transparency report - finalpwc indonesia/ transparency report 6 "pwc" refers to the...

PwC Indonesia

September 2017

Kantor Akuntan PublikTanudiredja, Wibisana, Rintis & Rekan

TransparencyReport

A conversation ontransparency,quality, and value

www.pwc.com/id

Our Report at a GlanceInvesting in Our People

Our Report at a Glance

The number oneProfessional Services

brand, and one of theworld’s top ten most

powerful brands in theBrand Finance Index

2017.

PwC ranked in thetop three of

Diversity Inc's topcompanies for

diversity.

External Recognition

Client Focused and Quality

ContentIntroduction 5

Our firm and structure 6

Our approach and governance 10

People management and development 16

Monitoring and assessing quality 24

PwC in the community 31

Contacts 34

PwC Indonesia/ Transparency report5

Introduction

Why do we need to talk about transparency, quality and value?

We would like to welcome you to PwC Indonesia’s first transparency reportfor our Assurance practice. In this report, we share what we’re doing and howwe plan to build on the trust and confidence our clients already have in ourassurance services. Quality is at the core of everything we do at PwC and weare proud of our achievements in this area; in particular our most recentpositive internal and external quality reviews.

Our assurance practice is evolving as we respond to multiple changes in themarket; we are experiencing a turbulent global financial environment,increasing scrutiny from local and overseas regulators and increasedtransparency from auditors following the introduction of the InternationalAuditing and Assurance Standards Board’s long form audit opinion. Rulesand regulations will only become more stringent, technology will continue tomove forward, and stakeholders will look for more informative financialreporting.

With these increasing demands and expectations, PwC Indonesia is activelyparticipating in conversations with relevant accounting bodies and regulatorsboth locally here in Indonesia and in South East Asia. Our goal is toreinvigorate the audit process and create more value for our key stakeholders.We have invested heavily in technology (Aura and Halo platforms), and willcontinue to do so, to support our Assurance practice as we not only look toimprove the effectiveness and efficiency of our audits but to providecompanies and audit committees with greater value and insight.

We are proud of the work our people have done, both for you and for the localcommunity here in Indonesia, and we look forward to PwC’s continuedrelationship with you.

Irhoan Tanudiredja Eddy Rintis

Managing Partner Assurance Leader

Our Firm and itsstructure


"PwC" refers to the network of member firms of PricewaterhouseCoopersInternational Limited. KAP Tanudiredja, Wibisana, Rintis & Rekan is a firm inIndonesia and member firm of PwC’s global network.

Throughout this report, the terms “PwC Indonesia”, “The Firm,” “we,” and “ourFirm” refers to KAP Tanudiredja, Wibisana, Rintis & Rekan.


In PricewaterhouseCoopers (PwC), our purpose is to build trust insociety and solve important problems. It is founded in our heritage ofcreating trust in the capital markets, and providing advice to helppublic, private and not-for-profit organisations be successful. Our aimis that while describing our work today, our purpose will also guideour decision-making and investment strategy for tomorrow, ensuringour ongoing relevance and leadership in the marketplace.

1. PwC Network

With offices in 157 countries and morethan 223,000 people, the PwC globalnetwork is among the leadingprofessional services networks in theworld (Figure 1). Each of the memberfirms of PricewaterhouseCoopersInternational Limited is a separatelegal entity and together they form thePwC Network. We help organisationsand individuals create the value they’relooking for, by delivering quality inassurance, tax, advisory and consultingservices.

The PwC global network is structuredas a network of member firms,operating locally in countries aroundthe world. It is this network thatprovides PwC member firms with theflexibility to share knowledge, skillsand resources with speed andconsistency – to the ultimate benefit ofour clients.

In most parts of the world, the right topractice accountancy is granted only tonationally based firms employingqualified professionals. Consequently,PwC member firms are locally ownedand managed in each country, but forman international team, therebyenabling a deep understanding of localmarkets and simultaneously providingglobal insight.

Figure 1: PwC Network

Working in


2. Operations in Indonesia

For more than 45 years, PwC Indonesia has playedan integral role in the Indonesian success story ofeconomic growth and social development.Drawing on the knowledge and skills of over 1,900professional staffs (including over 50 partners andadvisors), we help our clients succeed throughboth buoyant and challenging economicenvironments.

Today, the industry-focused services offered byPwC are adding value in virtually every industryand profession across the country. PwC continuesto work with large multinationals, public sectorentities, government entities and Indonesiancompanies, providing solutions to complexbusiness issues.

Our multidisciplinary approach allows us toprovide services beyond the audit and taxationlines we are well known for. Our close interactionand relationships with both economic and statebodies also allow us to keep up with the fast-evolving business environment. We take pride indelivering value-added services by helping ourclients improve transparency, governanceaccountability, and financial performance andreturn.

On a collaborative basis, PwC Indonesia worksclosely with the PwC Asia Pacific Americacountries (“APA”). Collectively, the PwC APAcomprises 21 territories and a strength of around37, 000 people, over 1,700 of whom are partners,enabling us to better share, collaborate and makestrategic investments with our regional colleagues,while improving our competitive ability to serviceglobal clients.

3. Assurance Practice

PwC’s Assurance practice comprises nearly 1,000professional staff which includes 27 partners andadvisors. The Assurance practice is aligned byindustry groups and supported by technical andoperational teams. Refer to Figure 4 for ourAssurance structure.

Our Assurance staff mix includes recent graduatesthrough to experienced partners. Figure 2 showsthe average number of years of experience of ourstaff. On average, our staff operates on a ratio of 4professional staff to every partner-manager(Figure 3). This ensures each working teams areclosely reviewed and supervised.

