P18 Audit Planning Memorandum

PT Ban Indonesia
Period: 31 December 2005

Prepared by: CP, 13 Nov 05

Reviewed by: BS, 15 Nov 05

GENERAL INSTRUCTIONS FOR AUDIT PLANNING MEMORANDUM

The audit plan is summarized in the audit-planning memorandum. The audit Engagement Partner
determines the extent of detail of the content of the audit-planning memorandum. The nature and extent
of information in the memorandum will vary with the size, nature, and complexity of the engagement.

OVERALL ASSESSMENT OF ENGAGEMENT RISK

Engagement Risk has been assessed as: Greater than Normal

Berdasarkan inquiry dengan manajemen dan temuan-temuan awal mengenai Perusahaan, maka
disimpulkan bahwa engagement risk terhadap audit Perusahaan adalah Greater than Normal. Hal
penting yang menjadi pertimbangan klasifikasi ini adalah kemungkinan adanya management override
terhadap laporan keuangan Perusahaan. Hal ini tidak teridentifikasi/tidak terjadi pada audit tahun 2004.

PERVASIVE RISK AND THE RESPONSE

Pervasive Risk Identified Response

Management override over the FS Increased involvement of engagement
management at all stages of the audit engagement
to ensure that the appropriate work is planned and
its performance is properly supervised.

PLANNING MATERIALITY AND MONETARY PRECISION

Selected Materiality (form P17):

Current Year Prior Year

CLASSIFICATION OF THE CLIENT'S USE OF COMPUTERS

The client's use of computers has been classified as (Form P13.1): SIGNIFICANT

A Control Assurance specialist will be used on this assignment

CONTROL ENVIRONMENT EVALUATION

Conclusion reached during audit planning:

The control environment does not appears to be conducive to reliable processing of financial information
and effective internal control

OVERVIEW OF THE ACCOUNTING PROCESS

Conclusions as to Whether the Components of Internal Control are Conducive to Effective Internal
Control and Reliable Processing of Financial Information within the Financial Accounting Cycle (Form
P13 and P14 series):

Internal control components are conducive to effective internal control and reliable processing of
financial information

1
P18 Audit Planning Memorandum
PT Ban Indonesia
Period: 31 December 2005

Prepared by: CP, 13 Nov 05

Reviewed by: BS, 15 Nov 05

Preliminary Conclusions About the Apparent Reliability of Processing of Financial Information

Within the Other Business Cycles (Form P13 and P14 series):

Business Cycle Name Preliminary Conclusion

EXPENDITURE Internal control components are conducive to effective
internal control and reliable processing of financial
information
INVENTORY Internal control components are conducive to effective
internal control and reliable processing of financial
information
PAYROLL AND Internal control components are conducive to effective
PERSONNEL internal control and reliable processing of financial
information
REVENUE Internal control components are conducive to effective
internal control and reliable processing of financial
information
FIXED ASSETS Internal control components are conducive to effective
internal control and reliable processing of financial
information
TREASURY Internal control components are conducive to effective
internal control and reliable processing of financial
information

Preliminary Conclusions About Whether Each Computer Processing Environment Supports

Reliable Processing of Financial Information Within the Related Business Cycles:
Computer Processing Environment Name Preliminary Conclusion
Sun Solaris V7.2 Supports
Windows Advanced Server 2000 SP3 Supports

Relationship between Business Cycles and Computer Processing Environment(s):

Business Cycle Name Computer Processing Environment(s)
EXPENDITURE Sun Solaris V7.2
FIXED ASSETS Microsoft Excel
INVENTORY Sun Solaris V7.2
PAYROLL AND PERSONNEL Windows Advanced Server 2000 SP3
REVENUE Sun Solaris V7.2
REVENUE Windows Advanced Server 2000 SP3
TREASURY Sun Solaris V7.2
TREASURY Windows Advanced Server 2000 SP3

CONTROL RELIANCE STRATEGY (ROTATION PLAN):

The following business cycles are included in our rotation plan:

Business Cycle Name Year Controls Wer Year When

Last Controls
Tested Are to Be Test
EXPENDITURE 2004 2005
FIXED ASSETS 2004 2006
INVENTORY MANAGEMENT 2004 2006
PAYROLL AND PERSONNEL 2004 2005
REVENUE 2004 2005
TREASURY 2004 2006

2
P18 Audit Planning Memorandum
PT Ban Indonesia
Period: 31 December 2005

Prepared by: CP, 13 Nov 05

Reviewed by: BS, 15 Nov 05

The following computer processing environment(s) and areas of general computer controls are included
in our control reliance strategy:

