Policy of compliance with the Principles of Ethics and Counteracting Mobbing and Discrimination in the TAURON Group

The policy of compliance with the Principles of Ethics and Counteracting Mobbing and Discrimination in the TAURON Group was implemented in May 2019, replacing the Policy of counteracting mobbing and discrimination at the TAURON Group in place since 2017. This policy defines the rules for reporting the violations of the ethics, mobbing and discrimination rules as well as the tasks, rights and obligations of the TAURON Group’s Ethics Committee.

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There are two sub-committees within the TAURON Group’s Ethics Committee:

  • Internal sub-committee, whose members are appointed and dismissed by the Management Board of the given Subsidiary, that at the same time appoints the Chair of the Subcommittee;
  • Group sub-committee, composed of eight members, appointed from among the representatives of the trade unions operating in the TAURON Group and eight representatives of the Employers, appointed by the Management Board of TAURON Polska Energia S.A.

The employee has been given a choice of which Subcommittee he / she would like to turn to in order to have his / her notification reviewed.

Due diligence procedures and internal regulations

The main assumptions used as part of the Policy of compliance with the Principles of Ethics and Counteracting Mobbing and Discrimination in the TAURON Group include:

  • ensuring compliance with the principles of ethics with respect to preventing employee rights violations and conflicts between employees,
  • defining the principles of counteracting mobbing and discrimination cases at the workplace and in connection with the performance of work, ensuring the implementation of the labor law provisions,
  • taking intervention measures and mitigating the effects of identified cases of violations of the principles of ethics, in particular mobbing and discrimination,
  • taking disciplinary measures against persons committing violations of the principles of ethics, in particular regarding mobbing or discrimination,
  • strengthening positive relations among employees.

The TAURON Group’s Corporate Social Responsibility Code of Conduct is a regulation supporting the Policy of Compliance with the Principles of Ethics and counteracting Mobbing and Discrimination, which includes the TAURON Group’s corporate values and the principles of conduct in the TAURON Group in three areas: employee, natural environment and stakeholders. They provide a guidepost on conduct for all employees.

Actions taken and results achieved

The Policy of compliance with the Principles of Ethics and counteracting Mobbing and Discrimination in the TAURON Group is implemented through the e-learning training courses aimed at developing and strengthening positive relations among employees and preventing cases of mobbing or discrimination as well as ongoing education of employees. The e-learning training is a mandatory training for all of the newly hired employees. The other employees are reminded of the Policy rules through the information campaigns and content available on the intranet website.

TAURON Group’s due diligence procedures

Internal control and audit procedure

The internal audit process in the TAURON Group is organized in such a way as to ensure security of the Group’s operations while supporting the implementation of the Strategy’s objectives. As part of its control and audit activities, the Group strives to increase the predictability of achieving strategic goals – including stable achievement of the assumed financial result – by also focusing on the potential risks that may threaten the value levers (drivers) that are key for the implementation of the Strategy.

The main goals of the Audit Area at TAURON Polska Energia S.A. include: planning and implementation of the audit tasks, including advisory and opinion forming activities, as well as the control tasks, including the performance of the ad hoc controls commissioned. As part of the audit activities, the correctness of the audited processes and the effectiveness of the control mechanisms are also verified. If any irregularities are identified, the auditors recommend taking appropriate corrective actions. The implementation of the recommendations is the responsibility of the management of the audited entities, and the degree of the implementation of the audit recommendations is monitored on an ongoing basis. The above tasks are implemented by two teams: the Strategic Audit Team, dealing with the strategic tasks, covering the TAURON Group and the Operational Audit Team, carrying out specialized operational tasks at the level of the Group’s individual subsidiaries and its lines of business.

Similarly, the control (inspection) activities are organized at the Group level and carried out by the Internal Control Team and at the level of the subsidiaries by the controllers employed by such subsidiaries. In addition, within the Audit and Control Area, there is a unit specializing in the control of the area of IT, OT and security systems. Tasks carried out by these units include both the scheduled audits as well as the ad hoc audits commissioned on an ongoing basis.

The organization of the Area aims to enable covering the entire operations of the organization with the scope of the audits and controls, both from the point of view of the needs of the TAURON Group as well as those of the individual subsidiaries. The direct reporting to the President of the Management Board allows the Audit Area to maintain the required independence and objectivity.

