Ethical code of conduct For internal auditor Within Electrica S.A. Bucharest

INTRODUCTION

The audit function is required in the current context of consolidated market economy structures by the management’s need, in order to perform its functions, of assurance and advice on the level of knowledge and control; this would help improve the activity and increase the quality of the business by giving it an added value.

Internal audit is a profession which has envolved over time, trying to constantly respond to changing requirements of organizations; at the same time it is an objective evaluation of all their activities so as to ensure an objective risk management assessment.

Internal audit is based on the International Professional Practices Framework standards for internal auditing, the general methodological norms on the internal audit activity, the company’s own regulations, the Internal Audit Chart and the Ethical Code of conduct of the internal auditor.

The establishment and implementation of an Ethical Code for internal auditors enhance trust in auditors and their activity. It is crucial that auditors be regarded with respect, trust and credibility.

The Ethical Code of conduct for internal auditors of ELECTRICA SA Bucharest is a set of principles and rules of conduct which are meant to govern the internal auditors’ activity.

The provisions of this Code apply to the internal auditors within the staff of ELECTRICA SA Bucharest.

The aim of this Code is to create the necessary ethical framework for performing the internal auditor profession, to ensure that the latter perform their job tasks with professionalism, loyalty, correctness and diligence and refrain from any deeds which could bring prejudices to ELECTRICA SA Bucharest and its subsidiaries.

The following objectives should be achieved to fulfil the aim of this ethical code of conduct of the internal auditor:

  1. a) performance – the internal audit profession involves an activity at the highest level, for the public interest, performed economically, effectively and efficiently;
  2. b) professionalism – the internal auditor profession requires intellectual abilities and experience achieved by training and education and through a code of values and conduct common to all internal auditors;
  3. c) quality of services – the internal auditors’ skills for performing their tasks with objectivity, responsibility, diligence and honesty;
  4. d) trust – when performing their job tasks, internal auditors should promote cooperation and good relationships with the other internal auditors and within their profession, and the support and professional cooperation, equilibrium and correctness are essential elements of the internal auditor profession, considering that the public trust and respect enjoyed by an internal auditor are the result of the cumulative performance of all internal auditors;
  5. e) conduct – internal auditors should have a faultless behaviour, both professionally and personally;
  6. f) credibility – the information supplied by the internal auditors’ reports and opinions should be true to reality and reliable.

The Ethical Code of conduct of the internal auditor in ELECTRICA SA Bucharest has two main components:

  1. a) the basic principles for the internal audit profession and practice;
  2. b) the rules of conduct which impose behavior norms for internal auditors.

 

 

BASIC PRINCIPLES

 Internal auditors should observe the following basic principles in their activity:

 

Integrity

According to this principle, the internal auditor should be correct, honest and incorruptible, their integrity being a foundation for the trust and credibility granted to the internal auditor’s reason.

 

Independence and objectivity

The independence towards the audited entity and any other interest groups is compulsory; internal auditors should make all efforts to be independent in addressing the issues under discussion; internal auditors should be independent and impartial both in theory and in practice; in all aspects of the audit work the independence of internal auditors should not be affected by personal or exterior interests; internal auditors should not get involved in activities in which they have a legitimate/ well grounded interest.

 

Objectivity

In their activity, internal auditors should prove objective and impartial when preparing the reports, which should be accurate and objective; the conclusions and opinions formulated in reports should be based exclusively on documents obtained and analysed according to audit standards; internal auditors should use all useful information received from the audited entity and from other sources. This information should be taken into account by auditors in their impartial opinions expressed. Internal auditors should also analyse the points of view expressed by the audited entity and, depending on their relevance, to formulate their own opinions and recommendations; internal auditors should perform a balanced assessment of all relevant circumstances and should not be influenced by their own interests or by the interests of others when forming their own opinions.

 

Confidentiality

  1. Internal auditors should maintain confidentiality of the facts, information or documents they learn about when exerting their attributions; internal auditors may not use for their own interest or for the interest of a third party the information acquired while performing their job tasks.
  2. In exceptional cases internal auditors may supply such information only in the special conditions provided by legislation in force.

 

Professional skills

Internal auditors should perform their job responsibilities with professionalism, competence, impartiality and at international standards, applying the knowledge, skills and experience acquired.

 

Political neutrality

  1. Internal auditors should be neutral politically, in order to be able to perform their duties impartially; in this line they should remain independent towards any political influences.
  2. Internal auditors should refrain, while performing their responsibilities, from expressing or demonstrating their political beliefs.

 

 

RULES OF CONDUCT

Rules of conduct are behaviour norms for internal auditors and are an aid for the interpretation and practical implementation of principles, with a role of ethical guidance for internal auditors.

 

Integrity:

  1. Practising the profession with honesty, in good faith and responsibly;
  2. Observing the law and acting in accordance with the requirements of the profession;
  3. Observing and contributing to the objectives of ELECTRICA SA Bucharest;
  4. Internal auditors are not allowed to participate in illegal activities and commitments which discredit the internal auditor profession or ELECTRICA SA Bucharest where they are employed.

 

Independence and objectivity:

  1. Internal auditors are not allowed to get involved in activities or relationships which might conflict with the interests of the entity and which could impact on an objective evaluation;
  2. Internal auditors are not allowed to provide to the audited entity other services than audit and consultancy;
  3. Shall not accept anything that may impair or be presumed to impair their professional judgment;
  4. Internal auditors have to present in their reports any documents or facts known by them, which would otherwise affect the activity of the audited structure.

 

Confidentiality

Internal auditors are not allowed to use the information acquired during their activity for personal use or in a manner which could be against the law or against the legitimate and ethical objectives of ELECTRICA SA Bucharest.

 

Competence

  1. Internal auditors should act professionally in all activities they perform, should apply professional standards and norms and should express impartiality when performing their job responsibilities;
  2. Chief internal audit structure must nominate in the audit team, only the internal auditors who have the necessary knowledge, skills and experience necessary to assignment;
  3. Internal auditors should use best quality methods and practices in their activities; while performing the audit and preparing the reports internal auditors should adhere to the basic principles and to generally accepted audit standards.
  4. Internal auditors should continuously improve their knowledge, efficiency and the quality of their activity;
  5. Internal auditors must possess the knowledge, skills, and other competencies needed to perform their individual responsibilities. The internal audit activity collectively must possess or obtain the knowledge, skills, and other competencies needed to perform its responsibilities;
  6. Internal auditors should know the specialised legislation and should be continuously concerned with increasing their level of training, according to international standards.

 

 

FINAL PROVISIONS

The Audit Committee verifies internal auditors’ compliance with the provisions of the Ethical Code of Conduct of internal auditors and may initiate the necessary corrective actions, in cooperation with the chief of the Internal Audit Office.

The provisions of this Ethical Code of Conduct for internal auditors are obligatory for all internal auditors of ELECTRICA SA Bucharest.

The chief internal audit structure is responsible for ensuring that all internal auditors know the values and principles of the Ethical Code of Conduct for internal auditors and act accordingly.