MILLIRE 2021 ANNUAL REPORT

35 MİLLİ RE ANNUAL REPORT 2021 FINANCIAL STATUS RISKS AND ASSESSMENT OF THE GOVERNING BODY UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON Internal audit is an independent, objective assurance and consulting activity, which seeks to improve an organization’s operations and add value to them. Internal audit helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. In this context, the primary functions of internal audit include constant auditing of all business and transactions of the Company in terms of their compliance with the related regulations, as well as the Company’s internal guidelines, its management strategy and policies; detection and prevention of any irregularities, mistakes or fraud, and assurance of the efficiency and adequacy of internal control and risk management systems. In conjunction with the above, another important aspect of the Department’s functions is to provide opinions and suggestions for efficient and productive use of resources to improve and add value to the Company’s operations. The Internal Audit Department of Milli Re was established as of 1 January 2005 and started operating on 1 April 2005. Internal audit operations are carried out in compliance with the “Regulation on Internal Systems of Insurance and Reinsurance Companies” published in the Official Gazette No. 26913 dated 21 June 2008. The authority and responsibility of the Internal Audit Department is defined in Milli Re’s Internal Audit Charter which is approved by the Board of Directors. The internal audit charter is reviewed annually and revised if necessary. In order to allow an independent and objective assessment, the Internal Audit Department reports directly to the Board of Directors. The conclusions reached as a result of the audit activities, are submitted to the Board through the Board Member responsible for Internal Systems. All employees of the Internal Audit Department comply with the code of ethics (integrity, objectivity, confidentiality, competence) stated in both the International Internal Audit Standards and Milli Re Internal Audit Charter. They demonstrate the necessary professional care when performing the audit activities. Internal Audit Department carries out its activities with a risk- focused audit approach. This approach aims to increase the efficiency and effectiveness of internal audit by giving priority to the more risk bearing process and units. Every year in December, an Internal Audit Plan regarding the audit activities to be done the following year is prepared taking into account the date of the last inspection and risk assessments of the unit and presented to the Board of Directors for approval. In accordance with the 2021 Internal Audit Plan approved by the Board, Internal Audit Department completed on-site inspection of all (22) units, and the Company’s Singapore Branch in 2021. During audit activities, it was determined whether the units’ operations are carried out in compliance with their operational guidelines. Effectiveness of the implemented internal controls regarding the units’ risks was tested and their adequacy was evaluated. Moreover, compliance with regulations, Company policies, limits, jurisdictions, and security measures was verified. Audit activities were performed using techniques such as enquiry, verification, examination, reperformance, recalculation and analytical reviews. During audits, no findings that might have an adverse impact on the Company’s financial structure were detected. INTERNAL AUDIT