Board of Director's Commitee Supporting Organ

Audit Committee

Basis of Audit Committee’s establishment

The Audit Committee is a committee established by the BoC to support the performance of BoC’s duties and functions in accordance with OJK Regulation No. 55/POJK.04/2015 of December 23, 2015 on the Formation and Implementation Guidelines for Audit Committee (“POJK 55”). 

 

Audit Committee Charter

The Audit Committee has the Audit Committee Charter as the guideline for carrying out duties and responsibilities. The Audit Committee Charter was established in xx. The Audit Committee Charter is available on the hyperlink attached click here .

 

 Audit Committee’s duties and responsibilities

The Audit Committee is committed to complying with the Audit Committee Charter in carrying out their duties and functions in such a manner that consistently supports the BoC in accordance with the principles of Good Corporate Governance (GCG) and the applicable rules and regulations. 

As stipulated in the renewed Audit Committee Charter, the Audit Committee’s duties and responsibilities include:

1. review of financial information;
2. dismissal and recommendation for the appointment of independent auditor and monitoring of their performance;
3. review of Internal Audit Division’s audit results;
4. internal control effectiveness;
5. monitoring of compliances with rules and regulations; and
6. evaluation on the implementation of risk management.

 

Independency Statement

To maintain the independency, every member of the Audit Committee must fulfill the independency requirements as stipulated in the Audit Committee Charter, as follows:

1. not an insider party to the Public Accounting Firm, Legal Consulting Firm, Public Appraiser Firm, or other parties which provide assurance services, appraisal services and/or other consultation services to the company within the last 6 (six) months.
2. not a party working for or having the authority and responsibility to plan, lead, control, or supervise the company’s activities within the last 6 (six) months, except for the Independent Commissioners.
3. not holding the company’s shares directly or indirectly. In the event that a member of Audit Committee receives the company’s shares directly or indirectly due to a legal event, the shares must be transferred to other parties at the latest within 6 (six) months after the shares are received.
4. not having an affiliated relationship with any member of BoC, BoD, or major shareholders of the company.
5. not having any business relationship which is directly or indirectly related to the company’s business activities.
6. in the event that an Independent Commissioner is a member of the Audit Committee, such Independent Commissioner may only be reappointed to be a member of the Audit Committee for 1 (one) subsequent term of office.
7. an Independent Commissioner who holds the position as the Audit Committee Chairperson may only hold a position as a chairperson at 1 (one) other committee.

 

The profiles of the Audit Committee’s chairman and members

 

Remuneration and Nomination Function

The BoC has decided that the function of nomination and remuneration for the BoC and BoD shall be carried out by the BoC without establishing a committee of nomination and remuneration.

In the implementation, the BoC shall act independently by referring to the Guideline for the Nomination and Remuneration Function, which determines the associated duties and responsibilities of the BoC.

The roles carried out concerning nomination:

1. determine the policy on the BoC’s and BoD’s compositions, criteria for the nomination process, and performance evaluation of the members of the BoC and BoD;
2. assess the BoC’s and BoD’s performance based on the policies;
3. determine the policies on the skill development program for BoC and BoD; and
4. determine the candidates of the BoC and BoD members to be proposed to the GMS.

 

The roles carried out concerning remuneration:

1. determine the policies on the remuneration structure, policies, and amount; and
2. assess the BoC’s and BoD’s performance by referring to the remuneration received.

The complete guideline for the Nomination and Remuneration Function is provided at click here

 

Board of Director's Commitee and Supporting Organ

Corporate Secretary

As a public company, ⁠the company is required to have a Corporate Secretary function in accordance with the provision of the Financial Services Authority (OJK) Regulation No. 35/POJK.04/2014 on Corporate Secretary of Issuers or Public Companies. The Corporate Secretary has the duties and responsibilities to facilitate the communication among the company’s organs, plan and develop corporate governance policies, and ensure the company's effective communications with external individuals and institutions, including investors and other market participants, while taking account of the company’s code of conduct, governance principles, and values.

The Corporate Secretary reports to the Board of Directors and is appointed and dismissed by a BoD Decree. The appointment of the Corporate Secretary is a component of the GCG implementation. The Corporate Secretary is not allowed to hold any position at any other issuer or public company.

 

Internal Audit

The Internal Audit Function has carried out its duties in accordance with the Internal Audit Charter. The Board of Directors has given its full support to the internal audit activities and there were no restrictions on the scope and access for the Internal Audit Function. 

In addition to complying with the Adaro Values and the Adaro Group’s Code of Conduct, the Internal Audit Function also adopts the Code of Conduct for internal audit profession issued by IIA. Each of the company's internal auditor must read and understand the Code of Conduct 

The Internal Audit Function plays the role to provide an objective and independent assurance and consultancy services for the company and its subsidiaries in the areas of governance, risk management and control, to add value and improve the company’s operations.

For the full Internal Audit Charter, please click here.

 

Internal Audit Officer

Duties and responsibilities

The Internal Audit Function’s duties and responsibilities, among others, include the following:

1. develop flexible annual risk-based internal audit plans;
2. implement the annual internal audit plans and conduct special audits whenever necessary;
3. test and evaluate the implementation of internal control and risk management systems in accordance with company policies and applicable regulations;
4. examine and assess the efficiency and effectiveness in all aspects, including finance, accounting, operations, human resources, marketing, information technology, and other activities;
5. provide suggestions for improvement and objective information about the relevant activities examined at all levels of management;
6. prepare an audit report and submit the report to the BoD, BoC, and the Audit Committee;
7. monitor, analyze and report the implementation of the improvement actions recommended;
8. collaborate with the Audit Committee;
9. develop and implement the assurance and quality improvement program to evaluate the activities of the Internal Audit Function; and
10. coordinate with other assurance functions (such as Health Safety & Environment, Legal and Compliance, Risk Management, external auditor) to optimize the assurance on the process of governance, risk management, and control of the company.

 

Structure and position

The Internal Audit Function is independent and reports directly to the President Director. To maintain objectivity, internal auditors are not allowed to have duties and positions concurrent with the implementer of the operational activities of the company and subsidiaries.

In addition, internal auditors must sign the Statement of Conflict of Interest every year to ensure that they have no potential of conflict of interest in carrying out duties and responsibilities, and if there is any conflict of interest, the company will take the necessary measures to overcome the associated risk of conflict of interest.

 

Internal Audit Practices

The internal audit practices are carried out by referring to the International Standards for the Professional Practice of Internal Auditing issued by the Institute of Internal Auditors (IIA). The standards of internal audit works have been formalized into a Standard Operating Procedure of Internal Audit.

 

Use of Information Technology

To facilitate its activity, the Internal Audit function has been using information technology as needed, such as for working papers, internal audit portal for knowledge management, timesheets, corrective actions data base, and data analytics tools software.

 

Assurance Program and Quality Improvement

To ensure continuous improvement of its audit quality, the Internal Audit Function implements a quality assurance and improvement program that comprises: 

• conducting surveys to obtain feedback from the management;
• performing self-assessment and peer review for each audit assignment to ensure compliance with the existing Internal Audit manual; and
• conducting self-assessment on the compliance with FSA regulations and conformance with IIA Standards.

 

The result of quality assurance and improvement program is compiled and discussed every year to be included in our continuous improvement project for the following year. The quality assurance and improvement program has been performed regularly and produced positive results. The outcomes are reported to the Board of Directors and the Audit Committee on a regular basis.