|GCG Supporting Elements
|In addition, management already established supporting organs as working units to control, supervise and be held accountable for the implementation of GCG and also at the same time to act as a business partner for a committee under the Board of Commissioners.
The existence of Audit Committee for publicly listed companies refers to Attachment of Bapepam Decision Letter No. Kep-29/PM/2004 dated 24 Sept 2004, Regulation No. IX.I.5 of Establishment and Work Guidance of Audit Committee.
Audit Committee is comprised at least three members, led by an Independent Commissioner with two independent external members.
Roles and Responsibilities of Audit Committee
The roles and responsibilities of Audit Committee are to assist BOC in performing their monitoring function and to provide inputs to Astra Otoparts management through BOC. Such roles are among others elaborated as follows: Providing independent professional opinion to BOC with regard to BOD’s report submitted to BOC, including the matters resolved in the GMS.
Identifying issues or matters that require BOC attention including financial information to be published by the Company such as financial reports and projections and other financial information.
Reviewing the independence and objectivity of external auditor, reviewing the adequacy of audit performed by the external auditor to ensure that all significant risks have been taken into account.
Analyzing the effectiveness of Company’s internal monitoring, reviewing compliance with existing capital market laws and other related regulations, examining potential errors, mistakes or deviation in implementing the decisions made in Directors meetings, and analyzing the implementation of compensation package for both BOD and BOC.
Discussing with the Company’s Finance Director significant changes in accounting policies, performing analysis together external auditor on the audit plan and audit scope for the annual audit, annual audit findings and the auditors’ opinion rendered, and the adequacy of the Company’s internal control system.
Together with Head of Internal Audit, analyzing the internal audit plan and scope of work and the audit findings, performing the Company’s internal control, ensuring that the Company complies with the Code of Conduct, and performing analysis of Internal Audit Basic Guidelines.
Together with Internal Audit and External Auditor, analyzing the coordination of audit work to ensure the adequacy of the scope of work and effective utilization of audit resources.
Developing good relationship with BOD, Internal Audit, and external auditor separately to discuss issues that require special attention.
Reviewing and Revising the Audit Committee Basic Guidelines on annual basis.
Independency of Audit Committee Members
To maintain independency in its conduct of work, Audit Committee Chairman originates from the Independent Commissioner of Astra Otoparts. The other two members of Audit Committee are personnel originating from external parties who are independent, and have no relationship, either directly or nondirectly, with the Company. Therefore, all Audit Committee members already meet the required criteria of independency, skills, experiences and integrity required under the prevailing laws.
Audit Committee Report 2011
In 2011, Chairman and members of the Audit Committee focused on several strategic issues for the Company, including:
- The reliability of the published financial statements by ensuring that the report has been in conformity with the generally accepted accounting principles.
- The audit process and scope of work performed by the internal and external auditors have been adequate and the follow-up on audit findings has been monitored.
- The implementation and results of risk management activities.
- Legal issues confronting the Company.
Chairman and Audit Committee members held several meetings in 2011 which were attended by its three members. In those meetings, Audit Committee members reviewed several issues such as:
- Financial Report: Reviewing the concept of the audited financial statements for year 2010 and quarterly financial statements for year 2011 prior to public disclosure.
- External Audit: Reviewing significant accounting and auditing issues in the 2010 financial statements and preparing audit plan for the 2011 financial statements.
- Internal Audit and Risk Management: Reviewing the 2010 audit activities and findings, performing 2011 audit, reviewing the settlement of follow-ups on 2010 and 2011 audit results, preparing 2012 audit plan, and implementing risk management in 2011, which were performed by Audit Committee Chairman and members.
- Legal Issues: Discussing various legal issues in every meeting, which were performed by Audit Committee Chairman and members.
- Audit Committee report the above meeting results to the Board of Commissioners meetings. Then the Board of Commissioners requested Board of Directors to the follow up the recommendations given by Audit Committee.
Astra Otoparts established Internal Audit Unit in 1997. Internal Audit Unit serves as a partner for management in achieving the Company’s goals by performing the audit function and consultancy function in an independent and objective manner.
Internal Audit activities are categorized into regular audit, special audit, IT audit, follow-up monitoring, and audit development. Regular audit is audit activities based on annual audit plan, which determines the focus and direction of the respective year audit with the priorities being set in line with the result of risk assessment. Special audit is audit activities outside the annual plan but conducted based on the request of the stakeholders or other considerations based on the urgency level of which. IT audit is audit activities in IT system to ensure that IT has provided adequate control on assets, data integrity, effective information supply, and efficient use of resources.
