As part of the PT Indo Sino Energi Resiliency Model, internal controls were developed to facilitate standardization of processes and practices across the ISE Group for focus risk areas such as Financial, Health, Safety, Security and Environment (HSSE), Plant and Facilities, Project, Procurement, Information and Communication Technology (ICT), Reputation, Human Capital, and Country.
a) FINANCIAL Limits of Authority
The Limits of Authority (LOA) defines decision-making limits within the ISE Group, providing a balance between effective and quality decision-making and appropriate management control.
LOA development and revision are independently reviewed by the Group Financial Control Department, to ensure adherence and consistency with the ISE Group LOA Framework and the ISE LOA Guidelines.
b) Budget Approval
Budget is an important internal control mechanism used by the ISE Group to ensure an agreed allocation of resources across the organization. Items are sufficiently prioritized to support strategic directions. The ISE Group performs a detailed review of its budgets and budgeting strategies including comparison against the company's business plan, performance results, and assessment of performance against the budgets. Such comparisons are widely shared across the ISE Group.
c) Financial Control Framework
The ISE Group has a Corporate Financial Framework (CFF) with the principal objective of providing reasonable assurance on the quality of financial reporting. This is achieved through a review of financial risk management and the integrity of the company's financial statements.
The CFF requires amongst others, documentation of key controls, remediation of control gaps as well as periodic testing of control operating effectiveness. On a semi-annual basis, each key process owner at various management levels is required to complete and submit a letter of assurance which provides confirmation on compliance to key controls for the areas which they are accountable for.
d) Corporate Financial Policy
The financial risk management practices are implemented across the ISE Group in accordance with the requirements of the CFP. This enables visibility on the ISE Group’s key financial risk exposures for improved risk management.
The Corporate Financial Policy (CFP) prescribes the ISE Group’s governing requirements in effecting the consistent application of sound financial risk management practices. This provides a foundation upon which financial risk exposures are identified and strategies to manage such risks are developed.
In addition to the CFP, the ISE Liquidity Risk Management Protocol (LRMP) and ISE Trading Risk Mandate have been established to safeguard the ISE Group’s liquidity position and risk financial sustainability, as well as to ensure alignment of risk management practices with ISE’s focus with regard to trading activities.
e) HEALTH, SAFETY, SECURITY AND ENVIRONMENT (HSSE)
The ISE Group’s Health, Safety and Environment (HSE) policy is supported by the HSE Management System which comprises of a formal set of requirements to manage HSE risks. This system is aligned with the ISE Security Management System (SeMS) within the Industry Security Risk Management (ISRM) guidelines implemented across the ISE Group. HSE and SeMS include clear requirements on the performance and documentation of HSE management activities. HSE audits are regularly conducted to ensure that management systems remain effective.
The ISE HSSE Executive Leadership Team (HSSE ELT) is responsible for overseeing management that defines group-wide HSSE policies and strategies. HSSE ELT reviewed PT Indo Sino Energi’s HSSE performance three times during the year. Additionally, the HSSE ELT is a platform to discuss HSSE performance and priorities.
