IBERDROLA USA
NETWORKS, INC.
February 4, 2016
Iberdrola USA
Networks, Inc.
Audit and
Compliance
Committee Report of
Activities 2015
IBERDROLA USA NETWORKS, INC. AUDIT AND COMPLIANCE COMMITTEE REPORT OF ACTIVITIES 2015
To the Iberdrola USA Networks, Inc. Board of Directors:
The Audit and Compliance Committee (the “Committee”) respectfully submits its 2015 Annual Report of activities,
evaluation of the adequacy of the Committee’s charter, and evaluation of the Committees performance in accordance
with Article 6 – Annual Report, of the Charter.
The Committee believes that its Charter is comprehensive and there are no modifications required at this time. The
Committee concluded that it has performed its duties as required by the Board of Directors during 2015.
Elizabeth Timm, Chairperson
José Izaguirre Nazar
Harvey G. Stenger
Armando A. Musa, Secretary
February 4, 2016
Take care of the environment.
Printed in black and white and only if necessary.
/ 2
Content
1. FORMATION
4
2. THE MEMBERS OF THE COMMITTEE
4
3. FUNCTIONS
4
4. FULFILLMENT OF FUNCTIONS
7
AVANGRID
/ 3
1. FORMATION
The Board of Directors (the “Board”) of Iberdrola USA Networks, Inc. (the “Company”) established the Audit and Compliance Committee (the
“Committee”) effective on November 20, 2013. The Committee is a standing committee of the Board with powers of information, assessment, and
presentation of proposals to the Board within the scope of its functions.
The initial Charter was approved by the members of the Committee on December 4, 2013, ratified and confirmed by a resolution of the Board of
Directors of the Company on December 4, 2013 but effective as of November 20, 2013. Since then, multiple modifications have been duly made to
the Charter – with the most recent modifications having been made effective as of December 16, 2015.1
The Charter may only be modified, at the request of the Chairman of the Committee or the majority of the members thereof, by means of a resolution
adopted by the Committee itself and by approval of the modifications by a majority of the Board of Directors.
The purpose of the Committee shall be to represent and assist the Board of Directors in its oversight of: the integrity of the Company’s financial
statements and internal controls; the Company’s compliance with legal and regulatory requirements; the independence and qualifications of the
independent auditor; and the performance of the Internal Audit of the Company (the Internal Audit) and the Company’s independent registered
public accounting firm (the Independent Auditor).
2. THE MEMBERS OF THE COMMITTEE
The committee consists of three directors, all of whom were appointed by the Board of Directors and two of whom are, in the judgment of the Board
of Directors, independent in accordance with the Company’s By-laws. Each Committee member has sufficient financial experience, particularly in the
areas of accounting, auditing or risk management, to discharge their responsibilities as members of the Committee and each member has the ability
to read and understand the Company’s basic financial statements. The Committee has a Chairperson. The following members of the Committee, as
well as the Chairman of the same, were appointed by the Board of Directors:
Member
Designation
Credentials
Elizabeth Timm
Chairperson External
Independent
Ms. Timm is a Management and Financial Consultant for RE/MAX by the Bay, a regional
real estate firm located in Portland, ME & Portsmouth, NH. Ms. Timm advises on strategic
priorities, communications, professional recruitment & retention, management routines and
leadership skills. She currently serves on the Board of the Girl Scouts of Maine plus their Audit
and Finance Committee.
José Izaguirre Nazar
Executive Director
Financial and Control Director for the Networks Business Spain of Iberdrola, S.A.
Harvey G. Stenger
External Independent
Mr. Stenger was appointed president at Binghamton University in November 2011. His
emphasis has been on improving student quality, strengthening academic programs, and
increasing international research and academic partnerships.
Secretary
Mr. Musa is Secretary of the Audit and Compliance Committee of Iberdrola USA Networks, Inc.
