Supervisory bodies

In accordance with item 9.2 of Article 9 of the Charter of Lenenergo, the Audit Commission is a supervisory body over financial and business activities of the Company.

Audit Commission

The Audit Commission of Lenenergo is a permanent internal control body of the Company, which does not depend on the officials of the Company’s governing bodies and the Company’s Executive office, and is guided in its activities by the powers defined by the Federal Law About Joint Stock Companies, the Company Charter and the Regulations on the Audit Commission of Lenenergo in the new edition approved by the Annual General Shareholder Meeting (Minutes #2/2014 of 24 June 2014).

In accordance with the Company Charter, the Audit Committee is elected by the General Shareholder Meeting of 5 people with a term of 1 year (before the date of the next AGM). The members of the Audit Commission cannot be at the same time members of the Board of Directors, or hold other positions in the Company’s governing bodies.

According to the Company Charter, the competence of the Audit Commission shall include:

confirmation of reliability of the data contained in the annual report, annual accounting statements, balance sheet, and profit and loss statement of the Company;
the analysis of the financial condition of the Company, identification of reserves to improve its financial condition and development of recommendations for the Company’s governing bodies;
organization and implementation of the check (audit) of the Company’s financial and business activities.

The check (audit) of financial and business activities of Lenenergo is carried out on the results of operations for the year (planned check), or at any time by the decision or requirement of the bodies or persons having the right to initiate such check (audit). A check may be held resulting from decisions of the Audit Commission, the General Shareholder Meetings or the Board of Directors, upon request of shareholder(s) owning (owning in the aggregate) at least 10% of the Company’s voting shares.

The work place and position are specified at the moment of election.In 2014, the Audit Commission of the Company operated in the following membership
20 June 2013 — 17 March 2014			17 March 2014 — 23 June 2014		23 June 2014 — present
#	FULL NAME	Work place	FULL NAME	Work place	FULL NAME	Work place
1	Kim Svetlana Anatolyevna	Head of Investments Control of Department of Control and Audits of JSC FGC UES	Lelekova Marina Alekseevna	Director of Internal Audit and Control Department of JSC Rosseti	Lelekova Marina Alekseevna	Director of Internal Audit and Control Department of JSC Rosseti
2	Kabizskina Elena Aleksandrovna	Deputy Head of Control and Audits Department of JSC FGC UES	Malyshev Sergey Vladimirovich	Leading Expert of Directorate for Auditing Activity and Internal Audit of Internal Audit and Control Department of JSC Rosseti	Malyshev Sergey Vladimirovich	Leading Expert of Directorate for Auditing Activity and Internal Audit of Internal Audit and Control Department of JSC Rosseti
3	Adler Yury Veniaminovich	Head of Methodology Standards Division of Corporate Governance and Shareholder Relations Department of JSC Rosseti	Ochikov Sergey Ivanovich	Leading Expert of Directorate for Auditing Activity and Internal Audit of Internal Audit and Control Department of JSC Rosseti	Ochikov Sergey Ivanovich	Leading Expert of Directorate for Auditing Activity and Internal Audit of Internal Audit and Control Department of JSC Rosseti
4	Uskov Valery Evgenyevich	Head of Division of the Committee of Power and Engineering Support	Lukovkina Irina Pavlovna	Chief Expert of Directorate for Control and Risks of Internal Audit and Control Department of JSC Rosseti	Lukovkina Irina Pavlovna	Chief Expert of Directorate for Control and Risks of Internal Audit and Control Department of JSC Rosseti
5	Kozelskiy Vladislav Vilorgovich	Head of Directorate of the Committee on City Property Management of St. Petersburg	Kozelskiy Vladislav Vilorgovich	Head of Directorate of the Committee on City Property Management of St. Petersburg	Kozelskiy Vladislav Vilorgovich	Head of Directorate of the Committee on City Property Management of St. Petersburg

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In 2014, the Audit Commission of Lenenergo performed:

check of financial and business activities of Lenenergo for 2013;
check of financial and business activities of Lenenergo for 9M 2014.