Figure 2: Average number of years ofexperience

Figure 3: Staff/ Partner-Manager ratio

4. Assurance leadership structure

The Firm’s leadership is committed to quality andhas dedicated resources to establishing highstandards in quality, independence, integrity,objectivity and professional ethics. Quality hasbeen embedded throughout the Firm and thedetailed policies have been endorsed by theleadership team, including ethical, humanresources and engagement performance.

Our leadership structure aims to help us maintainour commitment to quality in every aspects of ourbusiness (Figure 4).

The governance and leadership bodies and roleswithin PwC Indonesia are:

the Governance Board (“Oversight Board”) the Managing Partner (“MP”) the Assurance Leader (“TAL”), and the Firm’s Assurance partners

Each body and role has quality of service embeddedinto its responsibilities.

Partner -Manager

Staff


Figure 4: PwC Indonesia Assurance structure

4.1 The Governance Board

The Governance Board currently comprises fivepartners elected by a special majority of theFirm’s partners with a member being elected asthe Chairperson of the Governance Board. Tomaintain independence of the GovernanceBoard, the MP is not eligible to be a member butcan attend meetings at the discretion of theGovernance Board.

The Governance Board meets regularly and isresponsible for the Firm’s governance andoversight, as well as for sharing its input tosupport and monitor the Firm’s strategies andbusiness plans.

4.2 The MP and Assurance Leader

Irhoan Tanudiredja is the firm’s MP. His role isto:

provide leadership for the partners and theirteams,

to manage the Firm, including setting theshort and long-term strategic directions,

making decisions on partner issues and affairsin his role as a MP,

appointing the Firm’s Assurance Leader andother management positions to assist with themanagement of the Firm.

advises on the Firm’s organisational structureand on what are the partners’ duties andresponsibilities.

Eddy Rintis is the firm’s Assurance Leader. Hisrole is to:

set out Assurance targets/goals andstrategy;

lead and oversee Assurance practice; client and partner allocations; including

multiple partner roles; assess Assurance partner’s performance

and development; work closely with Risk & Quality groups

and others to ensure that risks areappropriately managed.

4.3 Partners

The partners’ governance role includes:

electing the MP and members of theGovernance Board,

approving candidates for admission aspartners,

any recommendation or proposal that apartner be required to withdraw from theFirm, and

any amendments to the Firm’spartnership agreement.


Our approach andgovernance


Governance of our Assurance practice

As an Assurance practice that operates within aregulatory environment in Indonesia, we havegovernance processes and policies in place toensure we adhere to the relevant regulations bothin Indonesia and when supporting clients fromterritories outside of Indonesia.

Prior to any engagement being accepted, PwCIndonesia has to complete a comprehensive clientand acceptance process. In addition, we as a firmand the individuals within our firm adhere to ourethical standards over:

Code of conduct Independence Insider trading

Each of these areas and our policies over these areexplained in more detail below.

Acceptance and Continuance

Before we begin work for any new client, we mustgo through a process to make sure that ourengagement will not compromise our ability toserve all our clients independently. This process isbased on the PwC global network’s proprietarydecision support systems for audit clientacceptance and retention called Acceptance andContinuance (A&C).

A&C facilitates a determination by the workingteam and risk management specialists on whetherthe risks related to an existing client or a potentialclient are manageable and whether or not PwCshould be associated with the particular client andits management.

Ethical and business conduct

The reputation and success of PwC Indonesiadepends on the professionalism and integrity ofevery partner and employee. All PwC Indonesiapartners and staff are expected to uphold andcomply with the standards developed by the PwCnetwork and PwC Indonesia.

Globally, we have the PwC Ethics and BusinessConduct (E&BC), grounded in our values. Thisglobal E&BC acts as an umbrella code for all PwCmember firms.

Upon joining, new staff members receive copies ofthe Code of Conduct and must attend a briefingsession. All staff and partners are expected toabide by the values expressed in the code duringthe course of their PwC careers.

This code specifies that we must use our integrity,good judgment, and conscience when making adecision or faced with ethical dilemmas. TheE&BC guides how we work and answer questionsto help us through difficult ethical situations.

We have in place a database that is designed tohelp raise awareness of the importance of ethicalconduct in our team by being readily accessible tostaff. It helps us avoid situations that could have anegative impact on our clients, people, andreputation.

There are also upward reporting mechanisms toaddress any complaints and allegations raised byPwC Indonesia employees concerninginappropriate behaviour or failure to comply withprofessional, regulatory, and legal requirements asset out in the PwC Global Code of Conductguidelines as well as PwC Indonesia’s policies andguidelines. These complaints and allegations, ifany, are addressed by the Ethics and BusinessConduct Committee.

RADAR: A framework for deciding theright thing to do

We are purpose led and values driven, and ourpurpose and values are our guiding principles indeciding the right thing to do. Addressing andresolving ethical dilemmas is complex, and theCode cannot address all questions or situations.The Code is one of many tools we have asprofessionals to guide our behaviour.

This RADAR decision making framework is hereto help you think and to build your skills inanalysing ethical dilemmas, and, in doing so, makegood decisions (Figure 5). In deciding on a courseof action, the steps and questions can help guideyour approach. They do not need to be followed inany particular order, and the following graphic isnot meant to be a decision tree. Rather, this ismeant to help frame your thinking, which couldhappen within a few minutes to a few days. Andremember, nothing can replace individualjudgment and the application of the values whendeciding what to do in the moment.


Figure 5: RADAR framework

Independence policies, processes andsystems

PwC Indonesia adopts the PwC Global policies andrelated rules for our independence and compliancepractice, complemented when necessary, by morerestrictive local professional and regulatory rules.Independence policies and guidance are reviewedand revised when needed. The Firm’sindependence policy covers, among others, thecore areas as outlined in Figure 6.

Figure 6: PwC Independence core areas

As a member of the PwC network, we have accessto a number of global systems that assist ourpeople and us in complying and in monitoringcompliance with regulatory, professional, and PwCindependence requirements related to financialinterests and business and service relationshipswith clients (Figure 7).

