Annual Report 2014

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INTERNAL CONTROL SYSTEM

Vnesheconombank's governance system includes the internal control system adequate
to the nature and scale of Vnesheconombank's transactions and the level of risks assumed.


The Bank's internal control system embraces all the areas of its activities and is oriented towards ensuring enhanced effectiveness and efficiency of the Bank’s financial and economic activities, compliance with the legislation, regulatory acts governing the respective areas
of activities, and Vnesheconombank's internal regulatory documents, as well
as the procedures set and powers granted to secure the absence of the conflict of interest between the Bank's structural divisions and/or employees.


Vnesheconombank's structural subdivisions include the Internal Control Service (ICS) that is accountable to Vnesheconombank’s Supervisory Board and, in terms of its day-to-day activities, to the Chairman of the Bank.


The Head of ICS is appointed by the Supervisory Board of Vnesheconombank.



ICS's activities include, among other things, monitoring critical business processes,
in particular those related to Vnesheconombank's lending and investment activities, upgrading the regulatory framework governing the activities of the Bank and the entities comprising the VEB Group, conducting inspections and limited scope audits, in particular full scope audits of financial and economic activities of Vnesheconombank's subsidiaries.


In the reporting year, the ICS carried out 22 reviews (full scope audits, limited scope audits, inspections) within the internal auditing of Vnesheconombank subdivisions' activities.


The audits concerned the Bank's business lines such as support for exports, control
over reserve creation procedure and over compliance with the limits set for the Bank's financial stability indicators, the limits on specific transactions and on the volume
of transactions with Vnesheconombank's specific counterparties.


ICS carried out more than 40 audits of financial and economic activities
of Vnesheconombank's subsidiaries and affiliates. Vnesheconombank’s Internal Control Service also exercises control over the efficiency and adequacy of measures undertaken
by the Bank in order to eliminate any inconsistencies identified.


In 2014, the VEB Group Sustainability Report was audited by the ICS as well.


Upgrading the internal regulatory framework is viewed as one of the major preconditions
for enhanced efficiency of the internal control.



Upgrading the internal regulatory framework in 2014: major outcomes


  • The methodologies of exercising control over the receipt and application of dynamically provided IT-resources and services (cloud computing) and control over the development of IT-services were developed.
  • The Bank updated 24 methodologies of monitoring the system of internal control
    over Vnesheconombank's investment and financial activities, including the methodology
    of the procedure for granting loans within export financing and the procedure
    for ensuring control over the current servicing of loans granted within export financing.
  • The methodologies related to preparing and presenting financial statements
    of a professional participant in the securities market were developed.

An increased focus is placed on upgrading the internal regulatory system in order to ensure the quality audit of Vnesheconombank's subsidiaries and affiliates.


As at 01.01.2015, the ICS staff had 7 permits from the Russian Ministry of Finance authorizing them to engage in banking audit activities and 1 certificate for engaging
in general audit; 21 certificates from the FCSM/FFMS to engage in various activities
in the securities markets; 1 ITIL certificate, 1 MBA diploma, 1 diploma of a professional accountant of the Institute of Professional Accountants and Auditors of Russia (IPAA) and 1 diploma in International Financial Reporting (DipIFR).