Integrated annual report | Samruk-Energy JSC

Audit

Internal Audit of the Company

The activity of the Internal Audit Service is based on the International Fundamentals of Professional Practice of Internal Audit and is recognized as compliant with International Professional Standards of Internal Audit.

By applying our skills and knowledge, we bring benefit to the Company through providing independent and objective guarantees and consultations aimed at enhancement of risk management, internal control and corporate governance systems in the Company and its subsidiaries and affiliates.

The Service functionally reports to the Board of Directors of the Company and to the Company’s Management Board administratively. The Audit Committee supervises the performance of the Service. The head and employees of the Service are appointed by the Board of Directors. In 2017, the number of employees of the Service was 7.

Internal auditors pursue continuous professional development on an ongoing basis, thus, the Service employees have CIA international certificate of internal auditor, IFA diplomas of the International Institute of Audit and Management (DipIFA), CAP ECCAA international certificate, diplomas of the Institute of Financial Managers of Great Britain (DipPIA and DiPCPIA).

The main functions of the Internal Audit Service are:

  • Assessment of risks, validity and effectiveness of internal control over risks in the area of corporate governance, operating (production and financial) activities of the Company and its SA, as well as their information systems;
  • Evaluation (diagnostics) of the corporate governance system in the Company and its subsidiaries and affiliates in compliance with established procedures, including assessment of introduction and compliance with adopted principles of corporate governance, relevant ethical standards and values in the Company and its subsidiaries and affiliates;
  • Assessment of the adequacy of actions taken by business units of the Company and its subsidiaries and affiliates to ensure the achievement of goals set to them as part of the Company and its subsidiaries and affiliates’ strategic objectives.
  • Provision of advice to the Board of Directors, executive body, business units of the Company and its SA regarding organization and improvement of internal control, risk management, corporate governance and organization of internal audit service.

Annual risk-oriented audit plans are reviewed and approved by the Board of Directors of the Company.

All scheduled audit engagements were completed in full.

In performing its responsibilities, the Service has confirmed its independence from the influence of any persons to the Board of Directors.

KPI of the Service and its head are set taking into account strategic goals of the Company. The Board of Directors of the Company evaluates the performance of the Service as “effective”.

External audit of the Company

The Company’s audit organization is selected in line with the Rules for selection of an audit organization for “Samruk-Kazyna” JSC and organizations, more than fifty percent of voting shares (equity stake) of which are directly or indirectly held by “Samruk-Kazyna” JSC under ownership or trust management, approved by the decision of “Samruk-Kazyna” JSC Management Board.

Quality and cost of services are the main criteria determining the choice of an audit organization.

PricewaterhouseCoopers (“PwC”) network of firms has been the external auditor of the Company since 2012.

PwC Global Energy Group specializes in providing consulting services to customers operating in every sector of the energy market through a worldwide network of 4,000 energy professionals. PwC employees in Kazakhstan have experience in working with the most complex and technically difficult projects.

Visit www.pwc.kz for more information.

According to “Samruk-Energy” JSC Policy in engaging audit organizations services, the Company applies the principle of rotation of a partner bearing the main responsibility for the audit, every five years. Dana Inkarbekova was the partner who had main responsibility for the audit from 2012 to 2015. Baurzhan Burkhanbekov has been the partner since 2016.

Furthermore, in the event of expected appointment of an audit organization employee who participated in the compulsory audit of the Company as an employee of an audit organization within two years preceding the date of his/her appointment (election) to the Company as a member of the Management Board, managing director and chief auditor, it is required to obtain a preliminary approval of the Audit Committee in order to avoid conflicts of interest.

PwC conducts audit at the following subsidiaries and affiliates of the Company:

Company

Activity

Period

“Samruk-Energy” JSC

Holding company

2008–2010, 2012–2017

“Alatau Zharyk Company” JSC

Services for power distribution, technical distribution of power in Almaty city and Almaty region

2010, 2012–2017

“Almaty Power Plants” JSC

Electricity and heat production for Almaty and Almaty region

2010, 2012–2017

“AlmatyEnergoSbyt” LLP

Sale of electricity in Almaty city and Almaty region

2008–2010, 2012–2017

“Shardarinsk” HPP

Electricity production

2007

“Moynak HPP” JSC

Construction of hydropower plant on Charyn river

2008, 2012–2017

“Mangistau Distribution Power Grid Company” JSC

Services for electricity transportation, technical distribution of electricity for oil and other companies, as well as power sales services to remote rural areas of Mangistau region

2008–2010, 2012–2016

“Plant Ekibastuz SDPP–2” JSC

Electricity and heat production on the basis of coal extracted from “Bogatyr” and “Severny” open-pit coal mines

2005–2009

“East-Kazakhstan Regional Energy Company” JSC

Electricity transmission and distribution

2012–2017

“Bogatyr Komir” LLP

Open coal mining at “Bogatyr” and “Severny” coal strip mines

2008–2010, 2012–2017

“MAEK-Kazatomprom” LLP

Electricity production

2014–2017

Fees paid to the audit firm for auditing services and separately for services not associated with audit of financial statements for 2017

Services

2017

Audit

27,499,808 tenge

Training

7,829,248 tenge

Opinion of an independent auditor

In the opinion of the external auditor “PricewaterhouseCoopers” LLP, consolidated financial statements fairly present, in all material respects, financial standing of “Samruk-Energy” JSC and its subsidiaries as of December 31, 2017, as well as its financial results and cash flows for the year then ended in compliance with International Financial Reporting Standarts.