The Independence team ensures theimplementation of the independence rules and

monitor the compliance. They are knowledgeableabout independence matters and compliance withindependence rules and regulation.

The roles and responsibilities of theIndependence team

The roles and responsibilities of the Independenceteam are:

1. Implementing PwC Global’s independencepolicy (including US SEC independence rules)and procedures, system, and controls.

2. Ongoing training and promotion of theindependence policies to practice partners andstaff.

3. Monitoring compliance with independencepolicies.

4. Embedding appropriate “tone at the top” andculture relating to independence.

5. Consulting on independence issues with clientservice teams.

6. Enforcing disciplinary policies and processesfor non-compliance with independencepolicies and procedures.

7. Putting in place compliance activities andremedial actions.

Insider trading

Insider trading violates legal and regulatoryrequirements, damages our brand and reputation,and may involve professional and criminalpenalties for those involved.

The Firm has a clear and stringent policy whichprohibits PwC personnel, and others associatedwith PwC, to become involved in, or associatedwith, the use of inside information in the buying orselling of securities. The Firm’s insider tradingpolicy applies regardless of the circumstancessurrounding how the person becomes aware of theinsider information and regardless of whether theinsider information actually influenced theperson’s decision to buy or sell a security.

This policy is regularly communicated with ourpartners and staff across the Firm. Severesanctions will be imposed for any violation or non-compliance with the policy.

Disciplinary policy for independence

Our independence policies and processesrequire that we report and address anyviolations that occur. A partner or staff membercould face financial sanctions or otherdisciplinary actions if they are in violation.


Figure 7: PwC Global Independence Policy (GIP)

Our Assurance framework

The overall PwC audit framework provides a holistic approach to make sure we conduct quality audits. Itapplies clear principles to audit work with the appropriate amount of supporting detail. Our six-step auditprocess ensures an audit that is robust, insightful, and relevant (Figure 8).

Figure 8: PwC Global audit approach

Meaningful conclusionsBeyond our audit opinion, we provide business insights, industry experience and thought leadership to enable usto draw conclusions which are more meaningful and practical. It will support our clients in mitigating risk andimproving their business planning and strategy.

Client acceptance & independenceOur acceptance procedures are designed to ensure that we only accept clients that act with integrity and fit withinour norms and values. Also, we accept only those engagements for which we have the resources, capacity andprofessional expertise available to assure delivery of the high level of quality that our stakeholders may expectfrom us.

Deep business understandingGetting the right depth of understanding also helps ensure that the information we provide to our clients is timelyand relevant. As such, we ensure that we look in detail and at an early stage into the client’s processes, systemsand data.

Relevant risksIn aiming to perform an effective audit, it is important for us to identify and select the relevant risks which cansignificantly affect the client’s financial reporting. We regularly give our people risk assessment skills training,and we encourage them to be naturally inquisitive and to use professional scepticism to ensure that all relevantrisks are identified and that an appropriate audit approach is developed to response appropriately.

Robust testingWe expect the use of data analysis and new technologies (such as Halo) is set to be utilised at the maximum levelin the coming years. Our global network is investing substantially in these developments. Process mining withindata analysis and benchmarking both provide us with better insights and levels of assurance than traditionaltesting methods could. This will benefit both our teams and our clients as we will have a better understanding ourclients’ businesses, better able to identify risks and provide meaningful insight to our clients.

Intelligent scopingWe set the scope of our audit work based on what we identify regarding risk, materiality, size, complexity andstructure. This leads us to the right areas of the client’s operations to focus on, and the best audit resourcesneeded to deliver this.


Supporting tools and technology

We recognise the impact of data and technology isenormous. Needs are changing fast and we areresponding. We continue to invest in smart-audittechnology that builds quality into the audit andenhances our ability to provide insights to ourclients. Our technology is built and implemented

globally ensuring consistency across the PwCNetwork.

Our unique technologies and tools which enhanceaudit quality and efficiency through automation,connectivity and mobility, which are undercontinual review and enhancement to improveaudit quality and efficiency (Figure 9).

Figure 9: Available audit tools

Aura

Aura is our global audit software used across the network and across all auditengagements.

This brings consistency in our audit approach across audit teams and firms within PwC network.

AuraNow

Aura Now is an online, multi-engagement dashboard tool that allows teams to monitorprogress towards completion and other key information across their portfolio of Auraengagement databases. It visualises the progress of an engagement, which enables ourpeople to prioritise their efforts. It also provides information regarding readiness for filearchiving to assist in preparing for and timing of archiving the audit file.

Aura Online

Aura Online is a web-based tool that provides the ability to view active and archivedengagements without having to install the Aura client or having local replicas ofengagement files.

This makes it easier for us to work together, leading to a more proactive and responsive service so anyissues raised during the audit can then be resolved promptly.

SmartGuidance -

EffectiveLearning at the

Right Time

Smart Guidance supplements the PwC audit guide with short, targeted, and engagingvideos on areas that our people find helpful - providing simple and concise remindersand reinforcing key messages in each area.

This helps our people spend less time looking for guidance and more time delivering a high qualityservice to our clients.

Connect

Connect is our collaborative workflow tool, providing fast, efficient and secureinformation sharing at every stage of the audit. It monitors the status of requests andinformation between our clients and the engagement team on a real time basis. Connectprovides visibility for both our clients and us to be able check progress on the go, anytime,anywhere.

Halo

Halo is our new data auditing suite of tools allowing us to identify and assess risks anddetermine where to focus audit efforts. The analytical and visualisation capabilities allowus to analyses patterns and trends, identifying unusual and high-risk transactions, andproviding invaluable insight to both ourselves and our clients. Halo comprises of threekey components – acquisition of client data, transformation of data and applications forautomated testing and analysis of data, for example, Halo for Journals allowsengagement teams to gather all journal entries and utilise built-in functionality to applyengagement-specific criteria designed to focus testing on higher risk entries.


