Internal Audit

INTERNAL AUDIT CHARTER

  1. INTRODUCTION
    This internal audit charter sets the basic framework for internal audit function of PT Industri Jamu Dan Farmasi Sido Muncul Tbk., ("Company") and sets its mission of: providing independent assessment of the activities of the Company and its subsidiaries with the objectiveof providing value added, increasing efficiency operations, risk management and internal control systems. The purpose of the Charter is also to provide assurance and consultation to strengthen good corporate governance in the Company and its subsidiaries.
  2. STRUCTURE AND POSITION
    1. The Internal Audit Unit lead by a Head of the Internal Audit Unit.
    2. The Head of the Internal Audit Unit is appointed and dismissed by the President Director upon the approval of the Board of Commissioners.
    3. The President Director may dismiss the Head of the Internal Audit Unit, after obtaining approval from the Board of Commissioners, if the Head of the Internal Audit Unit does not meet the requirements as the auditor of the Internal Audit Unit as stipulated in this rule and or fail or incompetent in performing the duties.
    4. The Head of the Internal Audit Unit is directly responsible to the President Director of the Company.
    5. The auditor who sits in the Internal Audit Unit is directly responsible to the Head of the Internal Audit Unit.
    6. Head of the Unit and Internal Audit staff are prohibited from carrying out tasks and assignments from the Company's operational activities both in the Company and its subsidiaries.
  3. REQUIREMENTS TO BE THE AUDITOR INTERNAL
    1. Have integrity and professional behavior, independent, honest, and objective in performing their duties;
    2. Have knowledge and experience on audit technique technical and other disciplines relevant to their field of duty;
    3. Have knowledge of the laws and regulations in the field of capital market and other related laws and regulations;
    4. Have the ability to interact and communicate both orally and in writing effectively;
    5. Compulsory to comply with professional standards issued by the internal audit association;
    6. Compulsory to comply with internal audit codes of ethics;
    7. Obliged to maintain the confidentiality of company information and / or data relating to the performance of internal audit duties and responsibilities except as required by law or court rulings;
    8. Understand the principles of good corporate governance and risk management; and
    9. Willing to improve knowledge, expertise and professional skills continuously.
  4. DUTIES AND RESPONSIBILITIES
    1. Develop and implement an annual internal audit plan;
    2. Test and evaluate the implementation of internal controls and risk management systems in accordance with company policy;
    3. Conduct examination and assessment of efficiency and effectiveness in finance, accounting, operations, human resources, marketing, information technology and other activities;
    4. Provide suggestions for improvements and objective information on the activities examined at all levels of management;
    5. Produce audit report and submit the report to the President Director and Board of Commissioners;
    6. Monitor, analyze and report on the implementation of suggested improvements;
    7. Collaborate with the Audit Committee;
    8. Develop a program to evaluate the quality of its internal audit activities; and
    9. Conduct special audit within the scope of internal control assigned by the President Director.
  5. AUTHORITY
    1. Compile, modify and enforce the Internal Audit Charter including specifying the procedures and scope of audit work.
    2. Access all relevant information about the company in relation to its duties and functions;
    3. Allocate internal auditor resources, determine the focus, scope and schedule of audits, application of techniques deemed necessary to achieve audit objectives, clarify and discuss audit outcomes, solicit written oral responses to parties examined, provide advice and recommendations.
    4. Communicate directly with the Board of Directors, Board of Commissioners, and / or Audit Committee as well as members of the Board of Directors, Board of Commissioners, and / or Audit Committee;
    5. Conduct regular and incidental meetings with directors, commissioners and / or the Audit Committee; and
    6. Coordinate its activities with the activities of external auditors.
    7. Propose staff of the Internal Audit Unit for promotion, rotation, education, training, seminars and courses related to the fluency of audit tasks or to meet the competence of staff / auditors according to the demands and career ladder set by the Company.
  6. INTERNAL AUDIT CODE OF ETHICS
    Internal auditors are expected to apply and uphold the following principles:
    1. Integrity
      The integrity of the internal auditor generates trust and provides a basis for reliability over the assessment made by the internal auditor. For that internal auditor must:
      • Carry out the task by being honest, objective, thorough, earnest and responsible.
      • Pay attention to regulations and provide disclosure of inspections expected by rules and professions.
      • Avoiding activities or acts against the law that are harmful or suspected to be detrimental to the profession of internal auditors or the Company.
      • Respect and encourage Company compliance with business rules and ethics
    2. Objectivity
      The internal auditor exercises professional objectivity as best as possible in collecting, evaluating and communicating information about the activity or process being audited. The internal auditor makes a balanced assessment of all relevant conditions and is not influenced by self-interest or by others in making judgments. For that internal auditor must:
      • Avoiding an activity or a relationship that may create a conflict of interest with the Company so that it is expected to affect its objectivity stance.
      • Refuse any kind of giving and from anyone, directly or indirectly, which may affect auditor professional judgment.
      • Reporting all audit results by disclosing the truth of the facts, if not disclosed, may result in inaccurate reporting of activities being audited.
    3. Confidentiality
      The internal auditor respects the value and ownership of the information obtained and does not disclose information without the proper authority unless there is a legal or professional obligation that requires it to be performed. For that internal auditor:
      • Must have care in using and keeping the required information while performing the task.
      • Not abusing the information obtained for personal interest or gain or any other thing which is reasonably suspected of causing loss to the Company for any reason.
    4. Competence
      The internal auditor carries out the knowledge, expertise and experience required in performing his duties. For that internal auditor must:
      • Implement audit tasks only where they have sufficient knowledge, expertise and experience.
      • Carry out internal audit tasks by complying with professional standards of internal auditors.
      • Continuously improve the ability, effectiveness and quality of work.
  7. AUDIT REPORTING RESPONSIBILITY
    The internal auditor will prepare and report the results of their audit work in a report to the audited party. The head of the department or unit being audited will respond to the audit results within 14 days. This response will include what steps will be taken by the department / work unit concerned in meeting the recommendation / improvement that is contained in the internal audit report. If necessary, the time targets for completion of the steps to be taken by the department / unit will be included.
    Distribution of audit report result submitted to the President Director and forwarded to the Board of Directors and Commissioners.
    The Internal Audit Unit will follow up on the audit results that have been conducted to ensure that the findings / recommendations of internal auditors have been implemented by departments / work units. If on the basis of a particular consideration the head of the department / work unit concerned does not follow the recommendations of the internal auditor, then the Head of the Internal Audit Unit will report the matter to the President Director.