He earned a law degree (J.D.) from Harvard Law School in 2003 and an undergraduate degree
(B.A.) from the University of Pennsylvania in 2000. He is a member of the bars of New York,
Washington DC, and Florida. He has served as Senior Attorney of Iberdrola USA since June
2011 with a focus on negotiations as well as commercial and corporate governance matters.
Armando A. Musa
3. FUNCTIONS
1. The Audit and Compliance Committee of the Company, as well as Internal Audit Department and the Compliance Unit, shall discharge their
functions with complete independence, notwithstanding the establishment of a suitable cooperation and information framework for the
discharge of their functions with the Audit and Compliance Committee of Avangrid, Inc. (f/k/a Iberdrola USA, Inc.) (the “country sub-holding
company”) and with its Internal Audit Area and Compliance Unit.
2. The Committee will have the following functions:
a) In relation to Internal Auditing:
i.
To oversee the independence and efficiency of the Internal Audit, ensuring that the same has sufficient resources and the professional
qualifications necessary to carry out its functions optimally, including that the Basic Internal Audit Regulations of the Iberdrola Group
are complied with.
ii. To approve the guidelines and the annual action plans established by the Director of the Internal Audit, in accordance with the
guidelines and general plans established by the Director of the Iberdrola USA Internal Audit.
iii. To propose the budget of the Internal Audit, for approval by the Board of Directors.
iv. To propose to the Board of Directors the appointment, re-election or cessation of the Director of the Internal Audit.
v.
1
To oversee the Internal Audit, which will depend functionally on the Chairman of the Committee and hierarchically on the Chairman
of the Board and who will prepare the information required for the meetings of the Committee that will attend. The Director of the
Because the Charter was modified so late in the year, this ACC Annual Activities Report and Self-Assessment will use the version of the Charter that was in effect for most of 2015 and
immediately prior to the current version of the Charter.
Take care of the environment.
Printed in black and white and only if necessary.
/ 4
2015 Activities Report – Iberdrola USA Networks, Inc. Audit and Compliance Committee
February 4, 2016
Internal Audit shall inform the Committee of any incidents, accounting irregularities or illegal acts which may occur in the development
of the annual activity plan, presenting it at the end of each year with an activity report. This internal audit activity report will also be
presented to the Director of the Iberdrola Internal Audit Area.
vi. To receive regular information on the activities carried out by Internal Audit. In order to ensure the guidelines and general plans
established by the Parent Company of the Iberdrola group and by the sub-holding company are followed, Internal Audit, through the
Director of Internal Audit, shall maintain the necessary flow of information with the Director of the Iberdrola USA Internal Audit.
vii. To ensure that the managers of the Company comply with the conclusions and recommendations in the reports of the Internal Audit.
The Committee may gather information and request the collaboration of any manager of the Company or its subsidiaries, which will
be notified to the Chairman of the Board of Directors and to the President, as applicable.
b) In relation to the internal monitoring and risk management systems:
i.
To be aware of and review the financial information process and the internal monitoring systems linked to the risks of the Company
and its subsidiaries, and to ensure that the main risks of the Company and its subsidiaries are identified, managed and adequately
reported, identifying, on this basis: the different types of risks which may face the Company, including financial or economics risks,
contingent liabilities and other off balance-sheet risks; the measures necessary to mitigate the impact of any risks, should any of them
be materialized; and the information and internal monitoring systems which will be used to monitor and manage the aforementioned
risks, including the contingent liabilities or off balance-sheet risks, all of these ensuring that these are adequately adapted to the
processes and general systems established by the Parent company of the Iberdrola Group and by Iberdrola USA.
ii. Maintain appropriate relationships with the Company’s Risk Division. The Company’s Risk Division shall be the normal body for
communication with the Committee and the rest of the Company’s organization on specific matters of risk, as it is responsible for
preparing the information required on these issues at meetings, with the Director of the Company’s Risk Division attending them if the
Committee so deems appropriate, but in any case without prejudice to the provisions of Article 13 below.
iii. To prepare, at least every six months, a report to the Board of Directors of Iberdrola USA Networks on the risks of the Company that
the Chairman of the Committee will make available to the Chairman of the Audit and Compliance Committee of Iberdrola, USA in
order to allow this Committee to identify the principal risks of Iberdrola USA and of its subsidiaries (“the Iberdrola USA Group”) group.
c) In relation to the Accounts Auditing:
i.
