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Annual Report 2008
The Statutory Audit Commission is elected by the annual General Shareholders Meeting.
New members of the Statutory Audit Commission were elected at the annual General Shareholders Meeting held on 26 June 2008. The Statutory Audit Commission consists of 5 members:
Vladimir V. Lukov – Chairman (Deputy Director, Department of Financial Policy, Ministry of Finance of the Russian Federation);
Tatiana A. Bogomolova – member of the Statutory Audit Commission (Deputy Head of Non-Core Businesses and Foreign Property Management Department – Head of Financial, Credit, Foreign Trade, Land Development and Tax Authorities Management Division, Federal State Property Management Agency);
Alexey E. Kovrov – member of the Statutory Audit Commission (Head of Business Results Analysis and Control Division, Expert Analytical Department, Federal State Property Management Agency);
Rustem S. Memetov – member of the Statutory Audit Commission (Advisor to the Unit of Property Relations with Foreign Countries, Division of Financial and Foreign Economic Institutions, and of Foreign Property, Federal State Property Management Agency);
Alexey V. Terentiev – member of the Statutory Audit Commission (Advisor to the State Legal Directorate of the President of the Russian Federation).
Internal Control Department (ICD)
The Internal Control Department is an independent structural unit responsible for performing internal controls within VTB Bank and ensuring the efficiency and effectiveness of its operations.
As of 1 January 2009, the Internal Control Department of VTB Bank comprised 135 employees.
Several internal control groups have been created within the structure of the Internal Control
Department in order to carry out internal control at the Bank’s branches.
In 2008, the Central Bank of Russia noted that the Internal Control Department of VTB Bank was successfully managing its operations.
The Internal Control Department performs the following functions:
checking the effectiveness of the internal control system and ensuring that it is functioning correctly with the use of automated information systems;
ensuring that the methodology for assessing and the procedures for managing banking risks are properly applied;
checking the accuracy, completeness, objectivity and timeliness of accounting, information collation and presentation and reporting;
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5. Risk management and internal controls
ensuring that the Bank’s internal regulatory acts comply with regulatory legal acts, and the standards of self-regulating organisations and professional codes of conduct.
The Internal Control Department assists the Bank’s external auditors by providing information on the Bank’s internal control system and any flaws identified during the period being examined by the auditors.
VTB Bank’s external auditor
Every year, VTB Bank engages an external auditor in order to check and confirm the reliability of its annual financial statements.
Based on its scrutiny of the financial and economic activity of the Bank, the external auditor prepares a
report, which is submitted to the Audit Committee for preliminary assessment. The prepared report is sent to the Bank’s Supervisory Council and is also submitted to the Bank’s Annual General Shareholders Meeting.
The Bank’s external auditor is designated as a result of a tender, the approval of the candidacy of the external auditor at a meeting of the Audit Committee, the recommendation of the Supervisory Council to the General Shareholders Meeting and the approval of the proposed candidate at the Bank’s Annual General Shareholders Meeting.
CJSC Ernst & Young Vneshaudit, a Russian subsidiary of one of the largest international auditing
companies, was appointed as VTB Bank’s external auditor for 2008.
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Annual Report 2008
6. Corporate governance
6.1. Overview of the corporate
governance system
Given the global financial crisis, 2008 not only tested the strength of the Bank’s corporate governance but also confirmed the ability of VTB’s existing mechanisms to respond effectively to new conditions. Despite certain changes in priorities, the Bank continues to believe that international best practice in its corporate governance system is necessary for its effective development, increased stability and improved transparency.
Adherence to the corporate governance code
VTB Bank’s existing system of corporate governance is based on the following principles which reflect the provisions of Russian legislation, as well as the requirements of the Central Bank of Russia and the recommendations of the Federal Service for Financial Markets of Russia:
the Bank provides its shareholders with the opportunity to exercise their rights, including the right to participate in the decision-making process by voting at the AGM, the right to receive dividends and the right of access to information;
the Bank operates a principle of equal treatment of its shareholders of a certain class of shares, as
well as guaranteeing the effective protection of their rights;
the Bank’s Supervisory Council carries out strategic governance of the activity of executive bodies (the President and Chairman and the Management Board). Two independent directors are members of the Supervisory Council. The Supervisory Council is accountable to shareholders;
the President and Chairman and the Management Board direct the Bank’s current activity. The executive bodies of the Bank are accountable to the Supervisory Council and to shareholders;
the Bank ensures the timely disclosure of full and reliable information including its financial position, economic figures and the structure of its property and governance in order to provide shareholders and investors with the opportunity to make well-informed decisions;
the Bank respects the rights of interested parties, including workers, as required by law and encourages the active collaboration of the Bank and interested parties in order to increase its assets, the value of its shares and the creation of new jobs;
VTB Bank has controls in place over the use of confidential and insider information; these include documents establishing rules for preventing the use of this information;
the Bank has built an effective system of control for its financial and economic activity in order to protect the rights and interests of its shareholders. The Bank has created an