Pursuant to Paragraph 4 of Article 5 of Federal Law No. 307-FZ On Auditing dated 30 December 2008, a contract for mandatory audit of accounting (financial) statements of a company where the government owns at least a 25% stake in the authorised (joint) capital shall be signed with an audit company or an individual auditor winning an open tender to be held at least once in five years as per the procedure stipulated in Federal Law No. 44-FZ On the Contractual System of the Federal and Municipal Procurement of Goods, Works and Services dated 5 April 2013.
The auditor selection tender for 2019 was conducted in accordance with the Regulations on Holding an Open Tender to Select an Auditor for the Mandatory Annual Audit of Transneft for 2019 and Reviewing the Interim Consolidated Financial Statements by IFRS for Q1 2020, approved by Transneft Order No. 35 dated 25 February 2018.
The Regulations were developed in accordance with the Civil Code of the Russian Federation, Federal Law No. 307-FZ On Auditing dated 30 December 2008, Federal Law No. 44-FZ On the Contractual System of the Federal and Municipal Procurement of Goods, Works and Services dated 5 April 2013 and the Rules for Assessment of Participants’ Bids and Final Proposals on State and Municipal Procurement of Goods, Works and Services, approved by Resolution of the Government of the Russian Federation No. 1085 dated 28 November 2013.
Bidding Terms and Conditions:
- an auditing organisation that applies for participation in the tender shall comply with the requirements defined in the Regulations;
- the open tender notice is posted by the customer on its corporate website and on the Company’s website at least 20 days before the day when the envelopes containing the tender applications are opened and access to the tender applications submitted in the form of electronic documents is provided;
- to participate in the tender, a participant submits their application within the time specified in the open tender notice; acceptance of open tender applications is closed on the day when the envelopes containing the tender applications are opened and access to the tender applications submitted in the form of electronic documents is provided;
- the open tender applications should contain the necessary information and documents about the open tender participant, as well as technical and financial proposals;
- evaluation and comparison of the open tender applications is to be completed no later than twenty days after the opening;
- evaluation and comparison of the applications is carried out by scoring the technical and financial proposals contained therein in accordance with the criteria and the procedure established by the Tender documentation; each open tender application is assigned a reference number to be listed in order of descending profitability of the terms of contract performance contained therein; the winner of the open tender is the participant whose open tender application was assigned the first number;
- the minutes of evaluation and comparison of the applications is posted on the corporate website and on the Company’s website on the day following the aforementioned minutes signing day.
The initial (maximum) price of the agreement for holding an open tender to select an audit organisation, as well as the final amount of payment for auditing services, based on the results of the tender, are determined by the Board of Directors of the Company.
Based on the open tender results, the Board of Directors of the Company nominates the winner of the tender for the General Meeting of Shareholders to approve.
The auditor’s remuneration for auditing services is determined after conducting an open tender; as per the contract for auditing the statements of Transneft for 2019, it amounted to RUB 12.5 million excluding VAT.
Results of Audit Efficiency Assessment by the Audit Committee
The Audit Committee under the Transneft Board of Directors evaluates the auditor’s opinion’s conformity to Federal Law No. 307-FZ On Audit Activities, dated 30 December 2008, as well as its compliance to the effective auditing standards.
Consideration of the audit report on the financial statements of Transneft for 2019 in accordance with the Work Plan of the Audit Committee for 2H 2019 – 1H 2020 was held in April 2020; the report was recognised as complying with the requirements established by the International Auditing Standards in force in the Russian Federation.