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Национальная Холдинговая Компания “Узбекнефтегаз”

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Regulation on Internal Audit

Appendix to the minutes
of the Board of governors session of the NHC “Uzbekneftegaz”
from 05.10.2016
“APPROVED”
by the decision of the Board of governors of the NHC “Uzbekneftegaz”
dated 5 November, 2016

Regulations on Internal Audit Service
of the National Holding
Joint-Stock Company
“Uzbekneftegaz”
(new edition)
Tashkent — 2016

Section I.

General provisions

1.1. The present Provision is developed according to the resolution of the President of the Republic of Uzbekistan from 27 September, 2006 No. RP-475 “About measures for further market development of securities” and the resolution of the Cabinet of Ministers of the Republic of Uzbekistan from 16 October, 2006 No. 215 “About measures for ensuring effective management of the entities with the public share in an authorized fund and proper accounting of a state-owned property”.

1.2. The following concepts are used for the present Provision:

Company — the NHC “Uzbekneftegaz”;

The Board of governors — the Board of governors of the NHC “Uzbekneftegaz” fulfilling functions of the supervisory board;

The Board of the Company — the collegiate executive body of the NHC “Uzbekneftegaz”;

Internal audit — activities of structural division of the company (service of internal audit) for control and job evaluation of the executive body and structural divisions of the company by checks and monitoring of observance acts of the legislation of the Republic of Uzbekistan constituent and internal documents, ensuring completeness and reliability of reflection of data in financial accounting and the financial reporting, statutory rules and procedures of implementation on economic transactions, safety of assets as well as implementation of the principles of corporate management;

Service of internal audit — structural unit out of the staff list of the company performing internal audit based on the requirements established by this Provision and the decision of the Board of governors of the NHC “Uzbekneftegaz”;

Section II.

Main objectives and functions of the internal audit service

2.1. The main objectives of the internal audit service are:

2.1.1. providing with reliable information and preparation of suggestions for improvement of the Board of governors activities of the Company under the results of internal audit execution;

2.1.2. operational introduction to the Board of the Company of recommendations about elimination of the shortcomings revealed in the course of internal audit, control over their elimination;

2.1.3. ensuring protection of the rights and legitimate interests of all shareholders, including minority.

2.2. The main functions of the internal audit service are:

2.2.1. implementation of internal audit (quarterly and following the results of financial year) by conducting the corresponding checking in the directions specified in subparagraphs 6.1.1. — 6.1.7. of the present Regulations according to the annual approved plan by the Board of Governors;

2.2.2. conducting examination of the economic agreements signed by the Company regarding their compliance to requirements of the legislation;

2.2.3. rendering the methodical help to the Company during the conducting financial accounting and creation of the financial reporting, their consultation concerning financial, tax, banking and other legislation;

2.2.4. rendering assistance to the Board of governors and the Board of the Company in development of specifications, assessment of offers of the external auditing and estimative organizations as well as preparation of recommendations in case of the choice of external auditing organization for audit inspection;

2.2.5. monitoring of execution of the Board of governors decisions;

2.2.6. studying and issue of recommendations on estimated large deal, the transaction with the affiliate of society or large deal with the affiliate of society.

Section III.

The rights and obligations of the internal audit service

3.1. The service of internal audit has the right:

3.1.1. to receive documents of the Company (orders, orders of the head, the decision of governing bodies, references, calculations, verified copies of necessary documents and other documentation) oral and written explanations from official and responsible persons of the Company on the questions arising during implementation of the internal audit;

3.1.2. to involve the corresponding specialists of the Company for rendering assistance in conducting of the internal audit.

3.1.3. to make the internal control including behind operations performed with legal entities whose authorized capital of more than 50% belongs to the Company.

3.2. The service of the internal audit is obliged:

3.2.1. to observe the requirement of the present Provision and other acts of the legislation at implementation of internal audit;

3.2.2. to constitute reports according to the requirements of the present Provision and the legislation;

3.2.3. to check reliability of indicators of financial and statistical statements;

3.2.4. to observe confidentiality of information obtained at implementation of internal audit;

3.2.5. in case of detection of the facts causing the entity of losses by its officials and other workers to report about it the Board of governors of the Company without delay and to perform the corresponding entry in the audit report;

3.2.6. to participate in carrying out inventory count of assets and control of timeliness implementation in the order established by the legislation.

3.3. The service of internal audit can have other obligations as well according to the legislation and the company charter. Regulation on service of the internal audit of the NHC “Uzbekneftegaz”

Section IV.

Requirements to service of internal audit

4.1. Service staff of internal audit shall have years of experience (as well as in combination) in the sphere of financial accounting, audit, financial or tax control at least two years from the last ten and to answer one of the following requirements:

4.1.1. to have the certificate of the internal auditor;

4.1.2. to have higher economic education from the highest educational institutions of the Republic of Uzbekistan or in educational institutions of a foreign state and according to the legislation of the Republic of Uzbekistan recognized as an equivalent to education in the Republic of Uzbekistan.

4.2. The procedure of certification of service staff of internal audit is determined by the republican professional associations of auditors in coordination with the Ministry of Finance of the Republic of Uzbekistan.

4.3. The number of employees of internal audit service makes not less than 2 auditors.

4.4. The head having the certificate of the internal auditor directs service of internal audit.

4.5. The head of service of internal audit annually constitutes the work plan and an annual expense budget of service of internal audit and represents it to the Board of governors of the Company for confirmation.

4.6. Professional level of service staff of internal audit shall be supported by means of increasing their qualification on a systematic basis in educational institutions, having the corresponding license.