Always seeking help, always consulting

Consultation is a key element of quality control.Although the Firm has policies setting out thecircumstances under which consultation ismandatory, our consultative culture means thatour engagement teams often consult with eachother on an informal basis as well as with expertsand regularly in situations where consultation isnot formally required. While we apply the properconfidentiality rules, we consider this culture ofopenness and willingness to consult, share anddiscuss issues can only be of benefit and enhancethe quality of what we do and how we do it.

Consultation not only means asking advice fromanother member of the team but also means, whenappropriate, seeking advice from various expertswithin the Firm (or other PwC member firms) toimprove client service or to resolve a difficult orcontentious matter. Examples where consultationoccurs includes our Accounting ConsultingServices team for technical accounting mattersand the involvement of a quality review partner onall higher risk engagements.

Accounting Consulting Services

With the complexity of financial reportingstandards, it is important that our clients receiveclear and consistent advice. Our AccountingConsultation Services (“ACS”) group providessupport and guidance both internally andexternally on the accounting treatment of complexissues, training on accounting standards, andreviewing financial statements for compliance

with financial reporting standards. ACS works intopic teams: financial instruments, businesscombinations, and revenues/liabilities andothers.

With connections to the Global ACS team, we areable to call for support from specialists from thenetwork. Engagement teams work closely withACS on significant accounting issues to arrive at aconclusion that is acceptable under the financialreporting framework. If there are differing views,a technical panel discussion is organised.

Involvement of a Quality Review Partner(QRP) on higher risk engagements

For higher risk engagements (including auditengagements of listed entities, higher profileclients, and clients contemplated for an initialpublic offering), the engagement team will besupported by a QRP.

QRPs are required to have sufficient stature,technical knowledge, appropriate experience andindustry expertise, time, and authority, to make anobjective evaluation of the engagement team’ssignificant judgments and conclusions reached inthe engagement. QRPs are required to completemandatory QRP training before taking on the role.

The Quality Team monitors the involvement ofQRPs in an engagement on monthly basis andreports to all Assurance partners.


People management anddevelopment


PwC Professionals – The network’sleadership framework

We recognise that our people are our greatest assetand that they give us a competitive advantage. PwCProfessional is our network’s leadership framework,which helps accelerate and enrich our people’sdevelopment and sets our brand apart.

To really stand out and stay competitive in aconstantly changing world, we need to offer morethan technical competence. Crucial attributes wewant our people to demonstrate are leadership, anawareness of the business environment at localand global levels, and the ability to developbusiness relationships. We need to be a leader whoinspires others and who can lead clients, teams,and others through change.

Our PwC Professional global leadershipframework ("PwC Professional Framework")articulates the skills and capabilities we expectfrom all our people in order to deliver anoutstanding experience to our clients (Figure 10).Our recruitment process is closely aligned to thisframework, enabling us to select the best talent,based not only on their technical skills but also ontheir behaviours and ways of working. The sameframework is used for the purpose of developingand assessing our people. It is the foundation forour training and coaching initiatives, as well asbenchmark for our annual performance.

Figure 10: PwC Professional framework

Getting the right people for our team

We are always on the lookout for the rightpeople to join our Assurance team, and we lookto our PwC Professional framework to provideguidance in our selection criteria. As a firm, welook forward to developing Assurance teamskills from day one.

Our graduate recruitment process starts with ourrecruitment roadshow where we talk to studentsabout a PwC career at the top-tier universities inIndonesia (Figure 11). Each year approximately5,000 candidates apply, undertake written tests,and a panel interview process. In the end, we invitearound 300 successful candidates to become a partof PwC, and of those invited, nearly 90% accept.

Figure 11: PwC Assurance recruitment processoverview


Talent management

Our business plans and strategy define our talentmanagement strategy. The Firm invests in creatingan environment that values excellence, teamwork,and leadership for a stimulating and meaningfulworking experience for our people. Our aim is tomaintain a leading position in professionalservices, so we need to ensure that:

We foster the development of people who havecareer aspirations aligned with our businessdirection and goals (Talent Identification).

We can readily fill key roles with competentinternal candidates to meet the Firm’s evolvingneeds (Talent Pipelines).

We are aware of our own internal benchstrength and development needs to be readyfor future contingencies (TalentDevelopment).

We believe that investing in a broad range of skills,experiences and backgrounds puts us in a strongerposition to understand and meet the needs of ourclients. Recognising that career progression is akey consideration in our peoples' careers, therewas greater emphasis to enable transfer to new ordifferent career paths within the Firm or externalsecondments to our PwC network member firms inthe recent years. For our more experienced staff,we offer global mobility opportunities with shortand long-term assignments and with the option toparticipate in a variety of on and off-the-joblearning and development experiences. Weencourage our staff to discover their full potentialby seeking opportunities to grow and to explorenew ideas. Secondments include inbound andoutbound assignments from and to the cities asoutlined in Figure 12.

We have a holistic view of our people. We aim tosupport career growth beyond a person’s currentposition at PwC Indonesia, while we map talentand develop skills to meet the Firm’s performancegoals.

Figure 12: Mobility mapping (2014-2016)

* Indonesian staff working abroad between 2014 – 2016** Non-Indonesian staff who have worked in Indonesia during 2014 – 2016


Diversity and Inclusion

The need for diverse talent has never been morecritical to the success of our business; as we lookto the future and our plans to grow our business.We need to work with different types of people,bringing different skills, experiences andperspectives and leveraging these assets willdemand a highly inclusive working environment.Creating these conditions requires the efforts ofall, particularly our partners, and this is one ofour points of focus as well.

