As a publicly listed company at the Indonesia Stock Exchange, PT Indo Tambangraya Megah Tbk, hereinafter ITM, is obliged to comply with the Law on Capital Market and all regulations derived from it. ITM considers such compliance essential to the attainment of its goal. It upholds the principles and rules of good corporate governance, namely transparency, independency, accountability, responsibility and fairness and promote best governance practices while managing its operation in the interest of shareholders and wider stakeholders. To do justice to its supervisory role vis-à-vis the Board of Directors (BOD) and to facilitate its works in fulfillment of its fiduciary duties the Board of Commissioners (BOC) establishes a number of committees, including the Audit Committee.  

Vision
The Audit Committee strives to become a competent, independent and professional and reliable instrument of supervision, aiming to perform its role responsibly and assisting the BOC in best way possible with information that the BOC needs in exercising its supervisory role.  

Mission
The Audit Committee assists the Board of Commissioners in executing its supervisory role, helping to ensure in particular that the Company is governed, managed and run properly in accordance with the principles and rules of good corporate governance, best-practice corporate social responsibility and management.

Objective
The Audit Committee Charter is stipulated by the Board of Commissioners as a guideline for the Audit Committee while performing its role and responsibility based on a transparent, accountable, competent and independent manner with the ultimate objective that the Company is governed, managed and run in compliance with prevailing laws and regulations.

ORGANIZATION

Membership Structure
The Audit Committee shall comprise of 1 (one) member who sits as Independent Commissioner in the Board of Commissioners and  2 (two) other members from outside the Company who are appointed expert members on the basis of their expertise, educational and professional backgrounds.

The member who is an Independent Commissioner serves as the Chairman of the Audit Committee. shall be constituted as the Head of the Audit Committee. In  case there are more than one Independent Commissioners who serves member of the Audit Committee, only one of them shall act as the Chairman of the Audit Committee.

An Independent commissioner is a member of the Board of Commissioner who is not:
a. coming from within the organization of ITM or its subsidiary companies and its affiliations;
b. holder ITM shares, either directly or indirectly.
c. having a direct or indirect operational business relationship with  ITM.

The appointment and the discharge of members of the Audit Committee is the legal right and responsibility of  the Board of Commissioners and are to be reported in a timely manner to the General Meeting of Shareholders.
 
Membership Qualifications
Members of the Audit Committee should posses the following qualifications:

• Integrity, competency, adequate knowledge and know-how and experience as reflected in educational and professional backgrounds and ability to communicate properly.
• Educational background in accounting and or finance of at least one member.
• Adequate know-how  in analyzing financial statement.
• Proper knowledge on laws and regulations governing a publicly listed company, notably the laws and regulations on the Capital Market, mining  and other matters related to company operations.

Membership Preconditions
Members of the Audit Committee should meet the following preconditions:

• Not having family affiliations to the Board of Commissioners Board of Directors and/or major shareholders either horizontally or vertically  (marriage relationship or ancestral descent up to second generation);
• Not having a direct or indirect business relationship with ITM;
• Not being an insider or employee of the Office of Public Accountant, Office of Legal Counsels or other parties that provide audit services, non audit services or other consultation services to ITM  within the last 6 (six) months before his/her appointment;
• Not being a person who has the authority or responsibility to plan, lead or control ITM operation within the last 6 (six) months before his/her appointment;
• Not being a person who hold directly or indirectly the shares of ITM.  In the case the members of Audit Committee obtain the share through the legal channel, those shares should be transferred to other party within 6 (six) months following the possession of those shares.

TERM OF OFFICE

The term of office of Commissioner who is concurrently serving as a member of Audit Committee shall be equally treated as the term of office of Commissioner as stipulated in  the Articles of Association and decision of General Meeting of Shareholders.

The term of office of members of Audit Committee who are not serving as members of Board of Commissioners shall be determined by the Board of Commissioners and might be re-elected for maximum of another one term.

DUTIES AND RESPONSIBILITY

To review the Company’s financial statements, projections and any other financial information for accuracy and adequacy purpose prior their publication.

To ensure that the Company has an efficient and appropriate internal control system and an internal audit system.

