Risk management, internal control and internal audit
Risk management and internal control
The Company has put the risk management and internal control system in place
The main documents that regulate the organisation and functioning of the RM&ICS in the Company:
- Risk Management and Internal Control Policy approved by the decision of the Board of Directors dated 7 June 2023 (Minutes No. 525/2023 dated 8 June 2023)
- Preferred risk (risk appetite) approved by the decision of the Board of Directors of the Company dated 17 September 2025 (Minutes No. 640/2025 dated 17 September 2025)
- The RM&ICS Development Programme (Order No. 669 dated 8 November 2024)
- The procedure for organising risk management and internal control (approved by the Company’s Order No. 557 dated 28 August 2025)
- Risk assessment and monitoring methodology (approved by the Company’s Order No. 927 dated 18 December 2025)
- Procedure for determining preferred risk (risk appetite) (approved by the Company’s Order No. 772 dated 21 November 2025)
- Glossary on risk management and internal control (Order No. 337 dated 28 May 2025)
- The Risk Register approved by the decision of the Company’s Management Board dated 13 December 2024 (Minutes No. 584 dated 13 December 2024)
Assessment of the RM&ICS
The Internal Audit Department conducts an annual internal independent assessment of how effective and reliable the RM&ICS is.
The assessment results and respective recommendations designed to improve the efficiency of RM&ICS functioning are included in the internal auditor’s report submitted annually for consideration by the Company’s governing bodies.
The internal audit report on the assessment of the reliability and effectiveness of the RM&ICS based on the results of 2024 was reviewed at the meeting of the Board of Directors (Minutes No. 621/2025) dated 2 June 2025). Based on the findings of 2024, the maturity of the RM&ICS was assessed as 5.2.
The internal audit report on the assessment of the reliability and effectiveness of the RM&ICS based on the results of 2025 was reviewed at the meeting of the Board of Directors (Minutes No. 666/2026 dated 13.05.2026). According to the results of 2025, the maturity level of the RM&ICS, based on the averaging assessments of the compliance of the current condition with the criteria of the target condition, has not changed compared to 2024 and is estimated at 5.2 points out of 6.
Improvement of the RM&ICS in 2025
- Regulatory and methodological documents on risk management and internal control were developed / updated:
- Preferred risk (risk-appetite) of the Company
- Procedure for organising risk management and internal control of the Company
- Risk assessment and monitoring methodology of the Company
- Glossary on risk management and internal control
- Procedure for determining preferred risk (risk appetite) (approved by the Company’s Order No. 772 dated 21 November 2025)
- Regulations for accounting for inspections of the Company and its subsidiaries carried out by external control (supervision) bodies
- Regulations for accounting for the Company’s verification activities carried out by the structural divisions of the Executive Office and branches of the Company
- A new model of the Company’s business processes was introduced. The formation of business process passports and updating of risk matrices and control procedures of business processes were organised.
- Control measures were carried out to assess the adequacy, effectiveness and efficiency of the RM&ICS, including as part of comprehensive audits of the financial and economic activities of the Company’s branches and audits of subsidiaries, during the analysis of information on inspections conducted by external control (supervisory) bodies.
Indicators | UoM | 2023 | 2024 | 2025 |
|---|---|---|---|---|
Number of control activities aimed at risk identification and minimisation | pcs | 103 | 188 | 195 |
Number of eliminated violations based on the results of inspections conducted by external control bodies | pcs | 859 | 9,232 | 3,232 |
Total amount of cancelled fines after appealing against the decision to impose administrative penalties | RUB million | 1.775 | 28.915 | 11.015 |
Total amount of funds received by the Company from counterparties in bankruptcy and liquidation proceedings | RUB million | 475.12 | 112.287 | 67.019 |
Plans for improvement of the RM&ICS for 2026
- To document business processes in accordance with the updated Business Process Model of the Company
- To participate in control activities: internal audits, internal audits of subsidiaries and training centres, inspections of financial and economic activities of subsidiaries and affiliates, official inspections
- To promote risk awareness, to conduct training events on the organisation and operation of the RM&ICS
- To maintain the level of qualifications of employees of the internal control and risk management unit through an independent assessment of qualifications in terms of compliance with the professional standard for internal control
Internal audit
The Internal Audit Department is a separate subdivision responsible for the implementation of the internal audit function in the Company.
In accordance with the Internal Audit Policy of PJSC Rosseti SouthThe Internal Audit Policy of PJSC Rosseti South was approved by the decision of the Board of Directors of the Company dated 30 December 2025 (Minutes No. 654/2025 dated 30 December 2025)., the Internal Audit Department is functionally subordinate to the Board of Directors of the Company, which oversees and organises the activities of the Internal Audit Department.
The purpose of internal audit is to strengthen the Company’s ability to create, protect and preserve the Company’s value by providing independent, risk-based, objective assurances, opinions, recommendations and forecasts to the Company’s Board of Directors and executive bodies.
As of 31 December 2025, the actual number of employees involved in internal audit function is 10 FTEs.
Improvement of the internal audit system
By the decision of the Board of Directors of the Company on 23 December 2024, the action plan and budget of the Internal Audit Department of the Company for 2025 were approvedThe Company’s business plan and budget for 2025 were approved by the decision of the Board of Directors of the Company dated 23 December 2024 (Minutes No. 598/2024 dated 23 December 2024)..
The Head of Internal Audit receives feedback from the sole executive body of the Company, the Audit Committee of the Board of Directors of the Company, the Board of Directors of the Company in various forms during interaction with the sole executive body, the Audit Committee, including participation in its meetings, analysis of decisions /recommendations of the Audit Committee, the Board of Directors of the Company on issues related to competence internal audit, as well as through a survey of the sole executive body and members of the Audit Committee.
In accordance with the Company’s Internal Audit Quality Assurance and Improvement Programme, a survey was conducted to assess the satisfaction of the Audit Committee of the Company’s Board of Directors with the performance of the internal audit function in 2025. The average score based on the results of the survey (the weighted average sum of points from the questionnaires of the voted members of the Audit Committee to the number of voted members of the Audit Committee) was four, which indicates a high level of satisfaction of the Audit Committee with the activities of the Internal Audit Department of the Company in 2025.
According to the results of an external independent assessment of the Company’s internal audit conducted in 2024, according to an external independent expert, LLC B1-CONSULT, the internal audit unit of PJSC Rosseti South received the highest rating, which means that the Company’s internal audit generally meets the requirements of International Professional Standards of Internal Audit, the Code of Ethics and the Internal Audit Policy, namely, has regulations on internal audit, policies and procedures; their implementation and results are assessed as conforming to International Professional Standards of Internal AuditThe results of the external assessment were reviewed by the Board of Directors of the Company dated 30 May 2025 (Minutes No. 621/2025 dated 2 June 2025).. Based on the recommendations of the members of the Audit Committee of the Board of Directors of the Company and an external independent expert in the Company has approved and is carrying out the action plan for the development and improvement of internal audit activities at PJSC Rosseti South for the period from 2025 to 2029The action plan for the development and improvement of internal audit activities at PJSC Rosseti South for the period from 2025 to 2029 was approved by the decision of the Board of Directors of the Company dated 30 May 2025 (Minutes No. 621/2025 dated 2 June 2025)..