Talking about creating diversity and inclusion(D&I) at PwC, on FY16 we have three priorities;“Female in Leadership”, “More Diverse, HigherSynergy”, and “Flexibility” (Figure 13).

In short-term, D&I prioritise on conducting D&Iprogram as a campaign for D&I aspects, whileincreasing people’s awareness about D&I aspectswhich results will be reflected in the GlobalPeople Survey. In long-term, D&I aims on

increasing the ratio of female in seniormanagement position, diversity in educationalbackground and profile of PwC people, andincreasing the ability to work flexibly.

We are striving for an inclusive culture in whicheveryone, irrespective of gender and culturalbackground, can feel comfortable and valued(Figure 14). Diversity is important to us becausewe believe strongly that the quality of what we dois enhanced when issues are addressed by peoplefrom differing perspectives, that it better attunesus to the outside world, and that it is critical toour recruitment and retention of talent.

Diverse talent has been more critical to thesuccess of our business; as we look to the futureand our plans to grow our business we will needto work with different types of people, bringingdifferent skills, experiences and perspectives andleveraging these assets will demand a highlyinclusive working environment.

Figure 13: Diversity and inclusion priorities


Figure 14: Gender mix by grade

Learning and Development

Our PwC Professional Framework underpins atraining curriculum which provides a wealth ofopportunities for our people to build professionalskills and knowledge to support the delivery ofhigh quality assurance services to our clients.

PwC fosters a culture of lifelong learning anddevelopment based on a model of 70% on-the-jobtraining (Experience), 20% coaching (Exposure &exchange), and 10% formal training (Education),as shown in Figure 15. Training is continuouslyevolving and tailored to each grade, role andexperience of each individual. This approach helpsour people keep up-to-date, informed, and highly-skilled throughout their career with us.

We want our people to develop and learn fromevery opportunity, stay open-minded, and beintellectually curious to maintain positive attitudestowards any challenge they face. We want them tobe able to demonstrate and maintain theirprofessionalism in every interaction with eachother and with clients. These expectations arereflected in the staff development plan andevaluation process.

We encourage coaching and mentoring to foster acoaching culture. We embed tips and tools in ourin-house and external courses, which people canchoose from to expand on their experience withPwC. Our training programmes are outlined inFigure 16.

Figure 15: PwC 70-20-10 framework


Figure 16: Our training programme

The Assurance team provides a trainingcurriculum for all partners and staff focused onthe development of technical excellence. Thecurriculum comprises mandatory and electivemodules. Mandatory learning modules are activelyenforced, and failure to complete a mandatorycourse will result in remediation as needed tocomply with Assurance standards and our Firm’spolicies.

In 2016, approximately 110,000 training hourswere provided to our Assurance staff. Whilst thereis a minimum requirement of 40 hours ofprofessional education each year, on average ourAssurance staff received 88 hours per person.

We want our staff to be able to perform an auditwith the highest quality and transparency – thecritical work of an auditor underpins investorconfidence, makes our clients more competitive,and supports the market economy.

We also actively encourages Assurance practices togain appropriate relevant professionalqualifications. We believe that by doing so we notonly provide better service to our clients byproviding high calibre and well qualifiedprofessionals, but we also provide our staffmembers with qualifications which will serve themwell in their future careers with us.

The professional qualifications offered includesCertified Public Accountant (CPA) Indonesia,Overseas CPA or CA for overseas graduates,Certified Information Systems Auditor (CISA) andCertified Internal Auditor (CIA) for RiskAssurance staff.

As of March 2017, certification obtained by ourPwC Indonesia staff includes: CPA Indonesia certification: 133 staff; CISA certification: 16 staff; and CIA and CEH certifications: 6 staff.

Performance evaluation and promotion

We continue to invest in equipping our Assurancepartners and staff with the coaching andmanagement skills needed to give honestfeedback, to continually improve performance andmaintain their high level of professional expertise.

The appraisal process covers both technicalcompetence and quality. We expect feedback to beprovided regularly throughout the year by all staffand partners. Feedback is 360 degrees withindividuals encouraged to provide upward anddownward feedback. This feedback forms a keyelement of our annual appraisal process withstrengths and new areas of learning requiredidentified and discussed.

Based on this assessment, individuals are assigneda performance rating that is benchmarked acrossthe Firm and which influences their salary, bonusand progression within the Firm. Our higherperformers have the opportunity both to progressmore quickly and to receive higher reward throughpay progression and bonuses. In the case ofpromotion to director or admission to thepartnership, the process is particularly thoroughand involves assessors from the partners fromacross Line of Service and observers from HumanCapital.

Core Audit Curriculum

Focused on auditing skills andapplying the PwC auditmethodology.

Content includes: Foundation training Audit methodology Auditing standards (ISA,

AICPA, PCAOB and J-SOX).

Technical Training

Focused on technicalaccounting standards as staffdevelop and keeping abreast ofnew standards.

Content includes: Accounting standards

(includes PSAK, IFRS and USGAAP)

Other relevant regulations

Industry Training

Focused on industry specifictraining to ensure staff havea comprehensiveunderstanding of issues inthese industries.

Content includes training forfollowing industries: Mining, oil & gas Financial services Plantation Telco Retail

Business Skill Training

Focused on non-technicalareas such as leadership,business development andrelationship management.

Content includes: Leadership and personal

growth People and client

relationship management Other courses such as

business writing skills,language and businessetiquette

Technical Skill Training Business Skill Training


Compensation and benefits

Our compensation and benefit strategy is toensure that we provide total rewards that arecompetitive and fair/pay for performance andposition to our people especially in the relevantindustry we operate in. For bonus incentives, weconsider the combination of individualperformance: quality of the work; the performanceratings and the group performance (both the firm-wide level and Assurance level) to ensurecollaborative and cohesiveness in business, firmand people aspect are balanced. Other than basicsalary and medical facilities/allowance, severalbenefits are applied in accordance to the needs ofdifferent levels, such as provision for vehicles,recreational allowances for managers; overtime,out of town allowances for below manager level.There are also annual leave and other paid leavethat is granted above what has been mandated byregulation/labour law.

