The key to successful business: how TAIF-NK improves its efficiency

Could you tell us how the work of internal audit in TAIF-NK is organised? What inspections are carried out and how often?

The task of internal audit is to assess the internal control system in terms of reliability of information, compliance with legislation, safety of assets, efficiency and effectiveness of individual functions and units. The organizational status of our service, namely functional subordination to the board of directors and the support of the company's top management, allow us to perform our work without interference and conflicts of interest.

During the year, the service carries out 6-7 planned internal audits. This can be an inspection of a separate structural unit, when we fully check the activities of the department, starting with the organization of paperwork management and ending with checking the performance of basic functions. Or we can check a separate business process, for example, the process of records and sales of finished products, during which we check the direct manufacturers of finished products — these are plant workshops, as well as departments related to the sale and shipment of finished products and their interaction.

During the audits, not only the work of the system as a whole, but also each element is analyzed: we identify how the relationship between them is built, identify shortcomings in the work of the company and give recommendations for their mandatory elimination. At the same time, I want to note that the work of our service is not only to identify inconsistencies. The objectives of the internal audit are the following: analysis of the causes of certain deviations, joint development of remedial actions jointly with the company's interested departments to eliminate them in order to avoid inconsistencies in the future, as well as the search for new opportunities and reserves to improve the company's efficiency.

We do not have strict deadlines for regular audits. The objects are determined in the formation of the annual work plan on the basis of the opinion of the company's management and recommendations of the board of directors, analysis of previous audits, as well as evaluation of external audit and tax audits.

Could you comment further on the risks? What problems can be solved by audits?

The purpose of internal audit is to improve the company's activities. To achieve this goal, the audit should identify and assess all possible risks, as well as provide recommendations aimed at improving the efficiency of systems and processes. To show how it works in practice — I’ll give you an example. According to the results of our audit, the refinery has implemented the project to upgrade the system for stripping oil products from faulty railway tanks. The discharge of the tank became possible without maneuvers outside the perimeter of the plant. As a result, the risk of theft of finished products was eliminated, in addition, time is saved for emptying the defective tank. Another example: based on the results of an audit, the company has developed and put into effect the “Regulation on the organization of insurance protection”, regulating the company's risk insurance activities. The introduction of this regulatory document allowed to unify the types of risks and to determine a common approach to different types of insurance, which led to a reduction in costs in the enterprise.

Of course, the results of internal audit work cannot always be measured quantitatively. For example, it is impossible to assess the effect of recommendations on bringing normative documents into accordance with the changed legislation or the elimination of contradictions in internal documents.

I want to emphasize that the result of the internal audit depends largely on the subsequent actions of the company's management. The service interacts with all structural units of TAIF-NK, so it is very important how the top management treats the work of internal audit. The support and special attention to the audit opinion from Director General of TAIF-NK PSC Rushan Rashitovich Shamgunov plays a very important role in positioning the function and importance of internal audit. Such close attention on his part allows us to implement effective tools for the successful development of our company.

Does TAIF-NK use the services of third-party organizations during audits?

Our service was organized in TAIF-NK in 2013, and over this period, there has been no need to involve third-party companies for internal audit. But as part of compliance with the requirements of the Russian legislation on external mandatory audit, our Company, of course, involves an external auditor to conduct audits of financial (accounting) statements according to Russian accounting standards and international financial reporting standards.

How often does the company apply new methods of internal audit? And why?

The methods of internal audit represent a set of financial, economic, organizational, operational, technical and actual methods and techniques for checking the production and financial and economic activities of the enterprise, so it is impossible to talk about the use of the only one method in the audit. The use of different methods in conducting audit procedures is necessary to collect sufficient, appropriate evidence to form reasonable conclusions based on the auditors' views expressed in the reports and supported by the relevant working documents. For example, the audit of procurement activities is checked from the formation of plans for the purchase and selection of suppliers, to the transfer of commodities and materials into production, which requires economic and comparative analysis, surveys, inspections and spot inventory counts and so on.

What normative documents does the internal audit in Russia use in its work?

The main document, as well as in the world community of internal auditors, is the international standards developed by the International Institute of Internal Auditors (The IIA). Since the standards are a set of general principles, their use is possible in almost any country, including Russia.

Recommendations on the application of the International Standards for the Professional Practice of Internal Auditing are given in the Corporate Governance Code approved by the government of the Russian Federation and the board of directors of the Central Bank of Russia.

It should also be noted that in 2015, by the order of the ministry of labour of the Russian Federation, it was approved the professional standard Internal Auditor, which describes the objectives of internal audit, labour functions included in the professional standard, the skill levels of internal auditors, as well as requirements for education and work experience. In fact, this document legalized the profession of “Internal auditor”, as it is not included in the current Qualification directory of positions of managers, specialists and other employees. Although it is not necessary for our company to use professional standards, their availability allows us to use them as a guide for the formation of the internal regulatory framework of the internal audit service, to determine the requirements for training, experience, knowledge and skills for the selection of internal auditors, which in turn is aimed at improving the overall efficiency of the internal audit service.

How do you assess the activities of the internal audit service of TAIF-NK over the past 3 years?

The effectiveness of our service in TAIF-NK is confirmed by the achievement of the goals. To date, there are various criteria for assessing the activities of the internal audit, which many use. I believe that one of the performance indicators is its relevance in the company and the fact that today the top management of TAIF-NK PSC demonstrates support and interest in the activities of the internal audit service. Today, the company uses the effective control system that complies with the generally accepted principles of management, which is assigned by the company's management to the corporate priorities of the highest order.

Our service, being one of the elements of the system of internal control, contributes to the improvement of production efficiency, cost reduction, efficient utilization of existing assets, long-term planning and adherence to the principles of corporate governance.