Business Controls

Syncrude’s Management Framework

Syncrude’s Framework of Management Control is a system that ensures our business and operations are properly governed and managed, and comply with all regulatory requirements. The Framework of Management Control is supported by our Corporate Policies, Delegation of Authority Guidelines, and three management systems.

Corporate Policies

Syncrude policies, policy applications and programs provide direction to employees on issues that have broad organizational impact. Corporate policies provide context for all decision-making and are intended to ensure consistent and fair management and leadership practices across our entire operation. Policies fall into five broad categories:

• Business Purpose, Core Values and Principles
• Code of Ethics and Business Conduct
• Safe and Reliable Performance
• Human Resources
• Services

Delegation of Authority

In 2005, Syncrude completed a thorough review of all delegation of authority levels. The intent was to develop a more consistent application and update of authority levels across the organization and provide a single reference source for all review and approval authorities.

Management Systems

Three key management systems ensure Syncrude maximizes its potential, while minimizing risk, throughout the organization. These include our Environment, Health and Safety Management System, Maintenance and Operations Reliability Management System, and Controls Integrity Management System. Each provides a framework for decision making, managing risk, and protecting our assets.

Environment, Health and Safety

This system, which was updated and approved in 2005, comprises our approach to excellence in environment, health and safety. It consists of 10 management elements that are focused on continuous improvement and are fully integrated into all business functions. This integrated and proactive approach to managing and minimizing risk ensures that we assess our risks, implement appropriate controls, and manage our monitoring activities appropriately.

Reliability

Currently, each Syncrude department manages the maintenance and reliability of their equipment. Syncrude has future plans to implement a comprehensive corporate maintenance and reliability program to further enhance these efforts.

Controls Integrity

In 2005, Syncrude began to implement an improved and more comprehensive business controls program known as the Controls Integrity Management System (CIMS). It provides a structured approach to assessing financial control risks, establishing procedures for mitigating identified risks, monitoring compliance with standards, and reporting these results to management.

Consisting of six management elements and 12 business process elements, CIMS enhances our controls systems as we continue to grow our business while also complying with new regulatory requirements. CIMS is also intended to create an environment that maximizes efficiencies and realizes cost savings.

Code of Ethics and Business Conduct

While already an industry leader in the area of ethics and business conduct, Syncrude conducted a thorough review of all related policies and procedures in 2005. In addition, a new Corporate Conduct Committee was formed to steward the application of the Code of Ethics and Business Conduct policies. This committee reports periodically to the Syncrude Executive Audit Committee and the Audit and Pension Committee of the Board of Directors. In addition, all corporate conduct policies were reviewed, revised where appropriate and approved by senior management. These include policies on Ethics, Conflict of Interest, Directorships, Corporate Disclosure and Trading in Securities, and Gifts and Entertainment. A process for reporting and investigating irregularities and potential conflicts of interest also was developed and approved.

Communicating to managers about our revised program and expectations around business conduct was a primary focus in 2005. Managers participated in a Business Practices Review session that outlined relevant corporate conduct policies and expectations, and were required to sign a Certification and Declaration letter that disclosed any potential conflicts of interest or irregularities.

A new video and brochure were also developed to help educate all staff on this important topic.

In 2006, all non-management employees will be required to participate in a similar Business Practices Review session and sign declaration letters. Enhancements around Code of Ethics and Business Conduct also will be made to our internal and external websites in 2006. The addition of an independent external ethics reporting system will further enhance our existing process for employees, contractors and the general public to report concerns they may have regarding our conduct.