4.7. Staff of service of internal audit is a subject to annual certification by the Board of governors of the Company.

Section V.

Independence of internal audit service

5.1. The main conditions of independence of internal audit service are:

5.1.1. appointment and dismissal of the head of internal audit service and employees from a post, establishment of the salary sizes and other payments by the decisions of the Board of governors of the Company;

5.1.2. direct subordination to the Board of governors of the Company.

Section VI.

Requirements to service of internal audit

and the summary report by the conducted results

6.1. Internal audit is carried out only by the service staff of internal audit with the help of examination and monitoring: Regulation on service of the internal audit of the NHC “Uzbekneftegaz”

6.1.1. the way of accomplishment of the approved business plan;

6.1.2. respect for the principles of corporate management;

6.1.3. condition of financial accounting and financial reporting;

6.1.4. correctness of calculation and tax payment and other obligatory payments;

6.1.5. compliance with the law at implementation of financial and economic activity;

6.1.6. condition of assets;

6.1.7. condition of internal control.

6.2. Other directions of check implementation can be determined by the board of governors of the Company according to the legislation, proceeding from a profile of the Company activities.

6.3. The corresponding reports are constituted after the performed results signed by the employee (employees) who has conducted the operation.

6.4. At the same time:

6.4.1. the report on check results of the business plan accomplishment shall include:

a) analysis of quantitative and qualitative indicators of plan performance;

b) the description of the established reasons in case of failure to provide of its accomplishment, with personal specifying of guilty officials;

6.4.2. the report on check results on following the principles of corporate management shall include:

a) the analysis of effectiveness of the made decisions by the governing bodies of the Company, observance of legitimate rights and interests of its shareholders;

b) the description of facts of the law violation in the sphere of corporate management (observance of constituent documents, holding general meetings and meetings of the governing bodies of the entity, correctness of charge and timeliness of dividend payout etc.);

6.4.3. the report on check results of a condition of financial accounting and the financial reporting of the Company shall include:

a) assessment of observance of an established procedure of conducting financial accounting and creation of the financial reporting;

b) the description of the revealed violations of the established procedure of conducting financial accounting and preparation of the financial reporting;

6.4.4. the report on check results of calculation correctness, tax payment and other obligatory payments shall include:

a) assessment of correctness of the calculations of taxes and other obligatory payments constituted and provided to the relevant organs;

b) description of the facts of violation of the established procedure of calculation and tax payment and other obligatory payments, deviations in case of determination of a taxable basis;

6.4.5. the report on check results of observance by the Company of the legislation in implementation of financial and economic activities shall include:

a) assessment of conformity of the financial and economic activities performed by the Company to the legislation;

b) the description of the discrepancies to the legislation of the financial and economic activities revealed during internal audit performed by the Company;

6.4.6. the report on check results of a condition of internal control shall include:

a) the description of system of internal control and the shortcomings which are available in its functioning;

b) the data on condition of performing discipline in structural divisions of the Company, the available shortcomings in work of the specific employees.

6.5. The check results of condition assets shall be based on inventory count of assets and include data on their movement, the actual availability and safety.

6.6. All the reports on performed checks shall contain the final part including assessment of activities of the Board of the Company and its structural divisions, recommendations about elimination of the revealed deviations and violations and complete package of supporting documents.

6.7. The consolidated report is constituted by the following results of the internal audit signed by the head of service of internal audit.

6.8. The summary report has to include:

6.8.1. the analytical part;

6.8.2. the final part;

6.8.3. full package of supporting documents.

6.9. The analytical part of the consolidated report shall include summarized information on the results of the inspections which are carried out by the employees of internal audit.

6.10. The final part of the report shall include:

6.10.1. general assessment of activity of the Board and structural

6.10.2. recommendations of internal audit service on elimination of the revealed deviations and violations as well as the generalized offers on increase in efficiency of financial and economic activities of the Company and enhancement of corporate management.

6.11. The consolidated report shall be prepared within 10 days after completion of internal audit.

6.12. Consolidated reports shall be submitted directly to the Board of governors for review and the subsequent statement. Copies of reports shall be represented to the Board of the Company after their confirmation.

Regulation on service of the internal audit of the NHC “Uzbekneftegaz”.

6.13. The board of the Company is obliged to take all measures for elimination of defects revealed as a result of internal audit.

6.14. The service of internal audit shall establish control of timely and proper execution of measures for elimination of the violations found during check and also on increase in efficiency of financial and economic activities of the Company in general.

Section VII.

Responsibility of internal audit service

7.1. The staff of internal audit service bears responsibility for:

7.1.1. distortion of the results which are carried out by their inspections;

7.1.2. non-compliance with confidentiality of information which is a trade secret of the Company and was provided to them or it became known in connection with accomplishment of the office liabilities;

7.1.3. ensuring safety and return of the received documents.

7.2. The service of internal audit is responsible for assessment of the taken measures for elimination of the violations found during audit inspection and for increase in efficiency of financial and economic activities of the Company.

7.3. The Board of governors of the Company quarterly hears the report of service of internal audit on checks results with taking measures for elimination of the revealed shortcomings and increase in efficiency of financial and economic activities of the Company.

Section VIII.

Final provisions

8.1. This Regulation comes into force from the date of its adoption by the general shareholder meeting.

8.2. When one of the rules of the present provision has become invalid, this rule is not the reason for suspension of other rules.

8.3. If other provisions are established by the existing legal acts of the Republic of Uzbekistan or by the company charter that is provided by this Provision, then rules are applied of the existing legal acts of the Republic of Uzbekistan and the company charter.

Regulation on Internal Audit (.docx 47KB)

Last change: 18.02.2017

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