May 1, 2019

AKR realizes that risks have become an integral part of every business process. These risks are inherent in all activities and decision making and the impact of these risks can significantly influence the stability of the Company.

In line with its business development, AKR needs a risk management system that is able to manage all forms of uncertainty as the Company’s focus. Risk management is becoming increasingly important as a basis for decision making by the Company to ensure that the Company’s wheels of business continue to move forward.

isk Management is a culture, where processes and structures are directed at appropriate management of potential opportunities and adverse impacts.

CORPORATE RISK MANAGEMENT

Risk is the responsibility of all parties in the Company to be involved in its management. The Company’s risk management is carried out through a top-down approach that involves the Board of Directors in evaluating the main risks as a whole; and a bottom-up approach that involves the Leaders of Departments/Branches/Subsidiaries in assessing specific risks in each business/business unit. Risk management is carried out jointly/in coordination with ERM Dept. at the Head Office using the established risk management reference, framework, policies and procedures

RISK FACED BY THE COMPANY AND RISK MANAGEMENT EFFORTS

Country Risk, Indonesia’s macroeconomic conditions, political conditions, and government regulations affect the Company and other companies operating in Indonesia
1. Economic and Political Risk. The Company’s operational activities are strongly influenced by inflation rate, Gross Domestic Product growth, taxation, and various developments in the political and economic fields in Indonesia.
2. Government Policy Change Risk The Company faces the risk of changes in government policies that could inhibit the Company’s business activities domestically. Changes in government policy can relate to taxation, currency controls, and the Company’s performance. Almost all petroleum products, and some of basic chemical products, traded and distributed by the Company, is imported from abroad. Policy changes, import bans, import quota restrictions, import fee regulations, or import tariffs could inhibit or cause an increase in import costs that could affect the Company’s performance. Subsidized petroleum distribution contracts granted for subsequent years are based on a government tendering process and the continuation of government deregulation policy. However, the granting of government contracts in the future depends on the ability of the Company to meet various criteria.
Industry Risk Supply and demand from the industry the Company operates also influence the Company’s performance. The trading and distribution segment is influenced by demand for basic chemicals and petroleum. Demand for basic chemicals and petroleum also relies on the economic conditions in Indonesia, as well as its neighboring countries. The logistic services segment also encounters demand risk. The Company provides logistic and distribution services and infrastructure facilities to third parties in Indonesia. The economic slowdown in Indonesia and worldwide influences international trading, which in turn can cause a decrease in shipping activities and the demand for logistic services. The risk of supply shortages, and rising prices of raw materials, may occur in the manufacturing segment. Natural disasters and climate change could cause supply shortages followed by rising raw material prices, with the cost increases not always being possible to pass on to the customer selling prices, which will affect the Company’s performance. In addition to the demand and supply risk, the Company faces competition risk from other companies that have similar business activities to the Company. To anticipate this risk, the Company has increased its operational capacity, maintained good relationships with suppliers and improved the quality of service to customers.
Operational Risk, Operational Risk will occur if the Company fails to follow the standard operating procedures needed due to climate change, natural disasters, broken supply chains, unsuccessful production, information technology, and employee management failure. These risks are associated with daily operations of the Company. Therefore, the Company has set standard operating procedures that are continuously being updated and enhanced, so that the risks are minimized and the Company is in line with the demands of business and technology. The Company is also building technology and operating systems backup if the primary systems fail to operate. Employees responsible for the systems are given regular training to enhance their skills and vigilance in dealing with other operating systems and tools.
Safety, Health and Environment Risk The Company may be exposed to risk in Safety, Health and Environment (SHE) given that the Company is engaged in basic chemicals and petroleum distribution, manufacturing, and logistic services. These risks include fires, spillages, errors in the handling of waste, equipment failures, system failures, etc. SHE risk not only affects the Company but also affects people around the operational areas. In order to avoid such risks, the Company implements strict and detailed regulations concerning occupational safety and provides training to employees to deal with undesirable conditions. SHE procedures are constantly being updated in accordance with government and organization regulations as well as certification in particular areas.
Financial Risk, The main risks faced by the Company related to financial instruments are credit risk, market risk (including interest rate risk, foreign currency exchange rate risk, and commodity price risk), and liquidity risk. The Company’s financial risk management has been presented in detail in the consolidated financial statements audited by the Public Accounting Firm Purwantono, Sungkoro & Surja.

RISK MANAGEMENT REPORT

EVALUATION OF RISK MANAGEMENT SYSTEM EFFECTIVENESS

The risk management has contributed positively to the process of planning, decision making, and strengthening the implementation of Good Corporate Governance (GCG) in the Company. The risk management system applied by the Company is able to minimize and/or reduce the level of impact and possibility of risk. This can be seen from the effectiveness of quality, quantity, and time of completion of a predetermined risk mitigation plan. This risk management system can support the Company in achieving significant revenue growth until reaching the established targets.