Conclusions about financial and business activities, annual accounting statements and reliability of the data containing in the annual report were prepared by results of these checks.

The current members of the Audit Commission were elected by the decision of the Annual General Shareholder Meeting on 23 June 2014 (Minutes #2/2014 of 24 June 2014).

Lelekova Marina Alekseevna

Chairperson of the Audit Commission

Birth year. Nationality: 1961. Russian Federation

Education: Higher. Far East Institute of Soviet Trade, economist; Moscow State University, faculty of Economics, courses on preparation of auditors at Training Centre on preparation and retraining of auditors, auditor; Far East State University, courses on preparation of professional accountants at Training Centre, financial manager, financial expert

Positions for the last five years:

2013-2015 — Director of Internal Audit and Control Department of JSC Rosseti

2009-2013 — Head of Control and Audits Department

Share in the charter capital: No

Kozelskiy Vladislav Vilorgovich

Member of the Audit Commission

Birth year. Nationality: 1976. Russian Federation

Education: Higher. Engineering and Economic Academy, State and municipal management (1998)

Positions for the last five years: 2004-present — Head of Directorate of the Committee on City Property Management of St. Petersburg

Share in the charter capital: No

Lukovkina Irina Pavlovna

Member of the Audit Commission

Birth year. Nationality: 1970. Russian Federation

Образование: Higher

Positions for the last five years:

2009-2015 — Chief Economist of Financial Planning and Liquidity Management Department, Leading Expert of Planning and Financial Division of Finance and Economics Department, Chief Expert on Internal Audit, Chief Expert of Consolidated Analysis, Planning and Control of Directorate for Control and Risks of Internal Audit and Control Department of JSC Rosseti

Share in the charter capital: No

Ochikov Sergey Ivanovich

Member of the Audit Commission

Birth year. Nationality: 1983. Russian Federation

Образование: Higher

Positions for the last five years:

2013-2015 — Leading Expert of General Audit and Checks Division of Directorate for Auditing Activity and Internal Audit of JSC Rosseti

2013 — Chief Expert of Investment Audit of Internal Control and Risk Management Department of JSC FGC UES

2009-2013 — Leading Expert of Risk Management and Organization of Internal Control of Directorate for Internal Audit and Risk Management of JSC IDGC North-West

Share in the charter capital: No

Malyshev Sergey Vladimirovich

Member of the Audit Commission

Birth year. Nationality: 1965. Russian Federation

Education: Higher.

Positions for the last five years:

2013-2015 — Leading Expert of Investment Audit Division of JSC Rosseti

2013 — Head of Investment Audit Division of JSC FGC UES

2011-2012 — Chief Expert of Capital Construction Division of JSC Gazpromneft-Aero

2010-2011 — Leading Advisor of Financial Inspection of the Ministry of Defense of the Russian Federation

Share in the charter capital: No

Data on remuneration and compensation paid to members of the Audit Commission

Payment of remuneration and compensation to members of the Audit Commission is carried out according to the Regulations on payment of remuneration and compensation to members of the Audit Commission of Lenenergo approved by the Annual General Shareholder Meeting on 30 May 2008. Payment of remuneration and compensation is made by the Company in a monetary form. The members of the Audit Commission shall be reimbursed for their expenses related to participation in the meeting of the Audit Commission and the audit according to the norms of reimbursement of travel expenses effective at the time of the meeting or check.