Partner remuneration

Under the Firm’s policy, Assurance partners mustnot receive incentives or remuneration for sellingnon-audit services to their audit clients.

The distribution of profits to partners isdetermined by the MP. The Governance Boardapproves the process and oversees its application.

Each partner’s remuneration reflects theirperformance as an auditor and how well theyperformed against key performance indicators,individually tailored to their role andresponsibilities. The Recognition andAccountability Framework, which includes keyperformance indicators and sanctions, is also partof the partners’ performance evaluations andremuneration.

Global people surveyPeople are at the heart of our services and webelieve we can only achieve quality work if ourpeople are engaged and happy to be with the Firm.The annual Global People Survey (GPS) isconducted across the entire network. The GPS letsstaff share their perceptions on four key aspectsthat influence current and future policies,programmes and the work environment at PwC.The four aspects are whether or not our people: are satisfied with PwC are proud to work at PwC would recommend PwC to others, and plan to be working here for the next 12 months

We call this our People Engagement Index (Figure17).

Figure 17: People Engagement Index

In 2016, Assurance practice achieved an 89%response rate for this survey. A high response rateis very important to ensure the feedback receivedis valid and represents the majority of our people.

The survey results and action plans are discussedwith Assurance leaders, Human Capital LoSPartner and Human Capital LoS Manager toensure concerns are appropriately addressed and acommitment from the Assurance leaders aregained. The action plan is then communicated inperson at staff meetings.

Based on the GPS results, we have recordedimprovements in our People Engagement Index(PEI) over the last three years (Figure 18). Our PEIin 2016 is 77%.

Figure 18: Our PEI trend from GPS (2014-2016)

55%

60%

65%

70%

75%

80%

2014 2015 2016

GPS Result Trend


Aligned with our GPS results, we have recorded animprovement in our turnover rate over the lastthree years. Our turnover rate in 2016 was 21%which was 2% lower compared to 2015 and 10%lower than 2014 (Figure 19).

Figure 19: Employee Turnover Rate (2014-2016)

0%

5%

10%

15%

20%

25%

30%

35%

2014 2015 2016

Employee Turnover Rate


Monitoring and assessingquality


Quality work means having the best people onthe job. We want those individuals who canapply technical skills to practical problems andwho can cultivate meaningful relationship withclients.

Quality comes from our leadership

Quality starts from the top with a strongcommitment from our leadership. This tone is setby the MP, Assurance Leader and the AssuranceLeadership Team (ALT). PwC operates within aRecognition and Accountability Framework, whichoutlines the key benchmarks for qualityperformance, is applied to partners and keymanagement roles. In using this Framework, ourleadership is actively responsible in helping usmeet our quality standards.

Assurance Leadership Team (“ALT”)

The ALT of PwC Indonesia consists of ourAssurance partners who take a Functional AreaLeadership role. The ALT oversees how the Firmmonitors audit quality. Specifically, the ALT meetsregularly to:

• monitor the operation of our quality controlsystem,

• initiate remedial action to address exceptionsand of any deficiencies in audit quality,

• report any significant audit quality matters andprovide recommendations on qualityenhancement initiatives to the AssuranceLeader and the Risk & Quality Leader.

The functional leaders and managers of the keyareas within the Assurance practice to support theALT to carry out its are:

• Risk & Quality• Accounting & Consulting Services• Human Capital• Human Capital Development

Risk and Quality group

The Firm’s aim is to continuously improve overallaudit quality, simplify the process whereverpossible, and maintain trust. We endeavour tosuccessfully meet and surpass the minimum auditquality standards set by PwC Network and localrequirements. The Risk and Quality (“R&Q”)group supports the ALT in achieving the Firm’sstrategic goals and assists the Assurance teams intheir work.

The R&Q group consists of two teams:

Risk Management & Independence (“RM&Iteam”) including Office General Counsel

Quality Team.

Both teams report directly to the TAL and the MP.Team compositions are:

RM&I team: 13 team members, led by an R&QLeader; and

Quality Team: 5 team members, led by aQuality Leader.

The main responsibilities of the R&Q groupinclude:

enhancing the quality of PwC’s work inaccordance with the PwC’s Global standards;

developing, implementing and monitoringcompliance to risk management policies, auditmethodology and technology;

developing and conducting training usingshared concepts, local practical issues, andreal-life examples;

communicating new and updated policies,procedures, and methodologies to the practiceand keeping them up to date;

addressing methodology and technology issues,and carrying out engagement reviews toidentify and improve audit quality andefficiency; and

providing support and consultation toengagement team relating to auditing,compliant with relevant laws and regulations,risk management and independence issues.

Compliance with ISQC1

The Indonesian Auditing Standards requires PwCIndonesia to have a quality control system over itsAssurance practice. These controls are part ofPwC Indonesia’s day-to-day activities. Our qualitycontrol system complies with the Quality ControlStandards issued by the Indonesian Institute ofCertified Public Accountants and InternationalStandards on Quality Control 1 (ISQC1), QualityControl for Firms that Perform Audits andReviews of Financial Statements and OtherAssurance and Related Services Engagements,issued by the International Federation ofAccountants (IFAC) (Figure 20).


Our leadership believes that the quality controlenvironment, policies, system, and processesdescribed in this document comply withapplicable regulations. Our compliance with thequality standards is regularly evaluated throughvarious reviews and inspection programmesboth internally within the Firm and externallyunder the global review programme by relevantregulators. No significant issues have been notedin the past 3 years. The results of these reviewsand inspections ensures our audits consistentlymeet the required quality standards.

