FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 56 /POJK.04/2015

CONCERNING

THE FORMATION AND GUIDELINES FOR DRAFTING

THE INTERNAL AUDIT UNIT CHARTER

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that with the enactment of Law Number 21 of 2011 concerning the Financial Services Authority, as of December 31, 2012, the functions, duties, and authorities for regulating and supervising financial services activities in the Capital Market sector, including regulations regarding the formation and guidelines for drafting the Internal Audit Unit Charter, have transferred from the Capital Market and Financial Institution Supervisory Board to the Financial Services Authority;

b. that in order to provide clarity and certainty regarding regulations on the formation and guidelines for drafting the Internal Audit Unit Charter, regulations regarding the Formation and Guidelines for Drafting the Internal Audit Unit Charter issued prior to the establishment of the Financial Services Authority need to be changed into a Financial Services Authority Regulation;

c. that based on the considerations as referred to in letters a and b, it is necessary to issue a regulation regarding the Formation and Guidelines for Drafting the Internal Audit Unit Charter by establishing a Financial Services Authority Regulation;

Recalling:

1. Law Number 8 of 1995 concerning the Capital Market (State Gazette of the Republic of Indonesia Year 1995 Number 64, Supplement to the State Gazette of the Republic of Indonesia Number 3608);
2. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);

DECIDING:

Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE FORMATION AND GUIDELINES FOR DRAFTING THE INTERNAL AUDIT UNIT CHARTER.

CHAPTER I

GENERAL PROVISIONS

Article 1

In this Financial Services Authority Regulation, the following terms are defined as:

1. Internal Audit is an activity providing assurance and consulting services that are independent and objective, with the aim of increasing value and improving corporate operations, through a systematic approach, by evaluating and enhancing the effectiveness of risk management, controls, and corporate governance processes.

2. Internal Audit Unit is a work unit within an Emitter or Public Company that performs the Internal Audit function.

Article 2

The use of names or terms for the Internal Audit Unit as referred to in Article 1 number 4 can be determined by each Emitter or Public Company.

CHAPTER II

INTERNAL AUDIT UNIT

First Section

Formation

Article 3

Emitters or Public Companies are required to have an Internal Audit Unit.

Second Section

Structure and Position

Article 4

(1) The Internal Audit Unit consists of 1 (one) internal auditor or more.

(2) The Internal Audit Unit as referred to in paragraph (1) is led by a Head of the Internal Audit Unit.

(3) In the event that the Internal Audit Unit consists of 1 (one) internal auditor, the said internal auditor also acts as the Head of the Internal Audit Unit.

(4) The number of internal auditors as referred to in paragraph (1) is adjusted to the size and level of complexity of the business activities of the Emitter or Public Company.

Article 5

(1) The Head of the Internal Audit Unit is appointed and dismissed by the Director with the approval of the Board of Commissioners.

(2) The Head of the Internal Audit Unit is responsible to the Director.

(3) In the event that the Head of the Internal Audit Unit does not meet the requirements as an internal auditor in the Internal Audit Unit as regulated in this regulation and/or fails or is incompetent in performing duties, the Director may dismiss the said Head of the Internal Audit Unit, after obtaining approval from the Board of Commissioners.

(4) Internal auditors within the Internal Audit Unit are directly responsible to the Head of the Internal Audit Unit.

Third Section

Requirements for Internal Auditors

Article 6

Internal auditors within the Internal Audit Unit are required to meet the following requirements:

a. possess integrity and professional behavior, independence, honesty, and objectivity in the execution of their duties;

b. possess knowledge and experience regarding audit techniques and other disciplines relevant to their field of duty;

c. possess knowledge of capital market legislation and other related legislation;

d. possess the ability to interact and communicate effectively, both orally and in writing;

e. comply with professional standards issued by the Internal Audit Association;

f. comply with the Internal Audit Code of Ethics;

g. maintain the confidentiality of information and/or company data related to the execution of Internal Audit duties and responsibilities, except as mandated by legislation or court decisions;

h. understand principles of good corporate governance and risk management; and

i. be willing to continuously improve their knowledge, skills, and professional competence.

Fourth Section

Duties, Responsibilities, and Authorities

Article 7

The Internal Audit Unit has at least the following duties and responsibilities:

a. formulate and implement the annual Internal Audit plan;

b. test and evaluate the implementation of internal controls and risk management systems in accordance with company policies;

c. conduct examinations and assessments regarding efficiency and effectiveness in the fields of finance, accounting, operations, human resources, marketing, information technology, and other activities;

d. provide improvement recommendations and objective information regarding audited activities to all levels of management;

e. create audit reports and submit these reports to the Director and the Board of Commissioners;

f. monitor, analyze, and report on the implementation of follow-up improvements that have been recommended;

g. cooperate with the Audit Committee;

h. formulate programs to evaluate the quality of the internal audit activities conducted; and

i. conduct special examinations when necessary.

