The internal control and risk management system in the process of generating financial statements and consolidated financial statements is implemented through:

To ensure consistent accounting principles based on IFRS approved by the EU, the TAURON Group devised and implemented the Accounting Policy of TAURON Polska Energia S.A. (Accounting Policy). The document is subject to relevant amendments and updates in case of amendments to the regulations. The rules in the Accounting Policy are applicable to TAURON’s standalone financial statements and the TAURON Group’s consolidated financial statements. TAURON Group companies are obliged to adhere to the Accounting Policy when preparing reporting packages forming the basis for compiling the TAURON Group’s consolidated financial statements. The reporting packages are verified by the Office for Consolidation and Reporting in the parent and by the independent auditor when auditing or reviewing the TAURON Group’s consolidated financial statements.

The Company has implemented procedures to approve financial statements. The Company’s interim (quarterly and semi-annual) and annual financial statements and the TAURON Group’s consolidated financial statements are approved by the Company’s Management Board before publication. The Company’s annual financial statements and the TAURON Group’s consolidated financial statements are additionally presented for review by the Company’s Supervisory Board before publication. The CFO as a Vice-President sitting on the Management Board supervises the preparation of financial statements, while the management boards of consolidated companies are responsible for compiling reporting packages for the TAURON Group’s consolidated financial statements.

The Company’s Supervisory Board has appointed an Audit Committee in TAURON Polska Energia S.A. whose membership, powers and activities are listed in Table no. 5.

TAURON Group companies keep ledgers forming the basis for the preparation of financial statements in its ERP financial and accounting systems. The consolidated financial statements are prepared using an IT tool designed to consolidate financial statements.

TAURON Group companies have IT and organisational solutions to control access to their finance and accounting systems and provide adequate protection and archive their ledgers. Access to IT systems is restricted by relevant authorisations for eligible employees.

In connection with the on-going integration of the accounting function and the transfer of financial and accounting services in the TAURON Group companies to the Shared Services Centre, the financial and accounting processes in the TAURON Group are gradually being harmonised. Companies adjust their own procedures to the financial and accounting processes giving consideration to the specific nature of the various segments.

The Company has an Internal Audit Department to plan and implement audit tasks, including advisory services and to perform ad hoc inspections. The audit procedures and rules are laid down by the Internal Audit Regulations in the TAURON Group as well as in the rules of cooperation between TAURON Group companies. By performing the internal audit function, the Company acts in compliance with the Code of Ethics and International Standards of Internal Audit Professional Practice.

The Company’s annual financial statements and the TAURON Group’s consolidated statements are audited by an independent auditor. The Company’s interim financial statements and the TAURON Group’s interim consolidated statements are reviewed by a statutory auditor. In 2013 the Company selected one single audit entity to audit and review the financial statements of significant TAURON Group companies and the consolidated financial statements. The agreement with the audit entity to audit financial statements was concluded to audit the financial statements in 2013-2015.

Pursuant to Supervisory Board resolution no. 343/II/2010 of 27 August 2010, a rule was adopted on changing of the audit entity to audit the Company and TAURON Group’s financial statements at least once every five financial years. The audit entity auditing the Company and TAURON Group’s financial statements may do additional audits after an interval of two financial years elapses.