Figure 20: ISQC1 components

Our commitment to quality

We require all of our partners to include auditquality objectives as part of their personal plan. Inaddition, depending on their grade, staff membersare responsible for some key risk and qualityindicators. There is a set of guidelines includingpunitive actions for any non-compliance.

The calls for quality start with our leadership andflow through our partners and staff in variouschannels: Face-to-face sessions with partners and

managers (i.e. Annual Technical Updates,Assurance Management Conference, Town-hall meetings)

Learning and development programs (i.e.Assurance core curriculums, Partner-Managerprogrammes, Methodology workshops, AnnualRisk & Quality trainings)

Webcasts, e-learnings Periodic alerts, emails, messages from

leadership

Quality is further supported through:1. Monitoring audit quality indicators.2. Involving Quality Review Partners (QRP) on

higher risk engagements. (Refer to page 15 formore information)

3. Always seeking help, always consulting. (Referto page 15 for more information)

Our monitoring programmes

The PwC Network has established a reviewprogramme for all PwC Assurance practicesknown as the Global Assurance Quality Review(GAQR). This includes a Quality ManagementReview (QMR), which tests whether our qualitymanagement systems are appropriately designed,operating effectively and comply with PwCNetwork standards, and an EngagementCompliance Review (ECR) programme to assesswhether engagements are performed inaccordance with relevant standards. A memberfirm report is prepared annually by theinternational team leader assigned to PwCIndonesia by the Global Assurance Risk & QualityLeader. The report includes the results of both theQMR and ECR for that year.

PwC Indonesia is responsible for monitoring theeffectiveness of its quality control system whichincludes arranging for the QMR and ECR referredto above. In addition, PwC Indonesia’s QualityTeam performs Post Completion Reviews onengagement partners who have not been subjectto either an ECR or an external review in thecurrent year.

Lastly, the firm is subject to external reviews forlocal and overseas regulators. In 2016, theassurance practice was subject to reviewsperformed by the Ministry of Finance (MOF) andthe PCAOB.

An overview of our monitoring programme isoutlined in Figure 21. Refer to Figure 22 for totalinternal and external reviews performed in 2016.Additional information on internal and externalreviews is provided below.

Quality monitoring is an integral part of ourcontinuous improvement as it provides input tothe Firm’s leadership on the overall quality of ourAssurance practice. Failure to meet performancestandards is treated seriously under the Firm’sRecognition and Accountability Framework.

Monitoring of quality


Figure 21: PwC Monitoring

Reviews Practice unit review Engagement review

Global/network reviewprogramme

Network standards (annual) Quality management review

(comprehensive every 3 yearswith an annual update inintervening years)

Engagement compliance review (Review frequency is specified

using risk-based approach)

Territory qualityreview programme

ISQC1 evaluation (annual) Territory quality review program(annual)

Regulatoryreviews/inspections

Regulatory inspections (annual oras notified)

Regulatory inspections (annual oras notified)

Figure 22: Internal and external reviews performed in FY16

Internal reviews - Engagement Compliance Reviews (ECR) and Post CompletionReview (PCR)

External reviews - Ministry of Finance (MOF) and US Public CompanyAccounting Oversight Board (PCAOB)


Global Assurance Quality Review (GAQR)

The GAQR programme is designed to beindependent, consultative, and trusted programmethat is objective, independent and risk-based.

At the Firm level, an Independent QMR occursat least every three years with updates duringthe intervening period. The QMR tests theeffectiveness of the Firm’s quality controlsystem in various functional areas under ISQC1.The last QMR at PwC Indonesia in 2016 notedthat the Assurance practice continues to be wellmanaged with the leadership setting anappropriate tone at the top about risk andquality.

At the engagement level reviews, known asEngagement Compliance Reviews (“ECR”), areundertaken on significant higher riskengagements. PwC Global requirementsmandate that all Assurance partners arereviewed once every regularly. In our Firm, allAssurance partners are reviewed two or threeyears. Additionally, the ECR is conductedperiodically on engagements determined to beHigher Profile Clients.

Internal inspections

Our Firm’s monitoring procedures include anongoing assessment of the design and effectivenessof our quality management system, as well as areview of completed engagements - ECR. Theresults of these procedures form the basis for thecontinuous improvement of our qualitymanagement system.

ECRs are risk-focused reviews of completedengagements covering, on a periodic basis,individuals in our Firm who are authorized to signaudit or non-audit Assurance reports. The reviewassesses whether an engagement was performed incompliance with PwC Audit guidance, applicableprofessional standards and other engagementrelated policies and procedures.

Our Firm’s local requirements mandate that allAssurance partners must have at least oneengagement reviewed either in the ECR or underthe territory review i.e. Post Completion Review(PCR).

Reviews are led by experienced Assurance partners,supported by independent teams of partners,directors, and senior managers and otherspecialists. Review teams receive training tosupport them in fulfilling their responsibilities, andutilize a range of GAQR-approved checklists andtools when conducting their review procedures.

The results of their reviews:

will contribute to the evaluation under theRecognition and Accountability Framework andrisk and quality indicators of partners, directors,and managers

are reported to our Firm’s leadership who areresponsible for analysing the findings throughroot cause analysis and implementing remedialactions as necessary.

In situations where adverse quality issues onengagements are identified, based on the natureand circumstances of the issues, the responsiblepartner or our Firm’s Assurance leadershippersonnel may be subject to additional mentoring,training or sanctions in accordance with our Firm’saccountability framework.

External inspections

Over the past seven years, both local and overseasregulators inspected the Firm’s Assurance practice.