ACTIVE ROLE OF BOARD OF CIMMISSIONERS AND BOARD OF DIRECTORS

The overall role of Board of Commissioners in terms of risk management is:

Provide direction and recommendations to the Board of Directors in overseeing the risk management practices and implementation in the Company.
Review and ensure that the Company and its subsidiaries have a risk management framework and process that is appropriate for existing business needs.

While the role of Board of Directors includes:

Developing a risk management culture at all organizational levels with a tone from the top approach where the development of risk culture starts from Top Management.
Ensuring the effectiveness of risk management implementation, such as ensuring it becomes an integral part of the Company’s operational activities.
Reviewing the Company’s risk profile and reports, this includes ensuring & providing views regarding the main risks that must be prioritized in risk mitigation.
Review the mitigation controls that have been determined to ensure the realization of implementation is sufficient and timely. 5. Ensuring the adequacy of human capital in managing strategic risks including the level of tolerance and risk treatment for each strategy.

May 1, 2019

The Company uses the service of a Public Accounting Firm (“KAP”) from independent external party in order to obtain credibility for an accountable account. In ensuring the integrity of the presentation of financial statements to shareholders, the Company uses external auditor services. The appointment of external auditor to audit the Company’s Financial Statements for the Fiscal Year of 2016 is determined through the Annual GMS based on recommendations from the Board of Commissioners and the Audit Committee. The appointed external auditor is not permitted to have a Conflict of Interest with the Company to ensure the independence and quality of the audit results. External auditor is responsible for conveying opinion on the compliance of the Company’s Financial Statements, which are audited against generally accepted Financial Accounting Standards.

EXTERNAL AUDITOR APPOINTMENT MECHANISM

The appointment of Public Accountant is carried out by the Company using the following mechanism:

Public Accounting Firm Evaluation by the Audit Committee
Public Accounting Firm Appointment for Fiscal Year 2016 is reported by the Audit Committee to the Board of Commissioners
Board of Commissioners approves the appointment of Public Accounting Firm to conduct general audit of the Consolidated Financial Statements for Fiscal Year 2016
The Board of Commissioners proposes to the 2016 GMS to approve the appointment of Public Accounting Firm

ACCOUNTANTS AND AUDIT PERIOD

The consolidated financial statements dated December 31, 2018 and for the year ended on that date was audited by Public Accounting Firm Purwantono, Sungkoro & Surja (a member firm of Ernst & Young Global Limited). The table below shows the Accountant and Public Accounting Firm that conducted the financial audit for the Company for the past six years as well as the audit fee:

OTHERS SERVICES PROVIDED

In addition to auditing the 2018 financial statements, KAP Purwantono, Sungkoro & Surja (a member firm of Ernst & Young Global Limited) also provided services related to the Company’s Precautionary Practices Application Report.

May 1, 2019

Based on The Financial Services Authority Regulation No. 56/ POJK.04/2015 concerning the Establishment and Guidelines for Internal Audit Charter, on August 13, 2015, the Company established its Internal Audit Charter, dated August 13, 2015 to replace the Internal Audit Charter, dated December 30, 2009.

The Internal Audit Unit was established with the aim to provide professional, independent and objective opinion to the President Director on the activities and operations of the Company, based on the Chairman of Capital Market Supervisory Agency and Financial Institution decision No. KEP-496/BL/2008 dated November 28, 2008 concerning the Establishment and Guidelines for Internal Audit Charter (“Regulation No. IX.I.7”), the Company as a public company has established an Internal Audit Unit and has owned an Internal Audit Charter as the Guidelines for Internal Audit. The first Internal Audit Charter were prepared and signed by the President Director on December 30, 2009.

THE INTERNAL AUDIT UNIT CHARTER AMONG OTHERS CONTAINS

The Internal Audit Charter includes the Internal Audit Unit vision, mission, functions, organizational structure, terms and development of the Internal Audit Unit, authorities, duties, and responsibilities, audit execution and reporting, ethics, restrictions as determined and approval by Board of Directors and Board of Commissioners.

VISION

Becoming a unit that is independent, objective, professional and provides added value to support the Company’s management in achieving its business goals, vision and mission.

MISSION

Assist the Company’s management in achieving the Company’s performance through consulting activities resulting in increased efficiency and effectiveness of Company activities.
Run the assurance function to achieve Good Corporate Governance and Operational Excellent.

