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Audit Committee of bank bjb

AUDIT COMMITTEE

Audit Committee is a Commissioner's complement tool that functions to monitor the effectiveness of the internal control system, internal audit, and financial reporting process. The main function of the Audit Committee is to support the Board of Commissioners to meet its duties and responsibilities by analyzing the financial statements and other financial information before the Bank submits to the stakeholders, and by analyzing the bank's internal control system, and the effectiveness of the internal audit function.

BASIS OF ESTABLISHMENT OF AUDIT COMMITTEE

The establishment of the Company's Audit Committee referred to Regulation of the Financial Services Authority No. 55/ POJK.04/2015 regarding the Establishment and Work Guidelines of Audit Committee. The Audit Committee supports the Board of Commissioner by performing its function which is to supervise the effectiveness of internal control system, internal audit, and reporting process, thus the Bank can be managed based on the principles of transparency, accountability, responsibility, independence, and fairness.

The establishment of the Audit Committee of bank bjb also referred to the following provisions:

  1. Decree of the State Minister of State Owned Enterprises No. KEP-117/M-PBUMN/2002 dated August 1, 2002 on the Implementation of Good Corporate Governance in State Owned Enterprises.
  2. Decree of the Chairman of Bapepam No.Kep-41/PM/2003 dated December 22, 2003 on the Establishment and Working Guidelines for Audit Committee.
  3. Decision Letter of the Board of Commissioners of PT Bank Jabar No. 07/SK/DK/2015 dated April 22, 2015 on the Division of Duties and the Schedule of Activities for the Board of Commissioners and its Committees.

AUDIT COMMITTEE CHARTER

The Audit Committee has Guidelines pursuant to the Decree of the Board of Commissioners 08A/SK/DK/2015 dated may 20, 2015, which specify clear roles, responsibilities, and scope of work to improve the effectiveness, responsibility, openness and objectivity of the Board of Commissioners in performing its functions. Audit Committee Charter regulates the organization and working period of the Audit Committee, duties and responsibilities, meetings, reporting and budgeting as well as ethical standards for the Audit Committee.

AUDIT COMMITTEE DUTIES AND RESPONSIBILITIES

The Audit Committee has the task to support the Board of Commissioners in accordance with its responsibilities. The duties of the Audit Committee are as follows:

    1. Supervise the Financial Reporting Process
      Supervise the generation process of Bank Financial Statement In connection therewith, the Audit Committee will:
      1. Monitor the financial reporting process to ensure compliance to accounting standards and policies that apply.
      2. Evaluate the financial information to be issued by the Bank such as financial reports, projections, and other financial information.
      3. Check whether the financial statements are in accordance with the applicable accounting standards and whether they are consistent with other information known to the members of the Audit Committee on monthly, quarterly and yearly basis.
      4. Monitor the determination of assets and liabilities assessment methods, commitments, contingencies, and reserves that must be established.
      5. Monitor financial statement items that contain complex and unusual transactions.
      6. Assess the adequacy of the disclosure of transactions with the related party.
      7. Assess and provide recommendations to the Board of Commissioners on the suggestions submitted by the External Auditor, the Board of Directors, and Internal Auditor if there is a change in the scope of the audit and accounting principles and standards.
      8. The Audit Committee will communicate to the External Auditor, the Board of Directors, and Internal Auditors when faced with different interpretations and inconsistency.
    2. Selection and Appointment of Public Accounting Firm (KAP) and Supervising its Duties
      The Audit Committee in providing recommendations to the Board of Commissioners regarding the Public Accounting Firm that will carry out an annual audit as External Auditor should at least perform, as follows:
      1. Selecting and recommending the appointment of KAP
        • The Audit Committee selects and recommends KAP candidates to audit Bank's Annual Financial Report to the Board of Commissioners.
        • The process of selecting and appointing KAP can be seen in Annex Guidelines of the Audit Committee - Appointment Process of Independent Auditor, based on the regulations.
        • The Audit Committee may recommend for the termination of employment with the external auditor to the Board of Commissioners if there is a strong indication that the independence of the auditor may be interrupted or proved that the auditor does not perform activities in accordance with Public Accountant's Professional Standards.
      2. Supervise the work of the External Auditor
        • Evaluate the Audit Plan and adequacy of audit program and supervise the work of the External Auditor and monitor the follow-up of the audit results in order to assess the adequacy of internal controls, including the adequacy of financial reporting process.
        • Engage in and/or receive a report on the discussion of audit findings carried out by the External Auditor with the management and make written report on the differences of opinion between the auditor and the management that need Board of Commissioners' attention.
        • In order to carry out duties as mentioned above, the Audit Committee should at least monitor and evaluate:
          1. Conformity of audit by Public Accountant with the applicable standards
          2. Conformity of financial statement with the applicable accounting standards
          3. Implementation of follow-up by the Board of Directors on the findings of the External Auditor as recommendations to the Board of Commissioners.
        • Provide inputs to the External Auditor in order to identify areas with high risk.
        • Consult with the External Auditor without the presence of management on internal controls with respect to the identification of possible internal control weaknesses, as well as compliance and accuracy of Bank's financial statement.
        • Ensure that the External Auditor, in relation to general audit, communicate the following things;
          1. Auditor's internal control responsibility level in presenting financial statement
          2. Significant changes in accounting policies
          3. Significant deficiencies in the design and implementation of internal control
          4. The method of recording, reporting, and impact of significant extraordinary transactions to the financial statements.
          5. There is fraud or indications of fraud and irregularities against the regulations and legislation in force, conducted by the management or employees which impact misstatement in the financial statements
          6. Significant audit correction.
          7. The procedures performed by the auditor on the annual report containing audited financial statements.
          8. Disagreement with the management about the application of accounting standards, audit scope, disclosures in the financial statements and words used by the auditor in its report.
          9. Any disagreement between the management with external auditor to consult with other External Auditor.
          10. Obstacles in the audit.
        • Conduct a joint review with the Board of Commissioners, Board of Directors, and the External Auditors concerning:
          1. Bank Annual Financial Statements and records on financial statements before being published.
          2. The audit report of the External Auditor on Bank's Annual Financial Statements and opinions and suggestions from the External Auditor.
          3. Important findings and recommendations made by the External Auditor and monitor the followup on such recommendation by the Board of Directors and management.
          4. Examine the representation letter signed by the Board of Directors, as well as assuring that the letter is obtained seamlessly and other specific things encountered in the assignment.
          5. Assess the opinion of the External Auditor on the quality and accuracy of the application of Financial Accounting Standards applicable to banks.
        • The Audit Committee evaluates the External Auditor regarding the qualifications, performance, and independence on Audit Partner from KAP and the auditor assigned to conduct financial audits, receiving input from the management, and the Internal Audit Division of the work of the External Auditor.
        • Discuss with the Board of Commissioners and Board of Directors and the External Auditor to gain understanding regarding the consideration used in determining the accounting standards and their applications.
        • Ensure adequate disclosure on the accounting standards.
    3. Non-Audit Service Evaluation
      To safeguard the independence of the External Auditor, the Audit Committee shall conduct an evaluation upon giving pre-approval to non-audit services assigned to such External Auditor. Non-audit services that interfere the independence are:
      1. Bookkeeping or other services related to Bank's accounting records or financial statements.
      2. Design and implementation of financial information systems
      3. Assessment services or services to provide opinion on the fairness
      4. Actuarial services
      5. Internal audit outsourcing services
      6. Management or human resources function services
      7. Intermediary services
      8. Legal services and expertise services unrelated to the audit
      9. Tax consulting services
      10. Additional services based on applicable legislation and regulations from Bank Indonesia.
      The measures that must be implemented by Bank Management to obtain pre-approval are as follows:
      1. The Board of Directors, delivered to the Board of Commissioners detailed description of the types of services and jobs to be assigned to the KAP.
      2. The Audit Committee evaluates and analyzes the non-audit services to be assigned to KAP in order to not interfere with the independence or give rise to conflict of interest.
