ANNUAL REPORT 2005 - Lukoil

the Group's organizations and structural subdivisions comply with legal requirements, rules in force
within the Group and its organizations, and international norms and standards.
The main tasks of the checks are:
analysis of efficiency, including investment efficiency, of LUKOIL Group organizations;
ongoing quality monitoring of implementation of internal audit recommendations and compliance
with Company management decisions, which followed previous control and audit checks;
CORPORATE GOVERNANCE
discovering existing risks and preparing recommendations for reducing them, improving the risk
management system;
assessing measures by management of subsidiaries and structural subdivisions of the Company to
ensure stable and efficient functioning of various components of the internal control system;
assessing whether organization and conduct of financial accounting helps to make operating and
financial control more efficient, contributes to further growth of shareholder value and protects
shareholder interests.
There was further monitoring of observance within the Company of the Procedure for Decision-
Making on Participation in Other Organisations, a document approved by the Management Committee
in 2003. A total of 56 relevant deals were considered in 2005, of which 37 were approved.
The Company has continued work on improvement of its control and internal audit methods. In 2005
internal standards were designed and approved for conduct of control and audit checks of operating
activities by LUKOIL Group organizations in the Exploration & Production and Refining & Marketing
segments.
Overall, the Company has created and successfully operates a system of internal control, which
ensures that the Company's management obtains accurate and objective information on activity of
LUKOIL organizations and structural subdivisions.
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