways;
- to organise and conduct internal control that aims to achieve economic stability and financial transparency within the divisions of the administrative staff, structural divisions, branches, non -governmental institutions of Russian Railways and S&A in the prescribed manner;
- to provide reliable information in a timely manner to Russian Railways management about financial and economic activities, shortcomings and tax and financial risks at Russian Railways divisions as well as S&A in the prescribed manner in order to adopt management decisions;
- to assess the effectiveness of the internal control and risk management systems at Russian Railways divisions as well as S&A in the prescribed manner;
- to assess the effectiveness of business processes at Russian Railways divisions as well as S&A in the prescribed manner.
The systematic and consistent efforts made by Russian Railways to improve internal control and audit functions helps improve the efficiency of business processes, cut costs and reduce the Company’s loss of income.
According to domestic and foreign experts, Russian Railways has established and employs one of the most streamlined, efficient and competent internal and control audit services in Russia, which meets the requirements of international professional internal audit standards based on best international practices and the general accepted model of the Committee of Sponsoring Organisations.
In 2014, Russian Railways was awarded the annual international prize of the Institute of Certified Financial Managers (UK) in the category “Best company in terms of the effectiveness of the internal control and audit system”.
Biographical information about internal control and audit executives