Internal Audit also performs follow up monitoring activities to ensure that the corrective recommendations already agreed upon have been implemented in a timely manner in accordance with the commitment of the audite.
Internal Audit Charter
To perform its functions in an independent and objective manner, Internal Audit Unit maintains an Internal Audit Charter issued by Board of Directors of Astra Otoparts approved by BOC on 29 July 2007.
The Internal Audit Charter serves as a reference in performing all internal audit activities. The Internal Audit Charter also established the structure and position of Internal Audit Unit, roles and responsibilities, authorities and code of ethics of Internal Audit Unit, requirements of auditors to be positioned in Internal Audit Unit, accountability report of Internal Audit Unit, and prohibition of double jobs for the positions of auditor and the executing personnel in Internal Audit Unit for the implementation of operational activities either at the holding level or at the subsidiary/affiliated company level.
Internal Audit Organizational Structure
Internal Audit Unit immediately reports to Board of Directors and provides periodical reports to Board of Directors
and Audit Committee with regard to the findings and recommendations already performed.
In performing the activities, Internal Audit refers to the Basic Guidelines of Internal Audit and adopts the approach and standard methodology as required for the companies within the group of PT Astra International Tbk. The Company is continuously making efforts to perform the audit development by among others using the tool improvement and audit methodology and enhancing the auditor quality.
Risk management is the process of managing risks covering the identification, evaluation and control of risks potentially disrupting the Company’s activities and business sustainability and leading to failures in achieving the Company’s goals.
Risk controls should be performed by adopting a structured approach starting from assessing the risks, developing the strategies to manage such risks, and mitigating the risks by utilizing the resources owned by the Company. The strategies employed may include transferring the risks to other parties, avoiding the risks, mitigating the negative impact of the risks and accommodating a portion of or the entire consequences of certain risks.
Risk management has basically been implemented since the inception of the Company and has been developing in accordance with the Company’s internal and external condition. Wellperforming risk management shall turn into a strategic partner for business units in achieving the optimal results of the Company’s activities.
Risk Management Activities
The dynamically changing of automotive business condition emphasizes the importance of a reliable risk management. The Company should continuously perform systematic steps in identifying, measuring, evaluating and managing various risk factors which prevail at present, covering strategic risks and operational risks.
At least there are four steps the Company has taken in managing the risks which are through the methodology of Risk Assessment, Business Continuity Plan, Insurance Review and Whistleblower System. By adopting those four steps, the Company already made a significant progress in the effort of adopting a framework and added value in the Enterprise-wide Risk Management system which could help to analyze, identify and manage various risks at all levels within the Company.
The risks that each business activity may be exposed to are generally originating from the uncertainties which result in decreasing profitability and which even may lead to losses. Accurate and comprehensive risk identification is of a significant importance, among others by gathering much information at the most possible extent through survey, interview, historical data and brainstorming.
In 2011 the Company continued developing the methodology to perform Risk Assessment to identify and evaluate the risks. Risk Assessment determines and prepares the risk profile faced by the Company in a systematical manner, by mapping and prioritizing various risk factors with a well-targeted response and mitigation based on the worst situation scenario and evaluating its impact on the shareholders value.
Other than providing a comprehensive perspective of the risks in all operational aspects within the Company, the Risk Assessment activities also facilitate the planning of manpower needs to manage and minimize the impact of such risks.
The implementation of Risk Assessment is performed at the corporate level and at the holding level down to the affiliate level by remaining focused on the consolidated company. Through a number of existing risk control mechanism and systems, the Company already identified the following main risks:
The tighter competition in After Market products. The competitive condition is particularly on products with more competitive prices yet with better quality.
The increasing price of raw materials for manufacturing products.
For such risks already identified, the Company has already taken a few important mitigating steps as follows:
Performing value preposition, performing efficiency in capacity planning and strategically remapping the products unceasingly for the future.
Consistently performing efficiency in the production process, improving productivity and minimizing the cases of rejection in finished products and performing the multisourcing for the procurement of raw materials.