PROFIL KEPALA UNIT AUDIT INTERNAL

INTERNAL AUDIT ORTANIZATION STRUCTURE

Internal Audit Division is part of the Company’s organizational structure with the following positions

FUNGSI UNIT AUDIT INTERNAL

Melakukan kegiatan pemberian keyakinan (assurance) dan konsultasi yang bersifat independen dan obyektif, dengan tujuan untuk meningkatkan nilai dan memperbaiki operasional Perseroan, melalui pendekatan yang sistematis, dengan cara mengevaluasi dan meningkatkan efektivitas manajemen risiko, pengendalian, dan proses tata kelola Perseroan.
Membantu Manajemen Perseroan dalam penerapan Tata Kelola Perusahaan yang baik yang meliputi pemeriksaan/ audit, penilaian, penyajian, evaluasi, saran perbaikan serta mengadakan kegiatan assurance dan konsultasi kepada unit kerja, sehingga unit kerja dapat melaksanakan tugas dan tanggung jawab secara efektif, efisien dan sesuai dengan kebijakan yang ditentukan oleh Perseroan.

INTERNAL AUDIT FUNCTIONS

Conduct independent and objective assurance and consulting, with the aim of increasing the value and improving the operations of the Company, through a systematic approach, by evaluating and improving the effectiveness of risk management, control, and governance processes of the Company.
Assist the Company’s management in the application of good corporate governance including inspections, audits, assessments, presentations, evaluations, suggestions for improvement and conducting assurance and consulting activities to the work units, so that the units can perform their duties and responsibilities effectively, efficiently and in accordance with the policies determined by the Company.

INTERNAL AUDIT INIT POSITION

1he Internal Audit Unit is structurally headed by the Head of Internal Audit Unit.
The Head of Internal Audit Unit is appointed and dismissed directly by the President Director after approval from the Board of Commissioners.
The President Director can dismiss the Head of Internal Audit Unit, after approval from the Board of Commissioners, if the Head of Internal Audit Unit is not able to fulfill the responsibilities as stipulated in the Financial Services Authority Regulation No. 56/POJK.04/2015, or is not able to perform the duties properly.
The Head of Internal Audit Unit is fully responsible directly to the President Director. 5. The Members of Internal Audit Unit are responsible directly to the Head of Internal Audit Unit.

INTERNAL AUDIT INIT DUTIES AND RESPONBILITIES

Develop a strategy and annual audit work plan and auditor’s ability and skills development plan to ensure they are up-to-date and in line with the Company’s development in accordance with input from the President Director and the Board of Commissioners.
Prepare and carry out audit of the effectiveness of internal control and risk management in accordance with Company policy.
Prepare and carry out compliance audit on the Company’s management to ensure that all activities of the Company are in accordance with the Company’s policies/ rules and regulations, and the applicable state legal regulations.
Prepare and carry out operational audit to measure the efficiency and effectiveness of all activities of the Company.

INTERNAL AUDIT INIT DUTIES AND RESPONBILITIES

Pegawai Unit Audit Internal harus memadai dalam jumlah dan memiliki kompetensi teknis dibidang audit dan kompetensi umum yang dapat mendukung pelaksanaan tugasnya. Pada 31 Desember 2018, jumlah anggota Unit Audit Internal adalah sebanyak 8 orang, yang terdiri dari 1 (satu) Kepala Unit Audit Internal, 2 manager, 3 asisten manager dan 2 supervisor.

Berikut adalah jumlah pegawai dan sertifikasi yang sudah dimiliki oleh pegawai dalam divisi Satuan Pengawasan Internal:

INTERNAL AUDIT UNIT ACTIVITY REPORT

Based on the annual audit plan as approved by the President Director. The audit activities include all Company’s branches and its subsidiaries in Indonesia and China.

The audit activities include reviewing existing business processes and their inherent risks as well as to ensure aspect of compliance with policies, laws, and regulations. Reviewing security and asset utilization, assessing the efficiency use of resources, in this case the ability to minimize losses and wastage in generating output, and reviewing operational execution in accordance with standards.

The Internal Audit activities carried out were in accordance with the standards, taking into account any identified and appropriately managed risks, conducting effective internal controls; ensuring all policies, procedures and regulations are adhered to; as well as any fraud anticipated, identified, investigated, and resolved.

The Internal Audit results take the form of improvement recommendations and are reported periodically to the management and the Audit Committee and monitored on an ongoing basis.

Internal Audit submits reports to the Board of Commissioners, the Audit Committee and the Board of Directors consisting of:

Audit Result Report
Summary of Follow Up Report on Audit Results
Audit Activity Realization Report
All significant business units have been audited. The 2018 audit was conducted by 7 auditors together with Internal Audit, with the audit covering operations, trading and distribution, logistics, manufacturing and finance

FINDINGS AND FOLLOW UP

The audit report includes the significant business processes that exist in each unit such as sales, finance and accounting, tank terminal and warehouse operations related to truck and ship operations under the unit’s supervision. The 2018 audit duties resulted in several findings and recommendations that were discussed with the person in charge of each unit, and reported to the Management of the Company. The Internal Audit also followed up on the agreed improvement process with the concerned units, to strengthen internal controls and mitigate any risks that may occur.

