Corporate Governance Structure and Principles > Auditor

The external audit of accounting (financial) statements is the important element in the total system of control over financial and business activities of the Company carried out by the shareholders.

According to Article 1 of Federal Law No. 307-FZ on Auditing Activity of December 30, 2008 and Article 86 of Federal Law No. 208-FZ on Joint-Stock Companies of December 26, 1995, the auditor shall conduct an independent checkup of the financial and business activities of the Company on the basis of its accounting (financial) reports in order to express an opinion on the accuracy of such statements.

The auditor of the Company's accounting (financial) statements of the Company for 2012 prepared in accordance with the Russian accounting laws is CJSC KPMG (Saint-Petersburg branch — North-West Regional Center).

CJSC KPMG is a company incorporated under the Russian legislation in 1990, a member of the KPMG network of independent firms, included in the KPMG International Association (Switzerland). CJSC KPMG renders auditing and consulting services on taxation and finances, is a member of self-regulating organization of auditors of non-commercial partnership Audit Chamber of Russia, as well as a member of Association of Russian Banks, Russian Association of Industrialists and Entrepreneurs, Institute of Professional Accountants and Auditors of Russia and many other international professional associations and companies.

Selection of auditing organization for conducting audit of financial statements of the Company prepared in accordance with the Russian accounting laws was carried out by the Central Purchasing Commission of JSC IDGC Holding. Based on the results of open tender negotiations for approval of an auditor CJSC KPMG was recommended to the management bodies of JSC IDGC of the North-West with the amount of remuneration of RUB 1,839 million, including VAT 18%.

The purchasing was approved by the Central Tender Commission of JSC IDGC of the North-West. The Audit Committee of the Board of Directors of the Company recommended to the Board of Directors of the Company to propose to the Annual General Meeting of Shareholders to approve CJSC KPMG as the Company's auditor.

By the decision of to the Annual General Meeting of Shareholders of JSC IDGC of the North-West CJSC KPMG was approved as the Company's auditor for 2012 with the amount of remuneration of RUB 1,839 million, including VAT 18%.

The Company is preparing consolidated financial statements for 2012 in accordance with the International Financial Reporting Standards (IFRS). The auditor of the financial statements is CJSC KPMG (Saint-Petersburg branch — North-West Regional Center) selected by the Central Purchasing Commission of JSC IDGC Holding based on the results of open tender negotiations with the amount of remuneration of RUB 4,366 million, including VAT 18%.

The purchasing was approved by the Central Tender Commission of JSC IDGC of the North-West. In compliance with the legislation of the Russian Federation and internal regulatory documents of the Company, the candidacy of an auditor of consolidated financial statements according to IFRS is not subject to consideration of the Board of Directors of JSC IDGC of the North-West and approval by the General Meeting of Shareholders. Determination of the remuneration amount for the auditor of financial statements according to IFRS is also out of competence of the Company's Board of Directors.

Works on special auditing tasks were not carried out by CJSC KPMG. There are no deferred and delayed payments for rendering the auditor's services.

There are no factors that can influence on independence of the Company's auditors as well as considerable interests connecting the auditors (officials of the auditors) with the Company (the Company's officials).

According to the requirements of Article 12 of Federal Law No. 307-FZ on Auditing Activity of December 30, 2008 the auditors are completely independent from the management bodies of the Company.