87% of listed companies audited by foreign firms
87% of listed companies audited by foreign firms
JAKARTA (JP): About 87 percent of companies listed on
Indonesia's stock markets were audited by members of the world's
six big accounting firms, says an executive of an international
accounting company.
Terry Underwood, an executive of Arthur Anderson in Japan,
said that based on these statistics, there is no reason for
foreign investors not to rely on financial reports of listed
companies in Indonesia.
"In my opinion, you can rely on the work of the Big Six in
Indonesia as much as you can in other countries," he told a
seminar on the Indonesian capital market held in Tokyo last week.
Underwood did not name the Big Six companies but according to
the Association of Indonesian Public Accountants, there are six
multi-national accounting firms which have operated in the
country through their local partners.
They include Arthur Anderson of the United States, which
operates in partnership with Utomo & Co, KPMG of Australia with
Hanadi Sujendro & Co, Coopers & Lybrand also of Australia with
Siddharta and Siddharta, Deloitte Rouche Tohmatsu (DRT) of the
United States with Hans, Tuanakotta & Mustafa, and Binder Dejker
Otte (BDO) of the Netherlands with Richard Tanubrata.
Underwood said that those six foreign accounting firms also
employ many expatriates such as Americans, Singaporeans,
Australians and Filipinos.
Skepticism
Skepticism over the work of the domestic accountants,
especially regarding financial reports of listed companies, is
not only expressed by foreign but also by domestic investors.
Kwik Kian Gie, an outspoken capital market analyst, is one of
those critical about the work of local public accountants.
Kwik charged that accounting firms often collude with share
issuers in engineering and making up financial reports of their
companies. Such practices, according to Kwik, was the main cause
of the sharp price dilution which took place in the period
between 1990 and 1992.
Underwood acknowledged that many investors often distrust the
work of Indonesian auditors due to misleading reports about their
credibility in the last two years.
"I think this occurred because Indonesian auditors do not work
hard enough to improve their image," he said
Underwood said public accounting firms, which operate in
partnership with foreign auditors, have a larger market share in
Indonesia.
"To me, it indicates pressure from foreign investors and
international institutions who have a preference for the large
accounting firms with international affiliations," he said.
Indonesia's generally accepted accounting principles (GAAP)
is, in fact, adopted from the GAAP of the United States. In terms
of format and contents, financial statements prepared in
accordance with the Indonesian accounting principles look almost
like a replica of the U.S. GAAP. (hen)