May 1, 2019

The Corporate Secretary is a liaison party bridging the interests between the Company and external parties, especially in maintaining public perception of the Company’s image and fulfillment of responsibilities by the Company. The Corporate Secretary is also responsible for policy making, planning and ensuring the effectiveness and transparency of corporate communications, institutional relations, investor relations and other capital market participants, with due observance to the ethical standards principles of the Company, corporate governance, and Corporate values. In addition, the Corporate Secretary shall ensure Company’s compliance with capital market laws and regulations.

CORPORTE SECRETARY PROFILE

CORPORATE SECRETARY DUTIES AND RESPONBILITIES

Sekretaris Perusahaan memiliki peran penting dalam implementasi tata kelola perusahaan. Berikut adalah 4 fungsi utama Sekretaris Perusahaan:

The Corporate Secretary plays an important role in the implementation of corporate governance. The Corporate Secretary’s 4 main functions are as follows:

1. Follow capital market developments, especially legislations in the capital market;

2. Provide input to the Board of Directors and the Board of Commissioners regarding compliance with capital market legislations;

3. Assist the Board of Directors and the Board of Commissioners in corporate governance implementation, which covers:

Disclose information to the public, including the availability of information on the Company’s website;
Timely submission of reports to the Financial Services Authority;
Execution and documentation of the General Meeting of Shareholders;

4. Act as a liaison between the Company and the shareholders, Financial Services Authority, and other stakeholders.

ORPORATE SCRETARY ACTIVITIES REPORT

During 2018, the tasks and activities carried out by the Corporate Secretary included:

Kept abreast on Capital Market developments, in particular the latest laws and regulations applicable in the Capital Market;
Organized the Company’s Annual General Meeting in Jakarta on May 3, 2018;
Participated in the Public Expose 2018 organized by PT. Bursa Efek Indonesia, in the commeration of 41st anniversary of Capital Market as a replacement to the Company’s Public Expose 2018 held on August 29, 2018 in Jakarta;
Conducted the Company MSOP Program;
Conducted the distribution of 2017 Final Dividend and 2018 Interim Dividend 2017;
Preparation of the Company’s Annual Report;
Established communication with, and submitted all necessary reports to the relevant Ministries, Financial Services Authority, and stock exchange regulatory bodies (SROs) such as the Indonesia Stock Exchange (IDX), KSEI and other relevant institutions;

CORPORATE SECRETARY TRAINING

To support the tasks and responsibilities, the Corporate Secretary continues to improve his competencies. Here are the training/workshops/seminars attended by the Corporate Secretary during 2018:

May 1, 2019

The Nomination and Remuneration Committee is formed by and is responsible to the Board of Commissioners to assist the functions and duties implementation of the Board of Commissioners regarding Nomination and Remuneration for Board of Directors members and Board of Commissioners members, as stipulated in OJK Regulation No. 34/POJK.04/2014 dated December 8, 2014 concerning the Nomination and Remuneration Committee of Issuers or Public Companies.

NOMINATION AND REMUNERATION COMMITTEE CHARTER

The Board of Commissioners has prepared the Nomination and Remuneration Committee Charter that regulates its duties and responsibilities and becomes a work reference for the Committee. The Nomination and Remuneration Committee Charter was approved by the Board of Commissioners on March 31, 2015, which included:

Introduction
Organizational Structure
Requirements for Committee Members
Responsibility
Nomination and Remuneration Committee Duties
Authority, Rights and Obligations
Nomination and Remuneration Committee Meeting
Nomination and Remuneration Committee Tenure
Closing

CRITERIA OF NIMONATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee plays a role in the process of nominating candidates for members of Board of Commissioners and Board of Directors, starting with defining criteria, conducting fit and proper test and delivering the results to the Board of Commissioners. The Committee also has the duty to evaluate the performance of Board of Commissioners and Board of Directors, and relate it to remuneration, and to propose evaluation results to the Board of Commissioners. The results of both evaluations are then submitted to the GMS for approval. The requirements for Nomination and Remuneration Committee members are as follows:

Understand well the vision, mission and work culture of the Company.
Have high integrity, ability, knowledge and sufficient work experience.
Not have a personal interest that could bring a negative impact and conflict of interest on the Company.
Have sufficient time to complete the task.
Able to communicate and work together properly and effectively.
Especially for the Committee Chairman, who is also an independent commissioner, the general rule is that he/ she has no relationship with the Company; members of Board of Directors; members of Board of Commissioners or major shareholders, and has no shares in the Company.