As regards the Independent Auditor of the Company ratified by the shareholders, to propose to the Board of Directors the conditions
for contracting the former in accordance with the policy in this regard as established by the Parent company of the Iberdrola Group,
acting for this purpose in the interests of the Company and any other companies forming the Iberdrola Group.
ii. To receive regular reports from the Independent Auditor on issues and developments in accounting or auditing legislation and in the
auditing practices in force from time to time, establishing in these cases the necessary information channels between Internal Audit
and the Iberdrola USA Internal Audit.
iii. To ensure the independence of the Company’s auditors, receiving from them information on those issues related to the audit process
which may put their independence at risk, and in general, information on any other issues which may be provided for in applicable
legislation and/or the relevant audit practices in force from time to time, and establishing where necessary, information channels
between the Internal Audit Department and the Iberdrola USA Internal Audit Department.
In any event, it shall receive from the auditors, on an annual basis, a written confirmation of their independence in respect of the
Company or entities directly or indirectly related thereto, as well as information regarding additional services of any kind provided to
such entities by the said auditors or by persons or entities related thereto, pursuant to the legislation governing the audit of financial
statements.
iv. Issue, on an annual basis and prior to the issuance of the auditors’ report, a report setting forth an opinion on the independence of
the auditors. This report shall, in all cases, pass upon the provision of the additional services referred to in the preceding paragraph.
v.
Analyze, together with the auditors, significant weaknesses detected in the internal control system during the conduct of the audit and
to review the contents of the Auditors Reports before they are issued, in order to avoid qualifications in their preparation and assess
the results of each audit, overseeing the reply of the management of the Company to their recommendations.
vi. To serve as a communication channel between the Board of Directors and the Independent Auditor, from whom the Committee will
receive regular information on the auditing plan and the results of its execution.
d) In relation to the process for the preparation of the Company’s financial information:
i.
To oversee the process for the preparation and the integrity of the financial-economic information of the Company. In this regard, the
Committee shall make sure that the interim economic and financial information is prepared in accordance with the same accounting
standards as the annual financial statements, advising on any proposals for changes to the accounting practices and policies with the
general accounting practices and policies of the Parent company of the Iberdrola Group and of Iberdrola USA.
ii. To obtain and review certifications by management in the Company’s periodic financial reports as to compliance with laws, regulations
and any other applicable authority of the content and in the preparation of such financial reports.
iii. To oversee the compliance with the legal requirements and the correct application of the accounting and financial information
principles and practices which may be applicable in relation to the Annual Accounts of the Company.
AVANGRID
/ 5
iv. The Committee shall report to the Board of Directors on the semi-annual and quarterly economic and financial information. The
Chairman of the Committee shall make this information available to the Chairman of the Audit and Compliance Committee of
Iberdrola, USA to allow this Committee to review the process of preparation and submission of the economic and financial information
relating to the Iberdrola USA Group as well as its integrity.
e) In relation to compliance with legal requirements, good governance requirements, and the prevention and correction of illegal or fraudulent
conduct:
i.