      3. The Audit Committee can only approve the provision of non-audit services if the results of the evaluation do not show any independence interference or give rise to conflict of interest.
      Pre-approval of the non-audit services can be excluded, if the maximum value of all non-audit services is 5% of the total value of the audit fees paid by the Bank to KAP in the fiscal year in which the non-audit services provided.
    4. Supervision of Internal Control
      The Audit Committee and the Internal Audit Unit supervise the operations of the Bank in accordance with their respective functions in order to not violate the regulations of Bank Indonesia, and the prevailing regulations and legislation. The supervision should at least include:
      1. The Audit Committee receives periodic internal audit reports from the Internal Audit Division as an input to identify possible internal control weaknesses.
      2. In order to improve internal control effectiveness, the Audit Committee can provide inputs to Bank Management through the Board of Commissioners. The suggestions should relate to the improvement of the Internal Audit Division's performance.
      3. Review and provide input to the Board of Commissioners regarding Internal Audit Annual Work Plan, including the scope of audit, as well as to ensure that the Internal Audit Annual Work Plan already includes the Bank's overall operational risk.
      4. Every beginning of the year, the Audit Committee evaluates the scope of the audit and annual Audit Work Programme prepared by Internal Audit Division, and recommend the evaluation results to the Board of Commissioners.
      5. Review and provide advice to the Board of Commissioners on the difficulties and obstacles faced by the Internal Audit in carrying out their duties, including constraints on the scope of the audit and/or barriers to access to get the necessary information.
      6. The audit committee should coordinate with the Internal Audit Division to;
        • Hold regular meetings in order to discuss the findings and/or other things containing any indication regarding internal control weaknesses, as well as misapplication of accounting standards include monitoring the follow-ups on the findings.
        • Discuss Bank Management's response on significant findings in bank operations as well as the recommendations made by the Internal Audit Division on such findings.
        • Annually monitor the code of professional conduct, evaluate the activities, organizational structure and qualifications of the members of the internal audit.
        • Broaden the evaluation to assess the nature, scope, magnitude and impact of significant internal control weaknesses and their effect on financial statements.
      7. Appraise the effectiveness and independence of Internal Audit Division and make evaluation on routine activities, placement of internal auditors, and the organizational structure of Internal Audit Division.
      8. Recommend to the Board of Commissioners on;
        • Significant changes in the audit scope from the original plan, including Internal Audit human resources and budget
        • Updates on Audit Committee Guidelines
        • Compliance with Audit Committee Guidelines
      9. The Audit Committee upon the request of the Board of Commissioners may recommend on the appointment and dismissal of the Leader of Internal Audit Division.
    5. Supervision on the Compliance to Rules and Regulations The Audit Committee and Compliance and Legal Units, in accordance with their respective functions, should monitor the compliance of Bank operations to the Rules and Regulations applicable, as well as to Bank Indonesia Regulations, and should at least include:
      1. Monitoring can be done through the evaluation of findings, reporting, or results of examinations conducted by Bank Indonesia, the external auditor, Compliance work unit, Internal Audit, Risk Management Unit/ Committee.
      2. If there is a strong indication that violation to the applicable regulations and legislation and Bank Indonesia regulation is occurred, the Audit Committee shall report to the Board of Commissioners and propose investigation to be held.
    6. Risk Reporting and Risk Management Implementation The Audit Committee and Risk Monitoring Committee in accordance with their respective functions should monitor Bank's operations and minimize the risk, they include:
      1. Evaluate the risk identification process and risk management implementation conducted by the management.
      2. Assess Bank's risk management process and financial control including the identification and evaluation of risks and control to minimize the incidence of such risks.
      3. Monitor and evaluate the adequacy of task implementation of the External Auditor and Internal Audit Division to ensure the controls and the handling of major risks included in the audit plan.
      4. Ensure that Bank's management has implemented all the recommendations related to risk and control recommended by the External Auditor, Internal Audit Division, Risk Management Unit, and Risk Monitoring Committee.
    7. Review Third Party's Complaints
      The Audit Committee does not only receive information derived from the implementation of routine tasks, but also receive third party's complaints regarding accounting, internal control, and fraud that may interfere Bank's operations.
      1. Complaints' requirements which can be further processed :
        • Complaints are delivered in written.
        • State clear alibis and problems on complaints made.
      2. Complaints Review
        In dealing with complaints submitted by the third parties, the Audit Committee may request internal audit to follow up.
      3. Review Results
        If the result of such review shows that the complaint submitted by third party is correct;
        • The Audit Committee will forward the results to the Board of Commissioners.
        • The Audit Committee will monitor the follow-up of review results, if requested by the Board of Commissioners.
    8. Implementation of Special Tasks
      Special tasks are tasks beyond the routine as directed by the Board of Commissioners, by providing a letter of assignment to the Audit Committee.
      1. The Board of Commissioners assigns special tasks, because;
        • there are indications of non-compliance with the applicable laws and regulations, thus the Audit Committee, with the approval of the Board of Commissioners, broaden the evaluation to carry out Investigative Audit to determine the impact and magnitude of loss due to such violation. To carry out investigative audit, the Audit Committee may request the assistance of the Internal Audit Division or external auditors.
        • there are third party's reports/complaints which indicate non-compliance and/or fraud.
      2. The implementation of the Audit Committee's special tasks are among others:
        • Evaluating all of the recording including Board of Directors' and Board of Commissioners' minutes of meetings, documentation, and other necessary information.
        • Raising questions to the Board of Directors and its staffs, the results are set forth in the Minutes FAQ signed by both parties.
        • If deemed necessary, conduct investigative audit carried out in collaboration with the Division of Internal Audit or the External Auditor.
    9. Perform Self Assessment for the Implementation of Audit Committee's Tasks
      Self assessment is conducted under the provisions of Bank Indonesia on the effectiveness of their duties whether in accordance with the Guidelines of the Audit Committee in addition to the evaluation made by the Board of Commissioners on Audit Committee's performance.