Business Continuity Plan
Business Continuity Plan (BCP) is a guidance to ensure the Company’s continuity of operations during a disaster or unexpected situations so as to minimize the impact and losses incurred. In 2011, Risk Management Unit performed coordination with subsidiaries/affiliated companies to anticipate the potential risk of flooding by performing socialization, benchmark and assessment of flood anticipation to its subsidiaries/affiliated companies. In addition, Head Office Risk Management Unit also performs BCP test which is designed to ensure the readiness of personnel and to test the readiness of infrastructure in Disaster Recovery (DR) site upon encountering emergency condition and ensuring that the supply chain would still remain operating.
Insurance Review is designed to ensure that the Company’s insurance programs have been properly managed either in terms of the risks covered or the sum insured. In 2011, Insurance Review was focused on the Company’s consolidated subsidiaries.
Whistleblower system is an alternative mechanism for employees to submit information which is expected to support the GCG development in the Company. The socialization of whistleblower system was conducted continuously and in 2011 already reached out to the consolidated subsidiaries.
Corporate Secretary is appointed by the Company by considering his/her professional ability and integrity in the eyes of public and business community. Corporate Secretary directly reports to President Director. Since Corporate Secretary represents the Company for certain matters, he/she shall maintain integrity and behavior, and realize his/ her strategic role in Indonesia capital market.
The main responsibilities of Corporate Secretary are, among others, to ensure the Company’s compliance with the capital market regulations and disclosure of the Company’s conditions to capital market authorities, shareholders, and the public at large. In this capacity, Corporate Secretary acts as liaison officer among the Company, Bapepam-LK, stock exchange, media, and the public.
The post of Corporate Secretary is currently held by Robby Sani, who is also serving as the Director of Astra
The activities of Corporate Secretary in 2011 were among others:
- Holding a public expose on April 27, 2011.
- Participating in a workshop organized for industry and trade journalists held by PT Astra International Tbk in Bandung on 11 November 2011.
- Participating in a workshop organized for capital market journalists held by PT Astra International Tbk in Bandung on 18
- Ensuring on-time publications of Annual and Quarterly Financial Reports in compliance with regulations issued by Bapepam-LK.
- Publishing Annual and Quarterly financial performance of the Company on its website.
- Delivering the Company’s information to the public in order to meet Bapepam-LK regulations.
- Providing information to the mass media about the Company and its progress.
- Participating in the Capital Market Expo organized by Capital Market Authorities in early October 2011 as a manifestation of transparency in disclosing information to the public.
In 2011, the performance of the Corporate Secretary contributed to a few significant achievements so that Astra Otoparts received recognitions and awards for the GCG implementation from two prominent institutions as follows:
- Astra Otoparts received the predicate of “The Trusted Company in GCG Implementation in 2011” from The Indonesian Institute for Corporate Governance. Such predicate has been conferred for two consecutive years in a row following Astra Otoparts’ participation in the Corporate Governance Performance Index (CGPI) assessment.
- Astra Otoparts received GCG award as The Best GCG Implementation of the Year 2011 at the fifth rank from Business Review Award 2011.
Confidentiality and Disclosure of Information
In classifying the types of information, Astra Otoparts always refers to the prevailing rules and regulations. Nonconfidential information should be published and accessible through the media and facilities relatively sufficient for public as stakeholders to access such information without being subject to any charges. Non-confidential information should be immediately informed to stakeholders if pertaining to quick decision making process made by the Company.
All employees of Astra Otoparts are prohibited from taking actions or behaving in such a manner that may incur losses for the Company due to disclosure of either a portion of or the entire of information to external parties including business partners, customers (main dealers) and suppliers. Employees are prohibited from disclosing, disseminating a portion of or the entire confidential information pertaining to the Company’s projects, intellectual property rights, patent rights, and the Company’s business plans illegally without any written consent from the Company. Any violation against and deviation of the availability, confidentiality and transparency of information shall be subject to sanctions in accordance with the Company’s regulations.
To obtain information regarding Astra Otoparts, the Company opens wide the information access for stakeholders, public and investors through the website www.astra-otoparts.com containing the latest information such as Company profile, product information, corporate news, financial statements, corporate actions, implementation of Good Corporate Governance, Corporate Social Responsibility (CSR) and others. The information in the Company website is presented bilingually (in Bahasa Indonesia and English) to facilitate public in accessing such information while at the same time also serving as GCG practice adopted by the Company.