To receive information from Compliance Unit in connection with any matter relating to regulatory compliance and the prevention
and correction of illegal or fraudulent conduct. In the framework of their cooperation and information relationship, at least every six
months the Company Committee will send to the Audit and Compliance Committee of the sub-holding company a report on these
matters.
ii. To review, through Compliance Unit, the internal policies and procedures of the Company to verify the effectiveness thereof to prevent
inappropriate conduct, like the Ethics Mailbox of the Company, and identify any policies or procedures that are more effective at
promoting the highest ethical standards, for submission to the Board of Directors. In particular, to report to the Board of Directors
regarding proposals to modify the Company’s Compliance Unit Regulation.
iii. To review and ratify the annual operating budget of Compliance Unit, for submission to the Board of Directors, and ensure that
the Compliance Unit has the necessary human and material resources to perform its duties, also ensuring its independence and
effectiveness.
iv. To approve the annual activities plan of the Compliance Unit.
v.
f)
To report on proposals for the appointment of the Chief Compliance Officer.
In relation to cases of irregular and improper financial conduct:
i.
To establish and supervise the channels which permit the employees of the Company to communicate confidentially and, as appropriate,
anonymously, any irregularities, especially those of a financial and accounting nature, which they may have witnessed at the Company,
taking into account in each case, applicable regulations regarding the protection of personal information and the fundamental rights
of the parties involved.
ii. To undertake the necessary investigations as regards claims by third parties against the Company or as regards irregular or anomalous
conduct, in accordance with the provisions of the above paragraph.
g) Special Purpose Vehicles and Tax Haven Companies:
To inform the Board, prior to the adoption by the latter of the relevant decisions on the creation or acquisition by the Company or its
subsidiaries of holdings in special purpose vehicles or in entities domiciled in countries or territories which are considered tax havens, as
well as any other transactions or operations of a similar nature which, due to their complexity, could undermine the transparency of the
Iberdrola Group or the Iberdrola USA Group, similarly informing the Chairman of the Audit and Compliance Committee of the last one.
h) Business Separation of Activities Compliance
i.
To give its opinion to the Annual Compliance Officer Report on Separation of Activities submitted to the Committee by the Compliance
Officer to provide an update on compliance with the separation of activities focusing on the effectiveness of the practices, procedures,
and systems adopted in accordance with applicable regulatory requirements of the Company and its subsidiaries.
ii. To overview any regulated business separation of activities report of the Company and its subsidiaries.
iii. To inform to the Board of Directors in advance of any changes to the business separation of activities regulatory requirements applicable
to the Company and its subsidiaries.
3. The Committee will similarly assume any other functions which, as the case may be, the Company’s Bylaws or the Board of Directors attribute
to it.
Take care of the environment.
Printed in black and white and only if necessary.
/ 6
2015 Activities Report – Iberdrola USA Networks, Inc. Audit and Compliance Committee
February 4, 2016
4. FULFILLMENT OF FUNCTIONS
a) MEETINGS 2015
•
February 4, 2015
°°
Attendees:
G. Jean Howard
Jose Izaguirre Nazar (Chair)
Rafael Gil Nievas, Secretary
IUSA Chief Compliance Officer, serving as the High Ranking Executive (VP– General Counsel) to head the IUSA Ethics and Compliance
Program
Chief Financial Officer – Iberdrola USA Networks
Director-Internal Audit - Iberdrola USA Networks
Director-Risk Management – Iberdrola USA Networks
Ernst & Young
°°
Agenda
1. Minutes Audit and Compliance Committee meeting December 3, 2014
2. 2014 Activities Report of the Audit and Compliance Committee
3. External Auditor (EY) Accounts Report
4. Chief Financial Officer Presentation on Financial Accounts
5. 2014 ACC Report on Economic and Financial Information
6. Report of the Committee regarding the independence of the External Auditor
7. Risks and Control Systems review
8. Report of the Committee regarding risks and controls
9. Governance:
•
PWC ACC Assessment
•
2015 Calendar and Agendas
•
ACC Charter
10. Compliance:
•
2014 Report on the Compliance Program
•
2014 Report on Separation of Activities
•
2014 Report on the Crime Prevention Program
11. 2014 Internal Audit Activities Report
12. Any Other Business
°°
Items Approved:
1. Minutes from the Audit and Compliance Committee held on December 3, 2014.
2. 2014 Activities Report of the Audit and Compliance Committee
3. The Charter of the Audit and Compliance Committee dated February 4, 2015.
4. 2014 ACC Report on Economic and Financial Information
5. External Auditor Independence Report
6. Report of the Iberdrola USA Networks Audit and Compliance Committee regarding the Risk Management Systems of Iberdrola
USA Networks.