In addition, Audit Committee has responsibilities as follows.

  1. Ensuring that Bank's financial statements are understandable, transparent, and reliable.
  2. Assessing the implementation of activities and audit results conducted by the Internal Audit Division and the External Auditor in order to prevent the execution and reporting which do not meet the standards.
  3. Evaluating Bank's policies related to the compliance with prevailing regulations and legislation, ethics, conflict of interest and investigation on fault or fraud, through the Board of Commissioners, provide recommendations regarding the improvement of Bank's internal control system and its implementation.
  4. Evaluating Internal Audit Division's Work Plan, reports, and any significant findings.
  5. Building communication with the Board of Directors and Work Units related to the status, progress, and new development on operational problems encountered as well as the findings of Internal Audit Division.
  6. Ensuring that the Internal Audit Division can have direct access to the Audit Committee and encourage communication outside committee meetings which have been pre-scheduled.
  7. Building direct line of communication with the External Auditor/Bank supervisor to discuss audit plans, findings, and reports.

THE AUTHORITY OF THE AUDIT COMMITTEE

The Audit Committee has the authority as follows.

  1. The Audit Committee is authorized to obtain information regarding bank's operations, employee data, funds, assets and other resources related to the performance of its duties, through the Board of Commissioners.
  2. In carrying out its duties, responsibilities, and authority, the Audit Committee cooperates with the Internal Audit Division.
  3. Provide input to the Board of Commissioners regarding the need for improvement in internal and external audit process, and Bank's financial statements.
  4. Evaluate the description of internal control/audit that will be published in Financial Statement and the Report of GCG Implementation.
  5. Review the independence and objectivity of the External Auditor and recommend the External Auditor which will be selected by the Bank to audit financial statements of the Bank, business units, or its subsidiaries.

AUDIT COMMITTEE'S SKILLS, STRUCTURE, AND MEMBERSHIP

Structure of the Audit Committee are:

  1. Members of the Audit Committee consisting of at least :
    1. One independent commissioner;
    2. One of Independent Party with expertise in finance or accounting;
    3. One of Independent Party with expertise in banking or law;
    4. Audit Committee member who is also an Independent Commissioner act as Chairman of the Audit Committee.
  2. Commissioner who served as Chairman of Audit Committee can concurrently hold position as Chairman of at most 1 (one) other committee.
  3. In performing daily tasks, the Audit Committee may be assisted by the Secretariat of the Audit Committee.

Composition of the Audit Committee of bank bjb is as follows:

Name Position Description Skill
Yayat Sutaryat Chairman Concurrently Member Independent Commissioner Law
Erie Febrian Member of Audit Committee Independent Economy
Mokhamad Anwar Member of Audit Committee Independent Economy and Financial Management
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