NOMINATION AND REMUNERATION COMMITTEE MEMBERSHIP

Based on the Company’s Board of Commissioners Decision concerning Changes to the Nomination and Remuneration Committee Composition, the Board of Commissioners approved and determined the changes in the Nomination and Remuneration Committee on December 31, 2018 with the following composition:

NOMINATION AND REMUNERATION COMMITTEE MEMBERS PROFILE

I nyoman mastra

Chairman of Nomination and Remuneration Committee

His profile can be seen in the Board of Commissioners Profile section in this Annual Report.

Soegiarto adikoesoemo

Member of Nomination and Remuneration Committee

His profile can be seen in the Board of Commissioners Profile section in this Annual Report.

INDEPENDENCY OF NOMINATIN AND REMUNERATION COMMITTEE INDEPENDENCY

The Nomination and Remuneration Committee is chaired by I Nyoman Mastra, an Independent Commissioner, who does not have any affiliations with Board of Commissioners, Board of Directors and major shareholders of the Company.

NOMINATIN AND REMUNERATION COMMITTEE DUTIES AND RESPONSIBILITIES

The duties and responsibilities of Nomination and Remuneration Committee as mentioned in the Nomination and Remuneration Committee Charter are as follows:
Related to nomination

Assess and evaluate the performance of each member of Board of Directors and Board of Commissioners with regard to the implementation of good corporate governance; implementation of the Company’s overall operations, related to the actual achievement of the Company; alignment of work between the vision and mission of the Company; conformity between strategy and innovation as well as achievement in increasing shareholder value.
Based on the above, hold discussions to propose candidates to become members of Board of Directors and Board of Commissioners to the Board of Commissioners to be used as discussion material at the GMS.
Carry out other duties related to nomination, as assigned by the Board of Commissioners.

Related to remuneration

Assess and evaluate the performance of each member of Board of Directors and Board of Commissioners with regard to the implementation of good corporate governance; implementation of the Company’s overall operations, related to the actual achievement of the company; alignment work between the vision and mission of the company; conformity between strategy and innovation as well as achievement in increasing shareholder value.
Based on the above, carry out discussions to determine the amount of remuneration for each member of Board of Directors and Board of Commissioners to the Board of Commissioners to be uses as discussion material at the GMS.
Carry out other duties related to remuneration as assigned by the Board of Commissioners.

AUTHORITIES , RIGHTS AND OBLIGATIONS AUTHORITIES

The Nomination and Remuneration Committee may access the records or information related to employees, funds, assets and other resources of the Company that are relevant to the performance of its duties.
In performing its duties, the Nomination and Remuneration Committee may work together with the personnel administration, finance and other departments related to its fields.
The Nomination and Remuneration Committee may work together with third parties under the Board of Commissioners’ approval.
Each member of Nomination and Remuneration Committee must perform their duties well and maintain the confidentiality of all Company documents, data and information. Documents, data or information may only be used for the implementation of the Committee’s tasks.
The Nomination and Remuneration Committee in performing its duties shall take into account such things as the company’s financial performance; individual job performances; fairness; and consideration of the Company’s long-term goals and strategies and other considerations.
The Nomination and Remuneration Committee work plan must be submitted to the Board of Commissioners.
The Nomination and Remuneration Committee must produce a report related to the execution of its duties to the Board of Commissioners.

NOMINATION AN REMUNERATION COMMITTEE MEETINGS

The Nomination and Remuneration Committee holds regular meetings at least once in every four (4) months or as needed. In 2018, the Nomination and Remuneration Committee held 3 (three) meetings with the level of attendance as follows:

Ada pun agenda rapat Komite Nominasi dan Remunerasi adalah sebagai berikut:

NOMINATION AND REMUNERATION COMMITTEE ACTIVITY REPORT

The Nomination and Remuneration Committee carried out several nomination and remuneration activities related to the selection of candidates for Board of Commissioners and Board of Directors and proposed remuneration for Board of Commissioners and the Board of Directors.

Throughout 2018, the Nomination and Remuneration Committee has provided advice to the Board of Commissioners in the form of determining remuneration to be carried out in accordance with the performance of each Board of Directors and Board of Commissioners, related to GCG implementation, suitability of targets and achievements, Company performance and work alignment

BOARD OF DIRECTORS SUCCESSION POLICY

The Company conducts continuous employee development programs. In nominating members of Board of Directors, the Company’s priority is to look internal candidate first. The Company also has a Nomination and Remuneration Committee where one of its tasks is to examine and propose the succession planning for Board of Directors and/or Board of Commissioners. The nomination procedure is executed transparently and in accordance with the conditions and needs of the Company, as well as legislations.
The Board of Directors succession program is carried out on an ongoing basis in accordance with the needs and development of the Company’s business. Succession programs are conducted in the following manner:

Education and training programs, whether conducted by the Company internally or by external parties.
Delegation of authority.

April 30, 2019

The Board of Commissioners formed several Committees under its supervision, one of them, the Audit Committee.

