INTERNAL AUDIT UNIT

 

In accordance with Bapepam-LK Regulation No. IX.I.7, Appendix to the Head of Bapepam- LK Decision Letter No. Kep-496/BL/2008 dated November 28, 2008 regarding the Establishment and Guidance to the Formulation of Internal Audit Charter, as updated by Financial Services Authority Regulation No.56/POJK.04/2015 dated 23 December 2015 and enacted on 29 December 2015 (“POJK No. 56/2015”), and Indonesia Stock Exchange Regulation No. I-A, Appendix to IDX Board of Directors’ Decision Letter No.Kep- 00001/ BEI/01-2014 dated January 20, 2014 and effective January 30, 2014 concerning the Listing of Stock and Equity other than Stocks Issued by Public Listed Companies (“IDX Regulation No. I-A”), the Company formally established the Internal Audit Unit.

 

INTERNAL AUDIT CHARTER

 

The Internal Audit Charter has been formulated by the President and Chairman of the Audit Committee. Broadly speaking, the Internal Audit Charter includes, among others:

grey dot   Vision and mission;

grey dot   Structure and positions;

grey dot   Duties and responsibilities;

grey dot   Jurisdictions;

grey dot   Code of Ethics;

grey dot   Membership requirements;

grey dot   Accountability; and

grey dot   Independency.

 

STRUCTURE AND POSITIONS WITHIN THE INTERNAL AUDIT UNIT

 

Based on POJK No. 56/2015 and the Company’s Internal Audit Charter, it was decided that the Internal Audit Unit be consisted of at least 1 (one) internal auditor or more. The number of internal auditors are to be matched to the Company’s size and business complexities. Currently, the Company employs 1 (one) internal auditor, whose name is Toto Wirawan Shahri S.E., M.M. Based on the Letter of Appointment dated 10 November 2014, signed by the Company’s President Director and Board of Commissioners, Toto Wirawan Shahri S.E., M.M was formally appointed as Head of Internal Audit Unit.

 

The Head of Internal Audit Unit is appointed and dismissed by the President Director with the approval of the Board of Commissioners. The Head of Internal Audit Unit reports directly to the President Director.

 

DUTIES AND RESPONSIBILITIES

 

The Internal Audit Unit conducts a series of activities and consultations to enable the Company to systematically improve its corporate value and operational performance through regular evaluation and enhancement of the risk management system, internal controls and good corporate governance processes. As outlined
in the Internal Audit Charter, the Company’s Internal Audit Unit is tasked with the following responsibilities:

grey dot   Formulate and implement the annual Internal Audit plan;

grey dot   Analyse and evaluate the implementation of the internal control and risk management

     systems in accordance with Company policy;

grey dot   Assess and evaluate the efficiency and effectiveness of operations in regard to Finance, Accounting,

     Operations, Human Resources, Marketing, Information Technology and others;

grey dot   Provide recommendations on improvements and objective information

     about the activities audited at all levels of management;

grey dot   Prepare and submit audit reports to the President Director and Board of Commissioners;

grey dot   Monitor, analyse and report on the implementation of the recommended actions;

grey dot   Work closely with the Audit Committee;

grey dot   Develop programmes to evaluate the quality of internal audit activities; and

grey dot   Conduct special audits (if required).

 

CODE OF ETHICS

 

In the carrying out of its duties and responsibilities, the Internal Audit Unit must comply with the Company’s established Internal Audit Code of Conduct and Code of Ethics. The Internal Audit Unit’s Code of Ethics are outlined in the Internal Audit Charter and mandates, among others:

1.    Integrity

grey dot  To work honestly, diligently, and responsibly; and

grey dot  Comply with all laws and never engage in any illegal activity.

2.    Objectivity

grey dot  Disclose all known material facts; and

grey dot  Always acts professionally in performing of their duties and responsibilities.

3.    Confidentiality

Must always exercise prudence and austerity in handling all information obtained during the course of their duties.

4.    Competence

grey dot  Conduct an audit in accordance with International Standards for the Professional Practice of Internal Auditing; and

grey dot  Constantly improves the capacity and effectiveness as well as the quality of the audit.

PROFESSIONAL CERTIFICATION

 

Every member of the Internal Audit Unit, in each of the business unit, as well as the Company’s internal auditor, are all certified auditors.

