External Audit/Public Accountant

The independent monitoring on the financial aspect of the Company is realized through the External Audit by a Public Accountant Firm. Based on the Annual GMS of 27 June 2008, Shareholders of the Company have appointed the Public Accountant Firm Office AAJ & Mawar as Independent Auditor of the Company who will carry out an audit on a Consolidated Financial Statements, Work Evaluation, Financial Report of PKBL, Excess Cash Report and Compliance to the Law and Internal Control of Garuda Indonesia for the 2008 fiscal year, with a total cost of Rp 1.15 billion.

Risk Management

The Company needs to ensure that each undertaken activity is not solely profit oriented, but also helps to maintain the continuity of its operations, corporate image and positive reputation as required by the shareholders. 

This sustainability is essential to protect the interest of employees, service users, shareholders, the environment, the community and other related stakeholders.Therefore an effective risk management program is important and must be promoted by the Board of Commissioners, the Board of Directors and each member of the Company. Each individual has a responsibility to manage risks throughout the whole process starting from pre-process, process and post process. 

As a Company that is engaged in the domestic and international aviation industry, Garuda Indonesia is faced with various risks that can be classified into the following categories: 

• Strategic risk (reputation), risks arising from making or not making a decision that may impact the Company’s strategy implementation

• Operational risk, direct or indirect risks arising from the failure or insufficient control of operational systems, either due to human error, a system failure or events beyond the control of the Company.

• Financial risk, a loss risk arising directly or indirectly from the fluctuation of foreign exchange rates, fuel prices, interest rates or incapability of debtors to make repayments.

• Hazard risk, due to terrorism, political conditions, weather conditions, business disruptions, general liability and third party liability. 

In managing risks faced by Garuda Indonesia, risk management is made as an integrated part of planning processes, reporting and control valuation. Therefore the Company will continuously seek and incorporate expertise and knowledge from team members from all Company’s functions.

The objective of Risk Management is to create a comprehensive and integrated approach to anticipate, identify, measure, prioritize and manage business risks portfolio that can have impact on the attainment of Company objectives. This team will formally be united into one group in the management structure and will be responsible to the Board of Directors. 

This team will report its activities to the Risk Management Committee, planned to be formed in 2008/2009. 

Efforts to manage a risk that is faced by the Company are stated in the Corporate Policy Manual (CPM), Chapter 10 on Risk Management Policy. 

In 2008 the Company set up an Enterprise Risk Management (ERM) project so that an effective corporate risk management system could be created and adopted. 

The ERM project primary task is to assist the Board of Directors to, among others

• conduct ERM socialization to improve awareness 

• conduct risks identification and mapping and review risks to produce the Company risk profile 

• produce a framework for the implementation of the ERM, in line with the vision and mission of the Company, and 

• coordinate the creation of ERM Information Systems 

In the framework of the Risk Management, the Audit Committee and the Internal Audit function will act as an independent and objective party that will assist in evaluating compliance and improve the effectiveness of risk management, internal control and corporate governance through a systematic approach and using a risk based methodology.