The Audit Committee is formed by and responsible to the Board of Commissioners to assist in ensuring the effectiveness of internal control system, financial reporting quality and effectiveness of the Internal Audit function including review the risks faced by the Company, and also compliance with the regulation. In carrying out its duties and responsibilities, the Audit Committee upholds the five GCG principles as described above, and acts professionally and independently for the benefit of the Company and stakeholders.

In order for the Audit Committee to be able to act efficiently and effectively, an Audit Committee was prepared and last updated and ratified by the Board of Commissioners on June 19, 2017 and published on the Companys website.

AUDIT COMMITTEE CHARTER

The Audit Committee Charter or Work Guidelines of Audit Committee was first prepared and approved by the Board of Commissioners on December 29, 2004. The Company has made several changes to the Audit Committee Charter on October 1, 2013 and August 13, 2015, in order to comply with the most recent regulatory changes.

The Company’s Audit Committee Charter contains:

Introduction
Purpose and Objectives
Responsibilities
Goal Tasks
Authorities
Work Programs
Structure and Membership
Meetings
Reporting
Closing

COMPOSITION OF AUDIT COMMITTEE MEMBERS

The Audit Committee must consist of at least three members, with one of them being an Independent Commissioner who concurrently serves as the Chairman of Audit Committee. Other member must be independent parties who is not an employee of the Company employees, and may not concurrently serve as member of other committees in the Company during the same period.

The composition of Audit Committee members in 2018 are as follows:

AUDIT COMMITTEE MEMBER PROFILE

I nyoman mastra / Chairman of audit Committee

His profile can be seen in the Board of Commissioners Profile section in this Annual Report.

INDEPENDENCY OF AUDIT COMMITTEE

All members of Audit Committee are independent and external parties, and appointed according to their ability and educational background, in compliance with the qualifications stipulated in Financial Services Authority Regulation No.55/ POJK.04/2015 concerning the Formation and Working Guidelines for Audit Committee, which includes among others, not having any affiliations with Board of Commissioners, Board of Directors and controlling shareholders of the Company.

AUDIT COMMITTEE DUTIES AND RESPONSIBILITIES

The duties and responsibilities of Audit Committee as stated in the Audit Committee Charter of PT AKR Corporindo Tbk, are as follows:

Reviewing the financial information published by the Company such as financial statements, projections, and other reports relating to financial information;
Reviewing adherence to legislations;
Providing independent opinion to the Board of Commissioners on disagreements between management and accountants;
Providing information to the Board of Commissioners related to the appointment of accountants based on their independence, scope of assignment and fee;
Reviewing the audit conducted by the internal auditors and supervise follow up on the findings of internal auditor;
Reviewing the implementation of risk management activities undertaken by management;
Examining complaints related to the accounting and financial reporting process;
Reviewing and providing advice to the Board of Commissioners related to potential conflicts of interest;
Maintaining the confidentiality of documents, data and information;

AUDIT COMMITTEE AUTHORITY

In performing its duties, the Audit Committee has authority as follows:

To access data, documents, and other information related to employees, funds, assets, and resources of the Company as required;
To communicate directly with employees, including Board of Directors and internal audit and accounting related to their duties and responsibilities;
To engage independent parties, other than members of Audit Committee, who may be required to assist the implementation of their duties, at Company’s expense. This authority requires the Board of Commissioners’ permission.
To perform other authorities as assigned by the Board of Commissioners.

AUDIT COMMITTEE FUNCTIONS

The main functions of Audit Committee are as follows:

Report results of risk management evaluation to the Board of Commissioners to address potential risks that may disrupt the ongoing business;
Evaluate the performance of the Company and its subsidiaries on a regular basis (quarterly, semesterly, and annually) on target achievement, market conditions and trends, future performance predictions, and reporting findings and providing suggestions for improvement of the Board of Commissioners performance;
Deliver reports from the Board of Directors in a professional and independent manner;
Together with the Internal Audit, provide an assessment on documentation procedures and implementation by management that are suggested by the operational department to improve the financial transaction performance and reporting system;
Discuss the development of business environment by identifying the potentials for Company’s performance development;
Ensure that the Company’s financial reports are in accordance with adopted accounting standards;
Ensure the internal control systems, financial reporting processes, and GCG implementation are functioning properly.