7.
2014 Report on Separation of Activities
8. 2014 Internal Audit Activities Report
•
April 9, 2015
°°
Attendees
Elizabeth Timm (Chair)
Harvey Stenger
AVANGRID
/ 7
Jose Izaguirre Nazar
Rafael Gil Nievas (by phone)
IUSA Chief Compliance Officer, serving as the High Ranking Executive (VP– General Counsel) to head the IUSA Ethics and Compliance
Program
Chief Financial Officer – Iberdrola USA Networks
Director-Internal Audit - Iberdrola USA Networks
Director-Risk Management – Iberdrola USA Networks
Ernst & Young
°°
Agenda
1. Welcome package: Audit and Compliance governance and overview: ACC Charter amendment
2. Welcome package: Internal Audit overview
3. Internal Audit Annual Plan Update
4. Welcome package: Accounting management function overview
5. Financial results
6. Committee Report regarding the financial results
7.
Welcome package: Risks management systems
8. Iberdrola USA Networks Risks
9. Committee Report on Iberdrola USA Risks
10. Welcome package: compliance function overview
11. Compliance Annual Programs update
12. Any Other Business
°°
Items Approved:
1. Revision to 2015 Internal Audit Annual Plan
2. Committee Report regarding the first quarter financial results
3. Committee Report on Iberdrola USA Risks
•
July 9, 2015
°°
Attendees
Elizabeth Timm (Chair)
Harvey Stenger
Jose Izaguirre Nazar
Rafael Gil Nievas, Secretary
IUSA Chief Compliance Officer
Chief Financial Officer – Iberdrola USA Networks
Director - Internal Audit - Iberdrola USA Networks
Director - Risk Management – Iberdrola USA Networks
Director – Taxes – Iberdrola USA
Ernst & Young
°°
Agenda
1. Minutes of the April 9 Committee meeting
2. Financial results 1H:
3. External Auditor review
4. Committee Financial and Economic Report
5. Mitigation of 2014 External Audit Filings
6. Committee Report on Mitigation Status of Audit filings
7.
Iberdrola USA Networks Risks
8. Committee Report on Control Systems and Risks
9. Internal Audit Plan Update
Take care of the environment.
Printed in black and white and only if necessary.
/ 8
2015 Activities Report – Iberdrola USA Networks, Inc. Audit and Compliance Committee
February 4, 2016
10. Compliance Annual Programs update
11. Training session: Pension and OPEB
12. Any Other Business
°°
Items Approved:
1. Minutes of the April 9 Committee meeting
2. Committee Financial and Economic Report
3. Committee Report on Control Systems and Risks
•
October 14, 2015
Elizabeth Timm (Chairperson)
Harvey Stenger
Jose Izaguirre Nazar
Armando A. Musa, Secretary
IUSA Chief Compliance Officer
Chief Financial Officer – Iberdrola USA Networks
Director - Internal Audit - Iberdrola USA Networks
Manager – Internal Audit – Iberdrola USA Networks
Ernst & Young
°°
Agenda
1. Appointment of Armando A. Musa
2. Minutes of the July 8th Committee meeting
3. 2015 YTD Financial Results US GAAP and IFRS
4. 2014 YTD Significant Deficiency Update
5. 2015 ACC Financial Review Report
6. 2015 Internal Audit Plan Update
7.