For participation in the check (audit) of financial and business activities the member of the Audit Committee shall receive single compensation in the amount equivalent to twenty-three minimum monthly wage rates of a first class worker set by the branch tariff agreement in the electric power complex of the Russian Federation (hereinafter — Agreement) for the period of the check (audit) based on the indexation fixed in the Agreement. The amount of remuneration paid to the Chairperson of the Audit Commission shall be increased by 50%. Payment of remuneration and compensation to the specialists (experts) involved by the Audit Commission who are not members of the Company’s Audit Commission is made by the Company on the basis of contracts concluded with them. In accordance with Article 4 of the Regulations on payment of remuneration and compensation to members of the Audit Commission of Lenenergo the terms of such Agreements are approved by the Company’s Board of Directors. The terms of contracts with external experts were approved by the Board of Directors on 7 February 2014 (Minutes #21 of 11 February 2014) and 19 December 2014 (Minutes #16 of 23 December 2014).

The total amount of remuneration and compensation paid to members of the Company’s Audit Commission, including to the external experts in 2014 amounted to RUB 1,800,117, including taxes.

In the reporting year, there were no transactions between members of the Audit Commission and the Company. Claims were not filed by the Company to the members of the Audit Commission.

Internal Audit and Control Department

The Internal Audit and Control Department of Lenenergo was created in 2008, reports directly to the Company’s Director General and is functionally accountable to the Committee on audit of the Company’s Board of Directors.

The Department’s main tasks are:

assessment of the Company’s internal control system and monitoring of compliance with internal control procedures;
control over performance by the Company of requirements of the current legislation, its internal Regulations ,as well as the efficient use and preservation of the Company’s assets (property);
organization and support of the Company’s risk management process, coordination of divisions involved in this process, assessment of the risk management process, regular monitoring of risk management activities, providing recommendations for improving the effectiveness and efficiency of risk management.

The Internal Audit and Control Department carries out its activity on the basis of the following documents:

The Risk Management Policy of Lenenergo in the new edition approved by the Board of Directors on 5 September 2014 (Minutes #6 of 9 September 2014), which defines the basic principles of organization, implementation and control of the risk management processes in Lenenergo, as well as priority actions to develop the risk management system;
The Internal Control Policy of Lenenergo in the new edition approved by the Board of Directors on 5 September 2014 (Minutes #6 of 9 September 2014), which defines mandatory basic principles of the organization of internal control system of Lenenergo and formation of a uniform approach to the implementation of internal control processes within the Company;
The Internal Audit Policy of Lenenergo approved by the Board of Directors on 5 September 2014 (Minutes #6 of 9 September 2014), which defines the objectives and principles of internal audit, internal auditors’ powers and responsibilities of executives and employees of the audited units corresponding to them, control over internal auditors’ activities and providing reporting;
Methodological Recommendations for Risk Management of Lenenergo approved by the Board of Directors on 31 May 2011 (Minutes #19 of 31 May 2011) developed with the purpose of establishing a uniform scale of measurement of risks at all levels of corporate governance and uniform approaches to the implementation of the risk management system in the Company.

External Auditor

The Annual General Shareholder Meeting of the Company approved LLC Ernst & Young to perform the audit of the Company’s accounting (financial) statements for 2014 prepared in accordance with Russian Accounting Standards (RAS) and the consolidated financial statements for the fiscal year ending 31.12.2014 prepared in accordance with International Financial Reporting Standards (IFRS) (AGM Minutes #2/2014 of 24 June 2014).

After conducting procurement procedures the candidacy of the auditor LLC Ernst & Young was considered by the Committee on audit of the Board of Directors of Lenenergo on 16 April 2014 (Minutes #42). Based on the recommendation of the Committee, the Board of Directors approved the decision to nominate the auditor of LLC Ernst & Young for approval by the Annual General Shareholder Meeting (Minutes of the meeting of Board of Directors #36 of 21 May 2014).

In accordance with item 22.8 of Article 22 of the Company Charter, remuneration of the auditor approved by the Annual General Shareholders Meeting for annual audit and confirmation of the Company’s annual financial statements shall be determined by the Board of Directors.

According to the decision of the Company’s Board of Directors of 2 October 2014, the remuneration of the Company’s auditor LLC Ernst & Young amounts to RUB 7,361,990.91 including VAT (Minutes of the meeting of the Board of Directors #8 of 6 October 2014).