Article 8

The Internal Audit Unit has at least the following authorities:

a. access all relevant information about the company related to its duties and functions;

b. 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;

c. hold regular and incidental meetings with the Board of Directors, Board of Commissioners, and/or Audit Committee; and

d. coordinate its activities with external auditor activities.

CHAPTER III

INTERNAL AUDIT CHARTER

Article 9

Emitters or Public Companies are required to have an Internal Audit Charter containing at least:

a. the structure and position of the Internal Audit Unit;

b. the duties and responsibilities of the Internal Audit Unit;

c. the authorities of the Internal Audit Unit;

d. the Internal Audit Unit Code of Ethics referring to the code of ethics established by the Internal Audit Association in Indonesia or the Internal Audit Code of Ethics commonly applied internationally;

e. the requirements for internal auditors within the Internal Audit Unit;

f. the accountability of the Internal Audit Unit; and

g. the prohibition of concurrent duties and positions for internal auditors and practitioners within the Internal Audit Unit regarding the execution of the company's operational activities, both in the Emitter or Public Company and its subsidiaries.

Article 10

The Internal Audit Unit Charter is established by the Board of Directors after obtaining approval from the Board of Commissioners.

CHAPTER IV

REPORTING

Article 11

Any appointment, replacement, or dismissal of the Head of the Internal Audit Unit must be immediately reported to the Financial Services Authority.

CHAPTER V

SANCTION PROVISIONS

Article 12

(1) Without prejudice to criminal provisions in the Capital Market sector, the Financial Services Authority has the authority to impose administrative sanctions on any party that violates the provisions of this Financial Services Authority Regulation, including parties causing the violation, in the form of:

a. written warning;

b. fine, namely the obligation to pay a certain amount of money;

c. restriction of business activities;

d. suspension of business activities;

e. revocation of business license;

f. cancellation of approval; and

g. cancellation of registration.

(2) Administrative sanctions as referred to in paragraph (1) letters b, c, d, e, f, or g can be imposed with or without prior imposition of an administrative sanction in the form of a written warning as referred to in paragraph (1) letter a.

(3) Administrative sanctions in the form of a fine as referred to in paragraph (1) letter b can be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (1) letters c, d, e, f, or g.

Article 13

In addition to administrative sanctions as referred to in Article 12 paragraph (1), the Financial Services Authority can take certain actions against any party that violates the provisions of this Financial Services Authority Regulation.

CHAPTER VI

CLOSING PROVISIONS

Article 14

Upon the commencement of this Financial Services Authority Regulation, the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Board Number: KEP-496/BL/2008 dated November 28, 2008 concerning the Formation and Guidelines for Drafting the Internal Audit Unit Charter along with Regulation Number IX.I.7 which is its attachment, is revoked and declared invalid.

Article 15

This Financial Services Authority Regulation comes into force on the date of its promulgation.

To ensure that everyone knows it, order the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on December 23, 2015

CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY,

signed

MULIAMAN D. HADAD

Promulgated in Jakarta on December 29, 2015

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

signed

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 407

A copy in accordance with the original

Legal Director 1
Department of Law

signed

Sudarmaji

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 56 /POJK.04/2015

CONCERNING

THE FORMATION AND GUIDELINES FOR DRAFTING

THE INTERNAL AUDIT UNIT CHARTER

I. GENERAL

That as of December 31, 2012, the functions, duties, and authorities for regulating and supervising financial services activities in the Capital Market, Insurance, Pension Funds, Financing Institutions, and Other Financial Service Institutions have transferred from the Minister of Finance and the Capital Market and Financial Institution Supervisory Board to the Financial Services Authority.

In relation to the above, it is necessary to restructure existing regulations, particularly those related to the Capital Market sector, by converting Capital Market and Financial Institution Supervisory Board regulations related to the Capital Market sector into Financial Services Authority Regulations. This restructuring is intended to ensure that there are Financial Services Authority Regulations related to the Capital Market sector that are consistent with Financial Services Authority Regulations in other sectors.

Based on the background and aspects mentioned, it is necessary to convert Capital Market and Financial Institution Supervisory Board regulations, namely Regulation Number IX.I.7, Attachment of the Decision of the Chairman of the Capital Market Supervisory Board Number: KEP-496/BL/2008 concerning the Formation and Guidelines for Drafting the Internal Audit Unit Charter dated November 28, 2008.

II. ARTICLE BY ARTICLE

Article 1

Sufficiently clear.

Article 2

Sufficiently clear.

Article 3

Sufficiently clear.

Article 4

Sufficiently clear.

Article 5

Sufficiently clear.

Article 6

Sufficiently clear.

Article 7

Sufficiently clear.

Article 8

Sufficiently clear.

Article 9

Sufficiently clear.

Article 10

Sufficiently clear.

Article 11

Sufficiently clear.

Article 12

Sufficiently clear.

Article 13

Sufficiently clear.

Article 14

Sufficiently clear.

Article 15

Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5825