AUDIT COMMITTEE MEETINGS

The Audit Committee holds regular meetings at least 1 (one) time every three (3) months. In 2018, the Audit Committee held 6 meetings with the level of attendance as foll

Ada pun agenda rapat Komite Audit adalah sebagai beriku

AUDIT COMMITTEE ACTIVITY REPORT

The main function of Audit Committee is to assist the Board of Commissioners in fulfilling its supervisory duties. Therefore, in accordance with applicable regulations, the Audit Committee has duties and responsibilities, among others, to ensure the achievement of objectives:

The Company’s financial information are presented fairly in accordance with Indonesian financial accounting standards;
Providing independent opinion in the event of any disagreement between management and the Accountant for the services provided;
Providing recommendations to the Board of Commissioners regarding the appointment of Accountant based on independence, assignment scope, and remuneration;
The Company’s internal control structure has been effectively implemented, including review the violation relating to accounting and financial reporting processes;
Review the internal and external audit to be conducted in accordance with applicable auditing standards and supervise the follow-up conducted by the Board of Directors; and
The Company complies with Capital Market laws and regulations, and other laws and regulations related to the Company’s activities.

During 2018, the Audit Committee carried out the following activities:

The Audit Committee conducted oversight duties through periodic meetings with related parties such as independent auditor, internal audit unit, and management. The meeting discussions covered the financial reporting business processes including monitoring and evaluating the independence of independent auditor, and providing independent opinion in the event of differences of opinion between the management and the independent auditor regarding the services provided. Briefly, these activities can be described as follows

Discussion with the Company Management. For each publishment of the Company’s consolidated financial statements (quarterly and yearly), the Audit Committee reviewed and discussed the statements to be published by the Company with the Company’s Management including discussion on the quality of applied accounting standards, the significant judgments used, and the adequacy of disclosures in the consolidated financial statements.
Evaluation and suggestion for the appointment of Public Accounting Firm (KAP) to the Board of Commissioners. In the first Quarter of 2018, the Audit Committee recommended to the Board of Commissioners that for the appointment of Independent Auditor, they should reappoint KAP Purwantono, Sungkoro & Surja (a member firm of Ernst & Young Global Limited), to conduct the general audit of the Company’s Consolidated Financial Statements for the fiscal year 2018. The Board of Commissioners approved the proposal and proposed it to the GMS. The Company’s Annual GMS on May 5, 2018 approved the appointment of KAP Purwantono, Sungkoro & Surja as the Company’s Independent Auditor to conduct the general audit of the Company’s Consolidated Financial Statements for the fiscal year 2018.
Review of audit conducted by internal auditor.
The Audit Committee seeks to empower, and work closely with Internal Audit through an emphasis on the work program direction. The Internal Audit work programs, not only focuses on financial and operational audits, but also focuses on providing advising on effectiveness and efficiency improvements in the Company operations. Periodically, the Audit Committee and internal auditor discuss the results of the established work program.
Discussion with independent auditor. The Audit Committee discussed and reviewed the quality of the Company’s financial statements with independent auditor. The independent auditors were responsible for providing an opinion on the fairness of the audited consolidated financial statements in accordance with Indonesian financial accounting standards. The review also covered the judgment quality, and the adequacy of disclosures in the consolidated financial statements that has been prepared by the Management has prepared. This discussion included other matters required by the auditing standards for discussion and communication with Audit Committee by the Independent Auditor, including independence of KAP and its auditors’ from the Management and the Company.

AUDIT COMMITTEE RECOMENDATIONS

As part of its duties and responsibilities, the Audit Committee provides recommendations to the Board of Commissioners regarding the areas under which the Audit Committee is responsible for oversight. During 2018, the Audit Committee recommendations were as follows:

AUDIT COMMITTEE COMPETENCY DEVELOPMENT

To support the execution of its duties, Audit Committee members attended training programs in order to improve their competencies, that are conducted either formally or informally. The competency development programs attended by Audit Comimittee members can be seen in the Company Profile Chapter.

April 30, 2019

The Board of Commissioners and Board of Directors composition diversity refers to their expertise, knowledge and professional experience and background that will support the effectiveness of their duties and functions. The Company does not discriminate by race, religion and gender for both women and men to occupy positions on the Company’s Board of Directors and Board of Commissioners.

The diversity of PT AKR Corporindo Tbk Board of Commissioners and Board of Directors members in 2018 is as follows:

April 30, 2019

In carrying out their duties and responsibilities, the Board of Commissioners and the Board of Directors hold meetings to discuss various agendas that relate to the interests of the Company. The activities in the 2018 Board of Commissioners and Board of Directors meetings include:

BOARD OF COMMISIONERS MEETINGS

The Board of Commissioners’ meetings comprise internal meetings of the Board of Commissioners, and Board of Commissioners meeting with the Board of Directors (Radirkom), as well as a Board of Commissioners Meeting with Committees under the Board of Commissioners that are held at least once a month.