2015 Compliance Plan Update
8. Litigation Report
9. Other Business
°°
Items Approved:
1. Minutes of the July 8th Committee meeting
2. 2015 ACC Financial Review Report third quarter 2015
•
December 3, 2015
Elizabeth Timm (Chairperson)
Harvey Stenger
Jose Izaguirre Nazar
Armando A. Musa, Secretary
Director - Internal Audit - Iberdrola USA Networks
Chief Financial Officer – Iberdrola USA Networks
Director – Ethics and Compliance Officer – Iberdrola USA Networks
Manager – Insurance and Claims – Iberdrola USA Networks
°°
Agenda
1.
2.
3.
4.
Minutes of the October 1, 2015 Committee meeting
2015 YTD Financial Results
2014 YTD Significant Deficiency Update
Internal Audit Area Presentations
•
•
•
AVANGRID
2015 Internal Audit Plan Update
2016 Internal Audit Plan
2016 Internal Audit Budget
/ 9
5. Compliance Area Presentations
•
2016 Compliance Plan
•
2016 Compliance Budget
6. Presentation on D&O Insurance Policy and Bylaws indemnity
7.
Affiliate Transactions Training
8. Other Business
°°
Items Approved:
1. Minutes of the October 1st Committee meeting
2. 2016 Internal Audit Plan
3. 2016 Internal Audit Budget
4. 2016 Compliance Plan
5. 2016 Compliance Budget
6. Appointment of R. Scott Mahoney, Chief Compliance Officer, serving as the High Ranking Executive
7.
Appointment of Ray Cardella, Director of Internal Audit
8. Internal Audit Budget for 2016
9. Compliance Unit Budget for 2016
10. Audit and Compliance Committee Charter *
11. Code of Business Conduct and Ethics of Iberdrola USA Networks, Inc. *
12. Regulations of the Compliance Division of Iberdrola USA Networks, Inc. *
13. Policy for Conflicts of Interest with Directors, Significant Stockholders, and Senior Officers *
14. Fair Disclosure Policy *
15. Insider Trading Policy *
*
Denotes that the document was in draft form and that the Committee favorably recommended the form subject to any further edits
deemed necessary and appropriate by management
Take care of the environment.
Printed in black and white and only if necessary.
/ 10
2015 Activities Report – Iberdrola USA Networks, Inc. Audit and Compliance Committee
February 4, 2016
SUMMARY OF MEETINGS 2015
Number of Meetings
5
Attendance:
Elizabeth Timm, Chairperson
4
G. Jean Howard
1
Harvey Stenger
4
José Izaguirre Nazar
5
Rafael Gil Nievas, Secretary
3
Armando A. Musa, Secretary
2
IUSA Chief Compliance Officer, serving as the High Ranking Executive (VP-General Counsel)
4
Chief Financial Officer
5
Director of Internal Auditor -Iberdrola USA Networks
5
Ernst & Young
2
Manager - Internal Audit – Iberdrola USA Networks
1
Director - Risk Management – Iberdrola USA Networks
3
Director of Compliance – Iberdrola USA Networks
2
Controller-Taxes – Iberdrola USA Networks
1
Manager – Insurance and Claims – Iberdrola USA Networks
1
Approvals:
- Minutes from the Audit and Compliance Committee held on December 3, 2014.
February 4, 2015
- 2014 Activities Report of the Audit and Compliance Committee
February 4, 2015
- The Charter of the Audit and Compliance Committee dated February 4, 2015.
February 4, 2015
- 2014 ACC Report on Economic and Financial Information
February 4, 2015
- External Auditor Independence Report
February 4, 2015
-R
eport of the Iberdrola USA Networks Audit and Compliance Committee regarding the Risk Management Systems of
Iberdrola USA Networks.
