Control, IMS Internal audit, risk management and compliance system
Capitals:
Control, IMS Internal audit, risk management and compliance system (CODE OF BEST PRACTICE Section 3)
The Company’s system of internal control and risk management in the preparation of financial statements is implemented through:
- verification whether uniform accounting policies are applied by the ORLEN Group companies as regards recognition, measurement and disclosures in accordance with the International Financial Reporting Standards (IFRSs) as endorsed by the European Union,
- following the procedures for registering economic events in the financial and accounting system and monitoring compliance with the procedures,
- internal controls, including separation of duties, multi-stage data verification, accuracy reviews of data received and independent checks,
- providing ORLEN Group companies with uniform templates of separate and consolidated financial statements, and periodic reviews of the correctness of accounting policies and disclosures included in the financial statements prepared by the ORLEN Group companies,
- verification of the consistency of the ORLEN Group companies’ financial statements with data entered into the integrated IT system used to prepare the ORLEN Group’s consolidated financial statements,
- auditor’s review of Q1, H1 and Q3 financial statements and audit of full-year financial statements of PKN ORLEN and the ORLEN Group,
- procedures to authorise, approve and issue opinions on financial statements before they are issued,
- independent and objective evaluation of the risk management and internal control systems,
- an internal audit system operating within the Integrated Management System.
Economic events at PKN ORLEN are recorded in an integrated financial and accounting system. Security and availability of information contained in the financial and accounting system are controlled at all levels of the database, applications and presentations, as well as at the operating system level. System integration is ensured by data entry control systems (validation, authorisation, a list of values) and logs of changes. PKN ORLEN keeps its IT system up to date with the changing accounting policies and other legal requirements. PKN ORLEN’s solutions are implemented into systems of the ORLEN Group companies.
The ORLEN Group companies apply uniform accounting policies adopted at the ORLEN Group and approved by the PKN ORLEN Management Board for the purposes of preparing consolidated financial statements.
The accounting policies are periodically updated to ensure compliance with any new legislation. Consolidated financial statements are prepared based on the integrated IT system where the process of consolidating data sourced from reporting packages provided by each ORLEN Group company is performed. Designed for financial management and reporting purposes, the system enables the unification of financial information. Performance and budget-related data, forecasts and statistics are gathered in one place, which ensures direct control and data compatibility.
The data is reviewed for cohesion, completeness and consistency, which is achieved thanks to embedded controls checking the compatibility of data entered by ORLEN Group companies.
In order to keep mitigating risks associated with the preparation of financial statements, they are reviewed by an independent auditor quarterly, i.e. more often than required by applicable laws.
As per the relevant procedure in place at PKN ORLEN (meeting all requirements arising from the applicable laws and regulations), the auditor of the Company’s financial statements is appointed by the Supervisory Board based on a recommendation from the Audit Committee and a report on the tender process held by the Audit Committee. Deloitte Audyt Spółka z ograniczoną odpowiedzialnością, Spółka komandytowa has been appointed as a qualified auditor of PKN ORLEN’s financial statements for 2019–2024. The selection of Deloitte as the auditor of financial statements in 2024 is conditional on the incorporation of Grupa LOTOS S.A. or PGNiG S.A. into the ORLEN Group in the period from January 1st 2022 to June 30th 2023 or, alternatively, PKN ORLEN otherwise taking control of the LOTOS Group companies or PGNiG Group companies. Whether this condition has been satisfied will be confirmed by a relevant resolution of the PKN ORLEN Supervisory Board. During audit work, the auditor makes an independent assessment of the reliability and accuracy of separate and consolidated financial statements and confirms that the internal control and risk management system is effective. The auditor presents the audit and review findings to the Management Board and the Audit Committee of the Supervisory Board.
The Audit Committee, appointed by the Supervisory Board in the exercise of its powers, is a supervisory body with some of its powers and responsibilities defined in the Act on Statutory Auditors, Audit Firms, and Public Oversight of May 11th 2017, including the following:
- monitoring the preparation of the ORLEN Group’s consolidate financial statements to ensure compliance with the Group’s Accounting Policy and applicable laws,
- monitoring the independence of the qualified auditor and audit firm selected to audit financial statements,
- monitoring the effectiveness of the internal control, internal audit and risk management systems.
The Company has in place certain procedures to authorise financial statements, under which periodic reports are submitted to the Management Board and then to the Supervisory Board’s Audit Committee for its opinion. Once the Audit Committee’s opinion is received and the auditor completes its review or audit of the financial statements, they are authorised for issue by the PKN ORLEN Management Board by means of a qualified electronic signature and then released to the public by the Investor Relations Office.
Full-year financial statements are also presented to the Supervisory Board for final assessment and control of the financial reporting process. The Supervisory Board is an independent body ensuring the reliability and accuracy of information disclosed in the financial statements of PKN ORLEN and the ORLEN Group.
The Company has in place and is improving an Integrated Management System based on certified international standards: ISO 9001, AQAP 2110, ISO 14001, ISO 45001, ISO/IEC 27001, ZKP, ISCC, KZR INiG, ISO 50001 and HACCP.
