Main Actors Of The Internal Control System

Board of Directors

The Board of Directors plays a central role in the internal control system by defining the fundamental guidelines relative to the organizational, administrative and accounting structure of the Company and of the subsidiaries and the Group. It defines, in particular, examined the proposals of the Internal Control Committee, the guidelines of the internal control system in order to ensure the identification, measurement, management and monitoring of the primary risks of the Company and its subsidiaries. In formulating these guidelines, the Board applies sector regulations and takes into adequate consideration the reference models and the best national and international practices. Lastly, the Board assesses - on an annual basis and with the assistance of the Internal Control Committee - the adequacy and actual functioning of the internal control system globally considered, in relation to Eni's characteristics. In its meeting of March 10, 2010, the Board - after the exam of the Report of the Officer in charge of preparing financial reports and the Report of Internal Control Committee - assessed the internal control system and considered it overall adequate, effective and functioning with respect to the Eni's characteristics.

Board of Statutory Auditors

The Board of Statutory Auditors monitors:

• compliance with the law and the By-laws;
• compliance with the principles of correct administration;
• the adequacy of the organizational structure of the Company,  for that falling under its competencies , as well as of the internal control system and the administrative and accounting system and on the reliability of the latter in correctly reporting the Company's transactions;
• the modalities for correctly implementing the corporate governance rules provided for in the Corporate Governance Code of to which the Company adheres;
• the adequacy of the instructions imparted from the Company to subsidiaries in order to guarantee the correct fulfillment of information requirements established by the law.

The Board of Statutory Auditors also has other responsibilities deriving from its corporate governance rules as well as from national and international regulations. As of 1 June 2005, the Board of Statutory Auditors has been implementing – within the limits allowed by Italian regulations – the Audit Committee functions required for foreign issuers by the Sarbanes-Oxley Act and by the regulations of the Stock Exchange Commission.
Furthermore, the Board of Statutory Auditors supervises the financial reporting process and the effectiveness of internal control and risk management systems, given its role of "Committee for internal control and auditing" pursuant to Italian Legislative Decree no. 39/2010.

Chief Executive Officer

The Chief Executive Officer (Chief Executive Officer) is entrusted by the Board of Directors with supervising the functionalities of the internal control system.
For this purpose, the Chief Executive Officer identifies the main Company risks and – when implementing the policy guidelines pertaining to the internal control system, as defined by the Board – provides for the relative planning, realization and management.
The Chief Executive Officer is also entrusted with the task of constantly verifying the overall adequacy, efficiency and efficacy of the internal control system and ensuring that it is adjusted to Company operations and to legislative and regulatory framework.
With reference to the internal control system for financial reporting, the relevant tasks are carried out in accordance with the role assigned by the law to the Officer in charge of preparing financial reports.

Internal Control Committee

The Internal Control Committee is entrusted with consulting and advisory functions with respect to the Board of Directors in relation to the internal control system. The Committee implements the following primary functions:

• together with the Officer in charge of preparing financial reports and the Audit Firm, it evaluates the correct utilization of accounting principles and their consistency for the purposes of drafting the annual and half-yearly financial report, prior to the approval by the Board of Directors;
• assists the Board – through consulting and advisory activities – in defining the guidelines for the internal control system;
• expresses opinions – on request of the CEO – on specific aspects of the identification process of the major corporate risks, in addition to the planning, development and management of the internal control system;
• supervises the activities of the Internal Audit Dept. and of the Officer in charge of internal control; in this context, the Committee examines, among other: the proposal for the Audit Plan and any variations to the latter during the course of the financial year; the budget issued by the Board; the periodic reports and the performance indicators of the activities carried out;
• examines and evaluates: i) the outcomes of internal audit reports as well as any evidence on related monitoring activities on improvement actions on control system, planned after the audits are performed; ii) evidence resulting from the periodical reports on the outcomes of the monitoring activities conducted on the internal control system over financial reporting, on its adequacy and actual application, as well as the adequacy of the powers and means assigned to the Officer in charge of preparing financial reports; iii) communications and information received from the Board of Statutory Auditors and its members regarding the internal control system, also in reference to the outcomes of preliminary inquiries conducted by the Internal Audit Dept. following reports received also in anonymous form (whistle blowing); iv) evidence emerging from the reports and management letters submitted by the Audit Firm; v) periodical reports issued by Eni Watch Structure, also in its capacity as Guarantor of the Code of Ethics; vi) evidence emerging from the periodical reports submitted by the Officer in charge of preparing financial reports and by the Officer in Charge of internal control; vii) information on the internal control system as it relates to the Company's structure, also through periodical meetings with management, as well as enquiries and reviews carried out by third;
• implements additional specific activities aimed at expressing comments and opinions on matters within its responsibility, on the basis of inquiry requests formulated by the Board, in addition to any tasks assigned to it by the Management System Guideline on " Transactions involving interests of Directors and Statutory Auditors and transactions with related parties ". With regard to this Management System Guideline, the Committee – also in its role of "Committee of Independent Directors" and as set forth in the relevant Consob Regulation – expressed a unanimous favourable opinion. In particular, the Committee is called upon to express its opinion on the interest of the Company in the completion of transactions with related parties, as well as on the convenience and substantial correctness of the underlying terms. Moreover, for transactions with related parties of greater importance, the Committee is involved in the preparatory stage of these  transactions;
• reports to the Board on implemented activities and on the adequacy of the internal control system on at least every six months, during the meeting for the approval of the annual and half-yearly financial report.

