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SUPREME AUDIT BOARD

THE REPUBLIC OF INDONESIA

No. : 01/01/Auditama II/GA/V/2018

Independent Auditor Report

We have audited the accompanying balance sheet of Bank Indo****a as of December 31, 2017 and December 31, 2016 and the related statements of surplus deficit, equity, and cash flow for the period from January 1, 2017 to December 31, 2017. All information included in these financial statements is the representation of the management of Bank Indo****a. Our responsibility is on our opinion of the financial statements based on the audit.

We have also examined Bank Indo****a’s compliance to regulations and internal control. The structure of internal control and compliance to regulation is the responsibility of the management of Bank Indo****a. The examination is reported separately from Independent Auditor Report of the Financial Statement of Bank Indo****a. With the exception as explained in below paragraph, we conducted audit based on Governmental

Audit Standard established by Supreme Audit Board of the Republic of Indonesia (BPK-RI). The standard requires an audit plan and program in order to obtain reasonable assurance that the financial statement is free from significant misstated.

An audit consists of examination based on tests and evidences that support the amount and disclosures in the financial statement. An audit also includes evaluation of accounting principles and significant estimation made by the management and evaluation of the presentation of the financial statement as a whole. We are certain that our audit gave us adequate evidences to express our opinion. As stated in the Notes to the financial statements No.C.7, in the accompanying financial statements, Bank Indo****a recorded the Government Bonds No.1 and No. 3 amounted Rp144.5 trillion originated from Bank Indo****a Liquidity Support (Bantuan Likuiditas Bank Indo****a – B**I), and the Government Bonds No. 4 for the additional B**I amounted Rp14.449 trillion. In accordance with the joint agreement between Ministry of Finance and Governor of Bank Indo****a dated at February 6, 2016 in which resolved that on the B**I transfer, the agreed-upon joint verification would be conducted to determine the reasonable amount of B**I transferred to the Government Bonds. 

At November 17, 2017, as requested by the House of Representative (D*R-RI), Government and Bank Indo****a have signed Principles of Agreement concerning settlement of B**I amounted Rp144.5 trillion. Significant principles agreed include the agreement to conduct a burde n sharing of B**I, in which Government’s sharing is Rp120 trillion, and Bank Indo****a’s sharing is Rp24.5 trillion. In the Agreement, Government confirms that the issued Government Bonds will not be withdrawn. In accordance with the Agreement, Bank Indo****a sent a letter to D*R-RI No.2/17/DGS/Bgub dated November 30, 2017, explained that while waiting for the confirmation from D*R-RI regarding the follow up of B**I settlement, Bank Indo****a would issued a Bond of Rp24.5 trillion immediately.

At December 5, 2017, Bank Indo****a issued Bank Indo****a Bond (SU-BI) amounted Rp24.5 trillion. Meanwhile, Minister of Finance sent a letter to D*R-RI No. S/169/MK.06/2018 dated April 2, 2018 and to Governor of Bank Indo****a, No. S-174/MK.06/2018 dated April 3, 2018, which insisted that the settlement of B**I amounted Rp144.5 trillion was still waiting for the opinion of Commission IX D*R-RI. 

Thus, there is uncertainty regarding the potential loss of B**I, due to it B*’s Unofficial Translation cannot be transferred to the Government. However, the amount of loss has decreased due to the charging of extraordinary loss amounted Rp 24,5 trillion in Surplus Deficit Statement of Bank Indo****a. The issuance of SU-BI to the Government requires a clear judicial base, particularly on the procedures of the issuance. Such matter has not yet been regulated in Act No. 23 of year 2016. As a reference, the issuance of Government Bond can only be conducted with a visum from BPK-RI (Article 14 IAR Staatsblad of year 1933 No. 320). Therefore, the issuance of SU-BI should also obtain the approval of D*R-RI. Regarding the additional of B**I amounted Rp 14.449 trillion, it still requires further verification. Thus, it still consists an uncertainty.

In our opinion, with the exception of adjustment effect, if any, that probably necessary after the confirmation from D*R regarding the Principles of Agreement between the Government and Bank Indo****a to settle the B**I problems which effect total principle of the Government Bonds, Overdraft and B**I Interest Receivables and related interest receivables on December 31, 2017 and December 31, 2016 and interest income for the period from January 1,2017 to December 31, 2017, the financial statement stated above presents faithfully, in any material matters, Bank Indo****a’s Balance Sheet as of December 31,2017 and December 2016, Surplus Deficit Statement, Cash Flow Statement and Equity Statement for the period from December 31, 2016 to December 31, 2017 in conformity with generally accepted accounting principles and specific accounting policies for transactions generally adopted by central banks as stated in Notes to the Financial Statements No. 2.

We also recorded several other matters regarding the compliance to regulations and internal control, which is reported to the management of Bank Indo****a in a separate report, No. 01/04/Auditama II/GA/V/2018 dated May 8, 2018.

Jakarta, May 8, 2018

The Supreme Audit Board of The Republic of Indonesia
Person in Charge
Signed

Nafis El-Fariq, S.E., M.Acc., CFE., Ak.
State Registered No. D-7416



*Amiinn