eurochem-annual-report-2011

Corporate governance
The Board Committees
Detailed oversight is performed at Committee level. Although full investigatory
powers are delegated to the Committees, these remain accountable to the
Board, which retains ultimate responsibility. This delegation of authority
ensures the Board focuses its attention on the key issues of our business.
The Audit Committee
The Audit Committee’s primary function is to
oversee the quality of the financial reporting
process, including the integrity and reliability of
information disclosure. In 2011, the Committee held
ten meetings, of which four were teleconferences.
The Audit Committee has two fully independent
members: Richard Sheath, Chairman of the
Committee, and Keith Jackson; the third member,
Nikolay Pilipenko, is a non-executive director, but
not fully independent as he served as EuroChem
CFO until 2008. The CFO and Head of Internal Audit
attend all meetings, with the external auditors and
the Corporate Secretary, amongst others, also
actively participating.
The Committee holds discussions with
PricewaterhouseCoopers, EuroChem’s external
auditors, twice a year without the presence of
management. In addition, the Chairman of the
Committee regularly meets with the Head of
Internal Audit. Throughout the year, the Committee
remains in regular contact with the CFO, the
Head of Internal Audit, the risk management desk
and the Corporate Secretary.
72 EuroChem Annual Report and Accounts 2011
The table below summarises the Committee’s activities during 2011.
External audit • Appraised the auditor’s performance in 2011, discussed 2012 audit fees
and reviewed the nature of the audit relationship considering any questions
of independence which may arise from relations with management or the
provision of non-audit services.
• Reviewed the co-operation process and communications between external
and internal auditors.
• Considered the financial reporting, audit risks and the level of audit work
on reporting controls.
• Discussed with the statutory auditors of the Russian Accounting
Standards accounts their experience and opinions to form a fuller view
of the control environment.
Financial reporting • Reviewed quarterly and annual consolidated financial reports, monthly
management reports, and the preparation of the annual report.
• Oversaw the development of a structured control framework for the preparation
of financial reports, including assurance over financial reporting accuracy,
across the Group’s companies.
• Guided the development of a comprehensive system for monitoring capital
projects and key performance indicators.
• Reviewed the scope for accelerated financial reporting.
• Monitored adherence to debt covenants.
Risk management
and internal control
systems
• Analysed and approved the introduction of insurance coverage for large
investment projects.
• Reviewed HSE risk management functions to improve performance.
• Assessed financial risk management approaches including scope for hedging.
• Revised insider information rules and procedures to reflect the latest
regulatory amendments. Recommended and established an insider trading
compliance function.
Internal audit • Reviewed the role and re-defined the priorities of the internal audit function.
• Reviewed the conclusions of internal audits particularly with an increased focus
on the Gremyachinskoe potash development and logistics.
Information
disclosure
• Advised on the preparation of the corporate social responsibility report.
• Reviewed contingency and succession planning for the finance function.
• Reviewed external communications and crisis communications policies.