BOARD OF COMMISSIONERS MEETING CONDITIONS

The Board of Commissioners must hold a meeting at least 1 (one) time every 2 (two) months.
The Board of Commissioners must hold meetings with the Board of Directors periodically at least 1 (one) time every 4 (four) months.
The Board of Commissioners must schedule the Meetings, as referred to in points 1 and 2, for the following year before the end of the fiscal year and submit the Meeting material to participants no later than 5 (five) days before the meeting is held.
Board of Commissioners Meeting Calls are made by the President Commissioner.
Calls for Board of Commissioners meetings and / or Meetings with the Board of Directors, are delivered by registered letter or with a letter delivered directly to each member of the Board of Commissioners and / or Board of Directors, with a receipt of having received. no later than 5 (five) days before the meeting is held, not taking into account the call date and the meeting date.
Decisions at Board of Commissioners Meetings must be made based on deliberation to reach consensus. If that is not reached, approval of the decisions can be made based on voting by more than 1/2 (one-half) of the members of the Board of Commissioners present.
Board of Commissioners Meetings can also be conducted through teleconferencing, video conferencing or through other electronic media facilities that enable all participants at the meeting to see and hear directly and participate in the Board of Commissioners’ Meetings.

MEETING FREQUENCY AND ATTENDANCE

Throughout 2018, the Board of Commissioners held 10 (ten) meetings as follows:

BOARD OF DIRECTORS MEETINGS

Board of Directors’ Meetings are scheduled regular and nonroutine meetings held by the Directors. Meetings are held as a mechanism for planning and monitoring the application of the Company’s strategies and policies

KETENTUAN RAPAT DIREKSI BOARD OF DIRECTORS MEETING CONDITION

Board of Directors’ Meetings must be held at least 1 (one) time every month.
The Board of Directors must hold a meeting with the Board of Commissioners periodically at least 1 (one) time every 4 (four) months.
The Board of Directors must schedule the Meetings, as referred to in points 1 and 2, for the following year before the end of the fiscal year and submit the Meeting material to participants no later than 5 (five) days before the meeting is held.
Board of Directors Meetings are made by members of the Board of Directors who are entitled to act for and on behalf of the Board of Directors in accordance with the provisions of the Company’s Articles of Association.
Directors’ meetings are held at the Company’s domicile or the place of business of the Company.
Decisions of Board of Directors’ Meetings must be made based on deliberation to reach consensus. If that is not reached, approval of the decisions can be made based on voting by more than 1/2 (one-half) of the members of the Board of Directors present.
Board of Directors ‘meetings can also be conducted through teleconferencing, video conferencing or through other electronic media facilities that enable all participants at the meeting to see and hear directly and participate in the Board of Commissioners’ Meetings.

MEETING FREQUENCY AND ATTENDANCE

During 2018, the Board of Directors held 51 (five) meetings with details as follows:

JOING MEETING

Board of Directors and Board of Commissioners Joint Meetings are Meetings as a form of coordination and consultation to discuss the Board of Directors’ periodic reports and discuss business conditions and prospects as well as national / regional policies that affect the Company’s performance, and to provide responses, notes and advice on decision as outlined in the Minutes of Meetings attended by Members of the Board of Commissioners, Members of the Board of Directors, Related Divisions and Corporate Secretary. In the Company’s Articles of Association it states that Joint Meetings can be held at least 4 (four) months.

MEETING FREQUENCY AND ATTENDANCE

During 2018, the Board of Commissioners and Board of Directors held 6 (six) joint meetings with details as follows:

April 30, 2019

The following shows the affiliated relationships between members of the Board of Directors, Board of Commissioners, and Controlling Shareholders:

There are no affiliated relationships among members of the Board of Directors.
Affiliations between members of the Board of Directors and members of the Board of Commissioners: President Director Haryanto Adikoesoemo, is the son of Soegiarto Adikoesoemo who serves as the President Commissioner of the Company.
Affiliations between the members of the Board of Directors and majority shareholders: President Director Haryanto Adikoesoemo, is President Director and one of the shareholders in PT Arthakencana Rayatama, the majority shareholder of the Company. His father, Soegiarto Adikoesoemo, is President Commissioner and one of the shareholders in PT Arthakencana Rayatama.
There are no affiliated relationships between members of the Board of Commissioners and other members of the Board of Commissioners.
Affiliations between members of the Board of Commissioners and majority shareholders: President Commissioner Soegiarto Adikoesoemo, is the President Commissioner one of the shareholders of PT Arthakencana Rayatama who are the majority shareholder of the Company. His Son, Haryanto Adikoesoemo, is the President Director and one of the shareholders in PT Arthakencana Rayatama.

April 30, 2019

BOARD OF COMMISSIONERS AND BOARD OF DIRECTORS REMUNERATION DTERMINATIN PRECEDURE.

The procedure for determining the Board of Commissioners and Board of Directors remuneration starts with the Board of Commissioners receiving a proposal for the amount of remuneration, based on the Nomination and Remuneration Committee recommendation that pays attention to performance achievements, which is then submitted at the GMS for the Shareholders to agree and approve.

BOARD OF COMMISSIONERS AND BOARD OF DIRECTORS REMUNERATION STRUCTURE

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