Internal Audit Unit

INTERNAL AUDIT UNIT

STRU CTURE AND POSITION OF THE  INTERNAL AUDIT UNIT

As set forth in the applicable capital market regulations, IA is a unit that is independent of other work units and is directly responsible to the President Director.

INTERNAL AUDIT CHARTER

Telkom IA unit has been equipped with the Internal Audit Charter as a formal company document, which contains a description of the vision, mission, structure, status, tasks, responsibilities and authority of the IA, including requirements for IA auditor personnel. The drafting of the Internal Audit Charter is guided by international standards for the practice of the internal auditing profession

issued by the Institute of Internal Auditors (“IIA”), and has been approved by the President Director and the Audit Committee of the Board of Directors based on decision No.Tel. 09/PW 000/UTA/COP-C0000000/2015 regarding the Internal Audit Charter.

VISION, MISSION , TAS KS AND RESPONSIBILITIES OF INTERNAL AUDIT

Vision

As a “Smart Partner” for Management, Business Unit/work Unit and subsidiaries in order to achieve the Company’s objectives as well as a driving force for the whole range of the Company and its subsidiaries in order to create a culture of discipline in implementing all provisions of the applicable legislation/policy/regulations/procedures/business processes.

Mission

1. Provide services and internal audit consulting in a professional, objective and independent manner for Management, Business Unit/work Unit, and subsidiaries.

2. Provide assurance on the suitability of financial reporting.

3. Actively guarding the implementation of internal control, providing support in raising GCG implementation, and evaluating the implementation of risk management.

The aforementioned Vision and Mission of the IA is applied in the form of IA activities that are organized in a systematic and measured manner, and in accordance with the applicable standards ranging from preparation,implementation and monitoring of the follow-up results. To this end, during the audit preparation phase, riskbased audit methodology is the main guideline which

emphasizes that determining the proper audit unit (auditable) is based on the level of risk; the higher the risk, the higher the need for auditing. The risk level of theb audit object (auditor) is based on the risks that have been mapped and determined by the Company as well as the professional assessment by the IA itself.

Duties And Responsibilities

The risk-based audit paradigm, in carrying out its duties and responsibilities, have used the IA Audit Management System (AMS), which is an application system for documenting the implementation of riskbased audits online. Increasing the role of IA is done by improving quality assurance for the company’s operations through audit and non-audit activities. Audits are conducted to ensure

that business risks that may occur can be addressed through effective internal controls. If deficiencies are found in the control of a business process and/or the risk of spiraling out of control, then a substantive test is conducted, namely a further testing of the audit object in order to explore root causes. Moreover, as a consequence of listing of shares on the Indonesian Stock Exchange (BEI) and the New York Stock Exchange (NYSE), IA periodically carries out tests and audits of the effectiveness and adequacy of internal controls in the context of financial reporting in accordance with Internal Control over Financial Reporting (ICOFR) standards. In order to support the implementation of the audit and develop awareness towards the importance of internal control for the business units, each quarter, the business unit perform Control Self Assessment (CSA) to the internal controls for which it is responsible.

Periodically, IA evaluates the CSA results to measure their adequacy and make recommendations for improvement

both for design and implementation. The next stage is to participate in the activities of internal consulting services. Internal consulting services is focused on, among others, Company operations that can be grouped into infrastructure management

(production equipment), products and services as well as supporting operations, including the identification of Group Financial Reporting Risk/GFRR, the preparation of business processes of subsidiaries and HR management. This internal consulting activity is more of a preventive solution to anticipate that business operations continue in the right direction and heed applicable regulations.

As part of the Company with a high commitment to the success of GCG, IA has an important role in the whistleblower mechanism which is the purview of the Audit Committee and the Executive Investigative Committee (EIC), where the head of IA is appointed

as secretary of the EIC. The whistleblower mechanism functions to accommodate every ‘complaints’ by employees to be forwarded to the management. In turn, if the Audit Committee and EIC deem that the complaint needs to be investigated further, IA will take the role to follow-up as part of the duties of audit. The results of such activities are reported to the President Director with copies forwarded to the Audit Committee and then the results will be communicated to the audit object to be followed up and rectified.

To ensure that the object of the audit has provided a sufficient response on the results of the audit and internal consultation, it is necessary to conduct further monitoring. Follow-ups on the ground are conducted by the audit object which is then monitored by the IA. In this regard, a follow-up is limited to areas of significant business processes with a mutually-agreed settlement time.

INDEPENDENCE INTERNAL AUDIT UNIT

As set forth in the applicable capital market regulations, namely Bapepam-LK regulation No. XI.2.7, the Internal Audit is an  independent unit from other work units and is directly responsible to the President Director. Telkom’s head of Internal Audit is appointed and dismissed by the President Director with the approval of the Board of Commissioners. One of the implementation of the independence of the Internal Audit Unit in Telkom is the Internal Audit Report sent to the President Director and copied to the Audit Committee (Board of Commissioners).

THE APPOINTMENT PROCEDURE AND NAME OF THE CHAIRMAN OF THE INTERNAL AUDIT

The Internal Audit (IA) Unit plays a role in exercising control over the Company’s business activities. The IA is headed by a Senior Vice President of Internal Audit (SVP Internal Audit), who is appointed and dismissed by the President Director with the approval of the Board of Commissioners. As of December 31, 2015, the Internal Audit SVP is held by Harry Suseno Hadisoebroto.

BRIEF PROFILE OF THE HEAD OF INTERNAL AUDIT UNIT

Harry Suseno Hadisoebroto served as Internal Audit SVP since July 1, 2015 and was appointed by a Resolution signed by the President Director. Since 1992 has worked at Telkom and its subsidiaries and has 11 years of professional experience in various positions at management level. He previously served as Internal Audit Telkomsel VP since May 1, 2014 until June 30, 2015. He has been Internal Audit VP at Telkom from April 1, 2011 until April 30, 2014.

Posted on May 11, 2016