February 4, 2015
- 2014 Report on Separation of Activities
February 4, 2015
- 2014 Internal Audit Activities Report
February 4, 2015
- Revision to 2015 Internal Audit Annual Plan
April 9, 2015
- Committee Report regarding the first quarter financial results
April 9, 2015
- Committee Report on Iberdrola USA Risks
April 9, 2015
- Minutes of the April 9 Committee meeting
July 8, 2015
- Committee Financial and Economic Report first half 2015
July 8, 2015
- Committee Report on Control Systems and Risks
- Minutes of the July 8th Committee meeting
- 2015 ACC Financial Review Report third quarter 2015
July 8, 2015
October 1, 2015
October 1, 2015
- Minutes of the October 1st Committee meeting
December 3, 2015
- 2016 Internal Audit Plan
December 3, 2015
- 2016 Internal Audit Budget
December 3, 2015
- 2016 Compliance Plan
December 3, 2015
- 2016 Compliance Budget
December 3, 2015
- Appointment of R. Scott Mahoney, Chief Compliance Officer, serving as the High Ranking Executive
December 3, 2015
- Appointment of Ray Cardella, Director of Internal Audit
December 3, 2015
- Internal Audit Budget for 2016
December 3, 2015
- Compliance Unit Budget for 2016
December 3, 2015
- Audit and Compliance Committee Charter *
December 3, 2015
- Code of Business Conduct and Ethics of Iberdrola USA Networks, Inc. *
December 3, 2015
- Regulations of the Compliance Division of Iberdrola USA Networks, Inc. *
December 3, 2015
- Policy for Conflicts of Interest with Directors, Significant Stockholders, and Senior Officers *
December 3, 2015
- Fair Disclosure Policy *
December 3, 2015
- Insider Trading Policy *
December 3, 2015
* Denotes that the document was in draft form and that the Committee favorably recommended the form subject to any
further edits deemed necessary and appropriate by management
AVANGRID
/ 11
b) SELF ASSESSMENT
The Committee evaluated its performance during 2015 and has concluded that it has complied with its duties, based on the cooperation of the
members of the Committee, the Company’s Senior Management and the support of the Internal Audit, Compliance and Risk Management Units.
As a result of their work, the members of the Committee:
1. Believes that the Committee satisfactorily performed the duties previously entrusted to it by the Board of Directors and which are set forth in
the By-Laws of the Company and the Charter of the Audit and Compliance Committee.
2. Supervised the preparation of the Company’s economic and financial information reviewed during the fiscal year, the effectiveness of internal
control systems over financial reporting with management and the independent accountant before the financial information was released to
the company’s stockholder or the public.
3. With regard to Internal Audit, supervised the unit’s independence and efficiency, including sufficient resources and the professional
qualifications; approved the annual plan; proposed the budget of the unit, for approval by the Board of Directors; proposed to the Board of
Directors the, re-election of the Director of the Internal Audit; and ensured that the managers of the Company complied with the conclusions
and recommendations in the reports of the Internal Audit.
4. Supervised the internal monitoring and risk management systems of the Company including; a review of the financial information process
and the internal monitoring systems; ensuring that the main risks of the Company and its subsidiaries are identified, managed and adequately
reported; maintained communication with the Company’s Risk Management Unit and reported to the Board of Directors of Iberdrola USA
Networks and the Chairman of the Audit and Risk Supervision Committee of Iberdrola, S.A. on the risks of the Company.
5. Proposed to the Board of Directors the conditions for contracting of the Independent External Auditor; received regular reports from the Auditor
on issues and developments in accounting or auditing legislation and in the auditing practices; ensured the independence of the Company’s
Auditors; and analyzed any significant weaknesses detected in the internal control system.
6. With regard to the Compliance, supervised the unit’s activities in relation to compliance with legal requirements, good governance requirements,
and the prevention and correction of illegal or fraudulent conduct; received information from the Unit in connection with any matter relating
to regulatory compliance and the prevention and correction of illegal or fraudulent conduct; reviewed, the internal policies and procedures
of the Company to verify the effectiveness thereof to prevent inappropriate conduct; reviewed and ratified the annual operating budget, for
submission to the Board of Directors; ensured that the necessary to perform its duties; and approved the annual activities plan.
Take care of the environment.
Printed in black and white and only if necessary.
/ 12