PwC Indonesia and its partners are authorised bythe Ministry of Finance under P2PK (FinancialProfession Development Centre/Pusat PembinaanProfesi Keuangan) to provide audit, assurance andother consultation work. Indonesia FinancialServices Authority, oversees and regulates listedcompanies/financial institutions and auditors forlisted companies/financial institutions. P2PKinspects PwC Indonesia on a regular basis withannual reviews of the Firm’s quality control systemand of selected engagements. There were nosignificant exceptions identified from the localregulatory inspection in all material aspects.

In addition to the reviews by the local regulator, theUS Public Company Accounting Oversight Board(PCAOB) inspected PwC Indonesia in November2015. Based on their inspection, there were noissues of insufficient audit evidence to supportaudit opinions. In addition, no significantexceptions were identified in the review of theFirm’s quality control system.

Our commitment to continuousimprovement

Over the past three years, we have put furtherfocus and resources into improving audit quality.This has included additional centralised risk andquality initiatives focused on targeted training,remediation, and monitoring activities across thepractice. These initiatives have been activelymonitored, and appropriate resources have been


applied to improve audit quality at the engagementlevel. To identify the true cause of findings, if any,we perform a thorough root cause analysis.

The root cause analysis process, which addresseskey findings from reviews and inspectionprogrammes, is performed in a structured andholistic way following guidelines and templatesprovided by the global network. The identified rootcauses fall under four categories (technicalknowledge, review and supervision, professionalscepticism, time and resources).

As an outcome of this analysis, the Firm develops aQuality Improvement Plan to address identifiedissues. The Quality Improvement Plan is reviewedand approved by our Assurance Leaders.The quality improvement initiatives aredeveloped based on the key aspects as outlined inFigure 23.

Figure 23: Our quality improvement initiatives

Regular monitoring of audit quality

Throughout the year we monitor key indicators across a range of areas (Figure 24), to ensure we areabreast of any potential quality issues. These indicators are measured at a Firm and individual level. Theindicators are used to encourage positive behaviours and provide the quality team with insight intopotential issues.


Figure 24: Audit quality indicators


PwC in the Community


Our work with the community

Fulfilling our Purpose

Whilst our mission is to build trust and solveimportant problems, we achieve this withcorporate responsibility (CR) as a societal lens.As a firm this lens helps us to understandstakeholder expectations and societal trends,manage our activities in light of these and investin positive societal change.

All of our staff are encouraged to be sociallyresponsible as they are granted 2 (two) workingdays every year to be utilised for communityprojects around Indonesia. In 2016, our peoplespent at least 7,000 hours to make a differencein several NGOs and/or communities such asGerakan Indonesia Mengajar Foundation, KickAndy Foundation, The Learning Farm andKoperasi Mitra Dhuafa.

Supporting education

With all the various programs we have, our mainprogram is supporting education. We believethat capacity building to a talent throughlearning by doing will give a better impact forthe future. Two of the initiatives where PwC isbuilding capacity in students are:

inviting selected college students toparticipate in the Young BusinessAdvisor program. The program providesthe students to work closely with seniorPwC people and enable them to bridgethe gap between education and thefuture workforce.

stimulating college student’s interest infinance and assurance by hosting mini-audit experiences providing them a realtaste of what the job involves day to day.

Providing assurance to the President’s Cup I & II

President Jokowi highlighted the need to reformIndonesian football to enable Indonesia tocompete again on a global scale. PwC was proudto play a part in this important process as thefinancial auditor of President’s Cup I and II(2015 and 2017). Our objective is to build trustand enhance transparency of the flow of funds.

In May 2016 FIFA president, Gianni Infantino,confirmed the world’s governing body councilhad ended Indonesia's ban after observing theactions of the Indonesian government to reviveIndonesian football and increase itstransparency; one of the noted actions was thesuccessful President Cup.

In addition, PwC was appointed as the auditorfor another soccer tournament, Sudirman Cup,initiated by Indonesia National Army (TNI).PwC will continue to support initiatives that inour view are important for the community andenhance the pride and passion of the country.

General Volunteering

Volunteering is always be at the heart of ourpeople. Several volunteering that we have arewith Yayasan Karang Widya (The LearningFarm), Koperasi Mitra Dhuafa, Yayasan BinaMandiri and some nearby schools.


Blood Drives

For at least three times in a year, PwC holds ablood drive in PwC office. In 2016, 312 peopleparticipated and collected 200 blood bags with50 liters of blood are collected.

Environmental stewardship

At PwC, we are committed to environmentalstewardship because we see it as critical to thelong-term success and sustainability of ourbusiness and our clients’ businesses. We alsoview environmental stewardship as critical to

our communities and to those who work withinthem, including our partners and staff. While wedo not manufacture goods, we do a broad varietyof initiatives that have wide-ranging impacts.These include: the use of technology (Webex) formeetings to minimise the greenhouse gas (GHG)emissions associated with our travel;minimizing the plastic and paper wastegenerated in our offices; and the effect we haveon our people’s daily choices, such as how to getto work. We focus on the areas where we canmake the most difference, aiming to improveour performance continuously.


Contacts

Irhoan Tanudiredja

Managing Partner

[email protected]

T: +62 21 528 90500

Eddy Rintis

Assurance Leader

[email protected]

T: +62 21 528 91040

Daniel Rembeth

[email protected]

Farhana Asnap

[email protected]

Want to know more?

Media Enquiries

This content is for general information purposes only, and should not be used as a substitute for consultationwith professional advisors.

PwC Indonesia is comprised of KAP Tanudiredja, Wibisana, Rintis & Rekan, PT PricewaterhouseCoopersIndonesia Advisory, PT Prima Wahana Caraka, PT PricewaterhouseCoopers Consulting Indonesia, andMelli Darsa & Co., Advocates & Legal Consultants, each of which is a separate legal entity and all of whichtogether constitute the Indonesian member firm of the PwC global network, which is collectively referred toas PwC Indonesia..

© 2017 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms,each of which is a separate legal entity. Please see http://www.pwc.com/structure for further details.

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