2014 Annual report

Audit Committee

In accordance with the Regulation on the Auditing Committee of the Board of Directors of JSC IDGC of the North-West, approved by the Board of Directors on August 27, 2012 (Minutes No. 109/7), the main purpose of the Auditing Committee is to ensure effective participation of the Board of Directors in monitoring financial and economic activities of the Company.

Starting from January 01, 2014, the Auditing Committee consisted of six person (the number of members is determined by the Board of Directors on July 22, 2013, Minutes No.130/1). By the resolution of the Board of Directors of April 16, 2014 (Minutes No.151/22), the number of members in the Auditing Committee of the Board of Directors of JSC IDGC of the North-West is defined in the amount of five people. After the adoption by the Board of Directors on July 18, 2014 (Minutes No. 160/2) of a relevant decision, the Auditing Committee consists of six persons.

The acting members of the Auditing Committee are headed by a non-executive director, a member of the Board of Directors, Marina A. Lavrova, the Head of Department for Economic Planning in Subsidiaries and Affiliates, Department of Economic Planning and Budgeting of JSC Russian Grids. The composition of the Auditing Committee includes an independent director with a considerable experience and expertise in the preparation, analysis, evaluation and audit of accounting (financial) statements, Tatiana P. Dronova, Deputy General Director for Strategy and Development of CJSC Energy Union Investment Holding.

In 2014, the Auditing Committee held 14 meetings, including one meeting in person.

The meetings addressed issues of monitoring over the functioning
and improvement of internal control and risk management systems.

On the basis of recommendations from the Committee, the Board of Directors (resolution of August 14, 2014, Minutes No. 2) defined priority areas of activity, such as improving the system of internal control and risk management, development of the internal audit function. Following the review, the following documents we recommended for approval by the Board of Directors as internal documents:

In addition, for the purpose of organization of a risk management system, the following documents were approved and recommended for approval:

In addition to the above, in reviewing the issues of monitoring
and improving the functioning of the internal control and risk management systems:

In 2014, among the other significant issues, the Auditing Commission of the Board of Directors reviewed the following:

The structure of issues addressed in 2014 by the Auditing Committee
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