To ensure that the Company has duly complied with the laws on capital market, the Indonesia Stock Exchange requirements and other laws relating to the Company’s business.

To review the selection and to recommend to the Board of Commissioners the Company’s public auditor and its auditing fee.

To review the disclosure of the Company’s information in case there is any connected transaction or any transaction with possible conflict of interest to ensure that the transaction is accurate, complete and transparent.

To write a section in the corporate governance report which will be published as an integral part of the Company’s annual report to be signed by the Chairman of Audit Committee.

To report and keep monitoring major risk management procedures after the Risk Management Committee has done the taskto review financial derivatives transaction, commodity hedging with contractual parties for linkages with the internal control.

To express opinions regarding appointment and termination of employment, the operation plan and results, budgeting and personnel of the Internal Audit Office.

To review and propose recommendations to amend scopes of works, duties and responsibilities of the Audit Committee in responding to changing circumstances.

To submit an operation report to the Board of Commissioners at least once a year.

To do any other tasks as designated by the Board of Commissioners upon the Audit Committee’s approval.

To invite executive officers or supervisors of the Company to attend the Audit Committee’s meeting for clarification purpose or to submit relevant documents.  These activities are possible only within the scope of Audit Committee’s authority.

To review, monitor and report to the Board of Commissioners and follow up on any complaint received from related parties towards the Company.
    
To keep the confidentiality of any Company’s documents, data and information.

ACCOUNTABILITY

Audit Committee shall report to the Board of Commissioners.

Audit Committee shall present the following periodical reports to the Board of Commissioners:

• Annual report on the implementation of the Audit Committee’s programs and activities, Quarterly report on the implementation of Audit Committee’s activities.

AUTHORITY

The Audit Committee shall have full, free and unrestricted access to the Company’s records, information on the employee, fund, assets as well as any other Company’s resources in relations with the execution of its duties.

In executing its authority, Audit Committee shall cooperate with the Company’s Internal Audit on a functional rather than hierarchical basis.

The Audit Committee has the right to request the attendance of the Internal Audit in its meetings as and when it deems necessary.  

The Audit Committee has the right to hire consultants and incur expenditures in accordance with company’s budgetary policy.
     
MEETING

Audit Committee shall convene regular meeting at least once a month.

Decision of the Audit Committee shall be deliberated and made in a meeting, which is convened with prior notice and attended by at least 2/3 (two-thirds) of the  members.

A decision of the Audit Committee shall be deemed valid if it is approved by more than ½ (one-half) of the members of the Audit Committee who are present at the meeting.

Meeting of Audit Committee shall be chaired by the Chairman of the Audit Committee or by the most senior member if the Chairman is unable to attend.

If it deems necessary, the Audit Committee has the right to invite relevant outside experts to its meetings with a view to listening to their expert opinions on matters under deliberation.

The Audit Committee maintains a proper record of its meetings in form of  minutes that are deposited properly.

REPORTING

The Audit Committee shall report to the Board of Commissioners the results of its reviews within 14 days  following the completion of the review.

The Audit Committee reports on a regular basis to the Board of Commissioners on its activities, problems encountered and its recommendations on follow up actions.

The Audit Committee through the Board of Commissioners shall submit each year reports on its works and achievements and other related information that need to be conveyed in the Annual Report of the Company.

BUDGETING

Before the end of a fiscal respective fiscal year, the Audit Committee shall draft and  submit to the Board of Commissioners its work plan and budget commensurate with its role and responsibility.

The budget of the Audit Committee shall be part of the Board of Commissioners’ annual budget.

Administration of Audit Committee is run for practical purposes  by the Head of Company’s Internal Audit  as far as auditing works are concerned.

Any assets that the Audit Committee deploys in its works are registered as the assets of the Company.

VALIDITY AND EVALUATION

This Revised Audit Committee Charter shall take effect as of the date of its approval

This Audit Committee Charter shall be reviewed for improvements from time to time to comply with the prevailing rules and regulations.

Performance of Audit Committee either collectively or individually shall be evaluated every year based on the self-assessment principle and the result shall be reported to the Board of Commissioners together with the Annual Report of the Audit Committee.