Control and audit

Internal controls

An integral part of corporate governance, our internal control system embraces all operations, key business processes, and governance levels. Internal controls are continuous integrated processes performed by governing bodies and employees as part of their duties.

In 2024, FESCO’s risk management and internal control system was assessed for compliance with the Bank of Russia’s Recommendations for Public Joint Stock Companies to Organise Risk Management, Internal Controls, Internal Auditing, and the Work of Auditing Committees under Boards of Directors (Supervisory Boards) (information letter No. IN‑06‑28/143 dated 1 October 2020). The Bank of Russia’s recommendations have been largely implemented, with the internal control system integrated across all Company business processes.

Internal audit has assessed FESCO’s internal control system maturity level as stable – processes are documented and standardised, with significant process risks addressed by control procedures.

In accordance with Federal Law On Joint Stock Companies and provisions of the Corporate Governance Code, the Company maintains an Internal Audit Department. This Department is functionally accountable to FESCO’s Board of Directors and administratively to the sole executive body or acting executive.

As a FESCO structural unit established by sole executive order following Board of Directors’ resolution, the Department conducts internal audits of FESCO and its controlled entities.

Head of the Department, appointed by sole executive order based on Board of Directors’ resolution following preliminary Audit Committee review, leads a ten‑person department. In 2024, the Department underwent restructuring based on Board Audit Committee resolution (Minutes No. 8/24 dated 23 September 2024), resulting in the establishment of two units:

  • internal audit unit for processes and projects (Moscow, five employees);
  • internal audit unit for Group assets in Siberia and Far East (four employees).

The Department conducts independent, objective, risk‑based internal audits to help Company and controlled entity governing bodies maintain and enhance FESCO Group value. The Department follows international best practices, regularly assesses risk management and internal control system reliability and effectiveness, and collaborates with the Board of Directors, and management of FESCO and controlled entities to improve risk management, internal control, and corporate governance.

The Department operates according to FESCO’s Internal Audit Policy approved by Board of Directors resolution on 28 November 2022 (Minutes No. 22/22 dated 29 November 2022).

It conducts independent assessments and internal consultations based on Board‑approved work plans, completing 16 internal audits in 2024.

The Department operates without independence limitations or restrictions that would hinder its ability to fulfil statutory and Articles of Association-mandated responsibilities.

External audit

On 28 June 2024, the General Shareholders Meeting appointed Kept as the Company’s external auditor for 2024 (Minutes dated 28 June 2024). The external auditor was responsible for auditing the Company’s financial and operating performance as prescribed by the applicable laws of the Russian Federation and pursuant to the contract signed between the Company and the auditor. According to clause 4, article 5 of Federal Law No. 307‑FZ On Audit Activities dated 30 December 2008, no open tender was required to select the Company’s external auditor.

The Company selected the external auditor through a tender procedure (Russian laws on procurement did not apply to said tender procedures). The Company selected its external auditor by collecting and comparing bids submitted by the auditors. The external auditor was appointed by the General Shareholders Meeting.

FESCO vessel in China

FESCO vessel in China