Internal Control of TVEL FC

The Internal Control System (ICS) of the Fuel Company is an interconnected integral complex of organizational structures, processes and procedures, rules for their implementation, management system characteristics that continuously or from time to time performs the function of internal control and ensures the achievement of the objectives of internal control.

Special Department for Internal Control (SDIC) is a division of the Fuel Company that is solely engaged in internal control activities with respect to various spheres of business.

SDIC of TVEL JSC (competence of the Internal Control and Audit Division) comprises of Control and Audit Administration, Internal Audit Department and Competitive Policy Control Department, and acts in accordance with regulatory legal acts of the Russian Federation, local regulations of the ROSATOM State Corporation and TVEL JSC, and Provisions on the said structural divisions.

Purpose of the ICS in accordance with the ROSATOM State Corporation Internal Control Development Concept is to improve assurance in achievement of the strategic goals of TVEL FC and contribute to corporate governance improvement in TVEL JSC and the companies within the control loop of the Fuel Company in accordance with applicable laws of the Russian Federation, regulatory government authorities and international standards.

The purpose of ICS development is to maintain corporate governance mechanisms (primar- ily, those related to supervisory functions) in adequate condition to changing external and internal situation.

Priority task of the Internal Control and audit Division is to maintain governance of ICS functioning and development processes.

Main subjects of the internal control system in the Fuel Company: President of TVEL JSC, the Board of Directors of TVEL JSC, management of TVEL JSC, Internal Control and Audit Division of TVEL JSC (ICAD of TVEL JSC), as well as corporate bodies and the SDIC of SA of TVEL JSC.

Objects of control: TVEL JSC, its SA and their structural divisions and the activities they conduct.

Results of 2013
In pursuance of the objectives set for the year of 2013, the Internal Control and Audit Di- vision of TVEL JSC carried out:

1. audits of business (management) processes to assess the risk of defaulting on the operations goals; following the audit, the ICS efficiency was assessed and recommendations were made as to the improvement of efficiency and performance of these processes;
2. audit arrangements to assess the efficiency of financial and business performance of TVEL JSC and SA of the Fuel Company; based on the results, the auditors drafted the remedial actions plan with respect to violations detected in the course of the audit.

All of the audits scheduled in the Consolidated Plan of control measures are implemented.

The ICAD conducts follow-up monitoring of remedial actions with respect to violations detected in the course of the audit.

Tasks for the Period up to 2015

The following actions are taken for the purpose of development of the internal control system in accordance with Internal control Policy of the ROSATOM State Corporation and its enterprises for the period up to 2015:

• integration of adequate control procedures in the processes and assignment of duties and responsibilities to the participants for the efficiency of internal control;
• development of mechanisms to encourage of vital stakeholders to take part in internal control activities;
• continuous monitoring of the ICS reliability and efficiency by introduction of various methods to promote continuous control and regular assessment of the internal control system;
• development of the SDIC competencies and potential.