PTPN IV Tightens Financial Controls Through Implementation of ICoFR

Every figure in a financial report must reflect business processes that are truly controlled, transparent, and accountable.

Jakarta (ANTARA) - PT Perkebunan Nusantara IV (PTPN IV) PalmCo is tightening financial report controls through the comprehensive implementation of Internal Control over Financial Reporting (ICoFR) to strengthen transparency, risk management, and enhance stakeholder confidence in the company’s performance.

“Throughout 2025, we are fully implementing the ICoFR system to ensure the reliability of financial reports whilst strengthening the company’s risk management,” said PTPN IV Chief Executive Officer Jatmiko K. Santosa in a statement in Jakarta on Thursday.

He stated that the comprehensive implementation of ICoFR is an essential part of efforts to build a strong internal control culture across all organisational levels.

“Every figure in a financial report must reflect business processes that are truly controlled, transparent, and accountable. It is not merely administrative recording,” he said.

The programme is being implemented across all company units, ranging from plantation and factory operations to internal supervision functions. The process also involves external auditors to ensure the control system operates effectively.

According to Jatmiko, strengthening the internal control system is not solely to meet regulatory obligations. Amid industry dynamics and transparency demands on state-owned enterprises, a strong system has become a strategic necessity for the company.

“Stakeholder confidence is largely determined by the quality of corporate governance. Therefore, this transformation is directed so that the company not only excels in operations, but is also robust in risk management and accountability,” he said.

In practice, continued Jatmiko, PTPN IV’s ICoFR system covers various processes that directly affect financial reports, such as revenue, production, procurement, asset management, and financial statement closure processes.

The company first identifies accounts that have a significant impact on the balance sheet and profit and loss statement. From there, various control mechanisms are designed to ensure each transaction is recorded accurately and can be traced.

Implementation is carried out through several stages, starting from control design, implementation and continuous monitoring, effectiveness evaluation, and improvement if weaknesses are found in the system.

At the evaluation stage, the company tests both the design of controls and their implementation in day-to-day operational activities.

This step is crucial to ensure that oversight mechanisms are not only sound in concept, but also effective in practice.

In implementation, the company has identified two main potential risks that can affect financial report quality: misstatement risk and fraud risk.

“Misstatement can occur due to calculation errors, incorrect account classification, and inadequate review processes. Meanwhile, fraud risk is usually related to pressure or opportunities that allow financial data manipulation,” he said.

To mitigate these risks, the company implements various controls, including layered verification of transaction recording, restriction of access to financial systems, and routine reconciliation processes of company accounts.

All business processes and control mechanisms are systematically documented so they can be traced in the audit process.

Strengthening the internal control system is also expected to improve the quality of management decision-making.

With more reliable financial reports and free from material misstatement, management has a stronger basis for formulating business strategies, managing costs, and optimising asset management across the company’s various operational regions.

Going forward, said Jatmiko, PTPN IV plans to strengthen the culture of self-evaluation of the control system, update risk maps regularly, and increase human resource capacity through continuous training.

This step is expected to make internal control not just a compliance programme, but part of the company’s working culture.

“For PTPN IV, the full implementation of ICoFR is one of the important foundations in the long-term transformation agenda to strengthen corporate governance and increase confidence among investors, regulators, and the public in the corporation’s performance,” said Jatmiko.