Name of the Computer Processing Environm Principal Business Activities Performed /

Areas of General Computer Controls
Sun Solaris V7.2 INFORMATION SYSTEMS OPERATIONS
Sun Solaris V7.2 INFORMATION SECURITY
Sun Solaris V7.2 APPLICATION SYSTEMS IMPLEMENTATION
AND MAINTENANCE
Sun Solaris V7.2 DATABASE IMPLEMENTATION AND SUPPO
Sun Solaris V7.2 NETWORK SUPPORT
Sun Solaris V7.2 SYSTEMS SOFTWARE SUPPORT
Windows Advanced Server 2000 SP3 INFORMATION SYSTEMS OPERATIONS
Windows Advanced Server 2000 SP3 INFORMATION SECURITY
Windows Advanced Server 2000 SP3 APPLICATION SYSTEMS IMPLEMENTATION
AND MAINTENANCE
Windows Advanced Server 2000 SP3 DATABASE IMPLEMENTATION AND SUPPO
Windows Advanced Server 2000 SP3 NETWORK SUPPORT
Windows Advanced Server 2000 SP3 SYSTEMS SOFTWARE SUPPORT

INHERENT RISK(S) IDENTIFIED

Risks identified at the account balance and potential error level and planned audit responses are
summarized below.

1. Penjualan, piutang usaha dan uang muka

Sehubungan dengan adanya perubahan kebijakan mengenai pencatatan uang muka penjualan
dari pelanggan yang langsung diakui sebagai penjualan yang diterima dari pelanggan, maka
terdapat resiko kesalahan terhadap untuk cut off pencatatannya [cut off].

2. Kewajiban dan biaya imbalan pasti pasca kerja

Kecukupan atas pencadangan biaya dan kewajiban yang dicatat [valuation], karena
manajemen akan menghitung sendiri cadangan imbalan pasti pasca kerja untuk seluruh
karyawannya, bukan oleh aktuaris.

3. Persediaan,

Net realizable value dari persediaan barang jadi [valuation], karena Perusahaan telah menjual
beberapa jenis ban pada tahun 2005 dengan harga dibawah biaya produksinya untuk
persediaan ban tahun 2004.

4. Piutang usaha, dengan adanya permintaan pelanggan untuk menunda pelunasan hutang
mereka kepada Perusahaan, perlu diperhatian collectibility dari piutang usaha dan kecukupan
pencadangan atas piutang tak tertagih yang dibuat Perusahaan [valuation].
5. Piutang usaha

Dengan adanya beberapa piutang yang masih perlu rekonsiliasi dengan langganan karena
adanya kesalahan perhitungan dan beda waktu pengakuan transaksi, maka ketepatan saldo
yang dicatat Perusahaan perlu diperhatikan [completness].

3
P18 Audit Planning Memorandum
PT Ban Indonesia
Period: 31 December 2005

Prepared by: CP, 13 Nov 05

Reviewed by: BS, 15 Nov 05

RISK MATRIX by ACCOUNTS

Risk Matrix by Account has been prepared for the following account balances:

Account Balance Inherent Control Substantive

Risk Risk Testing
Cash None None Standard MAP
Receivables Valuation None Selain melakukan standard
MAP, juga dilakukan identifikasi
secara mendetail saldo-saldo
piutang pelanggan, terutama
yang berumur lebih dari 180
hari, untuk dipropose
pencadangannya.
Inventory Valuation None Selain melakukan standard
MAP, dilakukan COMWIL test
dengan ditambah samplenya
dan concern untuk produk-
produk yang menurut
manajemen dijual dibawah
harga perolehannya.
Prepaid expenses None None Standard MAP
Property None None Standard MAP
Other assets None None Standard MAP
Payables None None Standard MAP
Employee benefits liability Valuation None Karena manajemen telah
memutuskan untuk menghitung
sendiri cadangan kewajiban
imbalan pasca kerja, maka KAP
SAM akan menghire
independent actuary sebagai
perbandingan atas hasil
perhitungan yang digunakan
oleh manajemen.
Bank Loans None None Standard MAP
Equity None None Standard MAP
Sales Valuation, Cut off None Selain melakukan standard
MAP, dilakukan cut off testing
dengan populasi 2 minggu
sebelum dan sesudah tanggal
neraca.
Cost of sales None None Standard MAP
Operating expenses None None Standard MAP
Payroll None None Standard MAP
Direct taxation None None Standard MAP

OTHER ISSUES
None noted