Officer in charge of preparing financial reports

In compliance with legal regulations, the Officer in charge of preparing financial reports is responsible for the internal control system over financial reporting and, for this purpose, prepares the administrative and accounting procedures for the drafting of the periodical accounting documentation as well as of any other financial communication; he/she also certifies - along with the Chief Executive Officer and with the relative report on the financial statements of the year, the  half-year financial statements and the consolidated financial statements – the adequacy and effective application of the cited accounting procedures during the course of their period of reference. The Board of Directors supervises in order to ensure that the Officer in charge of preparing financial reports is equipped with adequate powers and means in order to exercise these tasks as well as on the effective compliance with these procedures.

The activities of the Officer in charge of preparing financial reports are implemented on the basis of the  Management System Guideline (MSG) "Eni Control System over Company Reporting" approved by the Board of Directors on December 15, 2010, which fully transposes the content of the reference Guideline issued in 2007, defines the rules and procedures for planning, implementing and preserving an internal control system applied to Eni's financial reporting with external relevance, as well as for assessing its efficacy. The contents of the MSG are defined in accordance with the provisions of Article 154-bis of the Consolidated Law on Finance as well as the provisions of the US Sarbanes-Oxley Act of 2002 (SOA) with which Eni must comply given that it is a "foreign private issuer" listed on the New York Stock Exchange (NYSE), and are based on the model adopted by the CoSO Report ("Internal Control – Integrated Framework" published by the Committee of Sponsoring Organizations of the Treadway Commission).

Officer in charge of internal control

The Officer in charge of internal control - appointed by the Board of Directors upon proposal of the Chief Executive Officer, in agreement with the Chairman and following a consultation from the Internal Control Committee - is primarily entrusted with the tasks of i) verifying that the internal control system is always adequate, fully operational, and efficient ii) expressing an opinion regarding the suitability of the latter in attaining an acceptable overall risk profile.

This Officer is not responsible for any operational area, retains direct access to information which may be useful for the implementation of his/her task and is equipped with adequate means for fulfilling his/her tasks while reporting to the Board of Directors, the Board of Statutory Auditors and the Chief Executive Officer by means of periodical reports sent through the Internal Control Committee.

Internal Audit

The Board of Directors, on 30 October 2008, approved the "Guidelines on Internal Audit activities" in which the objectives, areas of intervention and functioning modalities were defined in accordance with the best reference practices. The Internal Audit Dept. has sufficient powers and means to guarantee the adequate execution of its functions with full operational independence, also in terms of independent budget, availability of quantitatively adequate and professionally competent resources and access to information, data, archives and goods of the Company and its subsidiaries.

According to this organisational model,  the Internal Audit Dept.,  while guaranteeing the necessary conditions of independence and the due objectivity, professional competence and diligence set forth in the international standards on work ethics and in the Code of Ethics – is responsible for the following main activities:

• carrying out audit interventions (operational, financial and compliance audits focused on the aspects outlined in Italian   Legislative Decree no. 231/01) in compliance with the annual activities' Plan: the latter is drawn up with a "top-down risk based" approach and is approved, together with the resources budget, by the Board of Directors and – for aspects pertaining to Legislative Decree no. 231/01 – Eni Watch Structure;
• carrying out "non-programmed" control interventions requested by the main subjects of the internal control system and/or the Company's top management;
• monitoring the state of implementation of the corrective actions defined after the audit activities;
• organising and supervising the setting up and management of channels for receiving reports – even in anonymous form – which it then stores in an updated archive, and managing the relevant inquiry activities in accordance with the Company procedures in force;
• carrying out the supervisory activities specified in Model 231 of Eni SpA and, in this context, as from 2009, has gradually begun to perform supervisory activities relative to HS matters, in addition to those undertaken by employer's personnel and the relevant HSE units, providing for independent assessments of the Control and Re-examination phases of the HSE Management System;
• carrying out independent monitoring for financial reporting according to the plan transmitted by the CFO, in addition – as from 2009 – to independent monitoring regarding activities pertaining to the "Consumer Price Control Model", on the basis of the Plan defined by the Chief Operating Officer of each Division;
• contributing to the Company's training and information activities regarding internal control issues.

The Internal Audit Dept. guarantees systematic and periodic information flows (quarterly summary reports and half-yearly reports) on the results of implemented activities towards the control and supervisory bodies and the Company's top management, so that they may implement the necessary actions for the control and assessment of the internal control system; moreover, it promptly informs the CEO and the control and supervisory bodies of any serious deficiencies in the internal control system and of any circumstance that may jeopardise its own independent status.