 

EDUCATION/TRAINING DURING FISCAL YEAR

 

On 21 April 2016, the Company’s Head of Internal Audit Unit participated in the “One Day Coaching ASEAN Corporate Governance Scorecard Programme”, organised by the Indonesian Institute for Corporate Directorship (“IICD”). He also participated in the CIA (Certified Internal Auditor) Training held from 14 to 23 November 2016, as organised by the Institute of Internal Auditors Indonesia.

 

BRIEF REPORT ON THE INTERNAL AUDIT UNIT’S ACTIVITIES IN 2016

 

In 2016, the Internal Audit Unit executed the following series of activities:

grey dot   Developed and executed an annual internal audit plan;

grey dot   Analysed and evaluated the internal control and risk management systems

     to ensure that they function in accordance with company policy;

grey dot   Assessed and evaluated the efficiency and effectiveness in Finance, Accounting,

     Operations, Human Resources, Marketing, Information Technology and other operations;

grey dot   Carried out an objective evaluation of the activities being audited

     at all levels of management and provide recommendations for improvement;

grey dot   Reviewed and reported on the implementations of the recommended improvements;

grey dot   Created and submitted audit reports to the Board of Commissioners and Board of Directors;

grey dot   Worked closely with the Audit Committee;

grey dot   Developed a programme to evaluate the quality of internal audit activities; and

grey dot   Conducted special audits as requested.

 

RESULTS OF AUDIT

 

The Company’s Internal Audit Unit has completed an evaluation of the effectiveness of the implementation of the Company’s Internal Control System, Risk Management, and Corporate Governance, and assessed the efficiency and effectiveness of all of the Company’s activities in Finance, Accounting, Operations, Human Resources, Information Technology and other activities. The Audit Report has been submitted to the President Director and the Audit Committee. The report serves as a recommendation and reference for all follow-up implementations.

 

PROFILE OF THE HEAD OF THE INTERNAL AUDIT UNIT

 

UAI - Toto

Toto Wirawan

 

Toto Wirawan Shahri was appointed as Head of the Company’s Internal Audit Unit on November 10, 2014. His career includes a term as Internal Audit Manager at PT Wiramaju Kharisma Jaya in 1993. Between 2000 and 2006, he served as Finance Business Development Senior Manager at PT Hero Supermarket Tbk. From 2007 to 2008, he was CFO at PT Indonesia Computer Square.

 

He is a graduate of the University of Borobudur, Jakarta, in 1992, possessing a bachelor’s degree in Accounting and receiving a master’s degree in Financial Management from YAI Persada Indonesia University, Jakarta, in 1996.

 

INTERNAL AUDIT CHARTER

INTERNAL AUDIT CHARTER

INTERNAL CONTROL SYSTEM

 

The Company’s Standard Operating Procedures (SOP) aims to provide guidance on the implementation of the Company’s business activities. This SOP also includes relevant financial controls including: development budget, budget control, billing and payment procedures.

 

The Company strives to ensure that the implementation of internal controls are in line with the COSO internal control frameworks. Aspects that are considered critical, including the division of authority within the finance department, are prioritised as part of an effort to create an integrated system of internal control.

 

Periodically, the effectiveness of the application and the level of compliance with all applicable SOPs are evaluated by the Internal Audit Unit. This is done in order to provide recommendations to management regarding any changes and/or development of SOPs needed to respond to the business environment and condition of the Company.

VIOLATION REPORTING MECHANISM

 

The mechanisms for reporting violations and preventing and identifying actual or potential violations of the Code of Conduct has been established by the Company. This mechanism also provides protection to the interests of the leader, employees and external parties of the Company when they file a report. The handling of a reported case to the management and/or Internal Audit Unit or other institutions is conducted by a specially appointed party authoritised to take actions against the alleged violation.

 

The Company expects that all reported violations and handling procedures are well documented.  In accordance with the relevant regulations and procedures, the Internal Audit Unit will review the complaint report and present it to the management of the Company as soon as after the complaint (the initial report) was accepted. Furthermore, the report will be followed up in accordance with management policies. Each reports and complaints, including prior violations and resolution, will be recorded and inventoried by the Internal Audit Unit.

 

There was no report of complaint related to any violation or infraction during the 2016 fiscal year.