The Audit and Control Area conducted 19 scheduled tasks, including 11 audit tasks and 8 control tasks in 2019. In addition, works were carried out to build and develop a model for the periodic assessment of the Internal Control System in place at TAURON Polska Energia S.A. as well in the entire TAURON Group. The Audit and Inspection Plan for 2020 includes 13 audit tasks and 23 inspection tasks. The works on the construction and development of the model for the periodic assessment of the Internal Control System will also be continued.

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Most important aspects of internal control and risk management with respect to the process of drawing up financial statements and consolidated financial statements

In order to ensure consistent accounting principles based on International Financial Reporting Standards (IFRS), as endorsed by the European Union, the TAURON Group’s Accounting Policy was developed and implemented by the TAURON Group. Where there are changes to the regulations, this document is updated accordingly. The rules defined in the Accounting Policy are applicable to TAURON’s standalone financial statements and the TAURON Group’s consolidated financial statements. The Group’s subsidiaries are obligated to apply the Accounting Policy when preparing the reporting packages that provide the basis for preparing the Group’s consolidated financial statements.

Furthermore, TAURON developed and implemented an intra-group regulation that comprehensively regulates issues related to the rules and deadlines for preparing the reporting packages for the purpose of consolidated financial statements. The reporting packages are validated by the holding company’s Consolidation and Reporting Team and by an independent auditor during an audit or review of the TAURON Group’s consolidated financial statements.

TAURON Polska Energia has implemented financial statements’ authorization procedures. Quarterly, half-year and full-year financial statements of the Company and the TAURON Group’s consolidated financial statements require approval by the Company’s Management Board before publication. Full-year financial statements of TAURON and consolidated financial statements of the TAURON Group are additionally presented for evaluation to the Company’s Supervisory Board before being published. Vice-President of the Management Board for the Company’s Finance (Chief Financial Officer) oversees the preparation of financial statements, while the management boards of the subsidiaries included in the consolidation is responsible for preparing reporting packages for consolidated financial statements of the TAURON Group.

Supervisory Board’s structure includes the Audit Committee of the Supervisory Board of TAURON Polska Energia S.A.

The TAURON Group’s subsidiaries maintain accounting books (ledgers) which constitute the basis for preparing financial statements using ERP financial and accounting computer systems, enabling system audits of the correctness of the document flow and classifying of business events. Consolidated financial statements are prepared using an IT tool used to consolidate financial statements, providing system control with respect to the coherence (integrity) and timeliness of preparing the consolidation data.

The Group’s subsidiaries have implemented IT and organizational solutions that provide control of access to the financial and accounting system and ensure adequate protection and archiving of the accounting books. Access to IT systems is restricted based on applicable access rights assigned to authorized personnel. Control mechanisms are applied in the process of granting and changing access rights to the financial and accounting systems. Granted rights are also subject to periodic verification.

Due to the integration of the accounting functions and the transfer of the TAURON Group’s material subsidiaries’ financial and accounting services to CUW-R (Shared Cervices Center – Accounting), the Group’s financial and accounting processes were gradually unified. The subsidiaries adjusted their own procedures to the flow of the financial and accounting processes, taking into account the specifics of the individual segments.

The Group’s business model clearly distributes responsibilities with respect to the financial and accounting processes between the Company (indicated as the Corporate Center) and the subsidiaries and CUW R, indicating that the Corporate Center is the owner of processes associated with accounting and reporting of the TAURON Group. With respect to the tasks of the Corporate Centre, strategic functions associated with the development of the model of operations and standards of the TAURON Group were indicated in the area of accounting and supervision of the implementation of standards in the accounting area in the subsidiaries and CUW R. Moreover, it was indicated that the Company as the Corporate Centre is responsible for drawing up the Company’s financial statements and the consolidated financial statements of the TAURON Group. A clear split of responsibilities and strong emphasis on the fulfillment of the supervisory functions by the Corporate Centre in relation to CUW R and the subsidiaries is, inter alia, aimed at improving the process of preparing the financial statements.

The Company’s full year financial statements are subject to a review by a certified auditor. In 2017, the Company selected an entity authorized to audit and review financial statements of the TAURON Group’s material subsidiaries and the consolidated financial statements. The contract with the entity authorized to audit financial statements was concluded for the audit of financial statements for 2017, and then, after the entry into force of the Act of 11 May 2017 on certified auditors, audit companies and public oversight, was adapted to the new provisions in the form of an annex covering the audit of financial statements for 2018 and the full year consolidated financial statements of the TAURON Group are subject to an audit by an independent certified auditor. Interim financial statements of the Company and interim consolidated financial statements of the TAURON Group.

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