Accounting firms told to revise audit reports on SOEs

Accounting firms told to revise audit reports on SOEs

Fitri Wulandari, The Jakarta Post, Jakarta

The Supreme Audit Agency (BPK) has asked several public
accounting firms to revise their audit reports on 34 state-owned
enterprises (SOEs) as they did not meet generally accepted
accounting standards, a senior government official said.

"The BPK has asked the accounting firms to revise their
reports," Mirza Mochtar, director of accounting and appraisal
services at the Ministry of Finance, told The Jakarta Post on
Tuesday.

Whether or not the accounting firms in question would be
sanctioned would depend on an investigation to be carried out by
the BPK and the Office of the State Minister for State
Enterprise, he said.

Mirza added that he had held talks with the Indonesian
Accountants' Association (IAI) about the problem.

"The IAI said that the firms are willing to revise their
reports," he said.

Zaenal Soedjais, the chairperson of the IAI promised to take
firm action against any of its members who colluded with SOE
directors to cook their audit reports, as quoted by Koran Tempo.

Both officials declined to disclose the names of the
accounting firms, but Zaenal acknowledged that they included the
local units of the world's Big Five.

The BPK has demanded revisions of the audit reports as they
did not include compliance reviews as required under the
prevailing regulations.

Reports had earlier said that the auditors did not include the
compliance review aspect in their audits as it was a relatively
new requirement that was only introduced last year.

Experts have said that revising the audit reports by inserting
compliance reviews could lead to a change in the auditor's
opinions given for certain SOEs.

The 34 SOEs whose audit reports did not meet accounting
standards include trainmaker PT INKA, postal service PT Pos
Indonesia, insurance companies PT Jamsostek and PT Jasa Raharja,
and banknote and security paper company Perum Peruri.

This latest development in the accounting field at home comes
amid a string of major accounting scandals in the U.S.

Alleged accounting scams also emerged here during the late
1990s.

Ten firms had audited 37 banks before the 1997 financial
crisis. The audit results revealed that the financial
performances of the banks were sound.

As the financial crisis struck the country, the banks
collapsed like a house of cards due to mismanagement.

Later, a government investigation slammed the accounting firms
involved.

Ironically though, most of the firms involved in these cases
went unpunished.

Mirza said that the government was currently revising two
finance minister decrees on the accountancy profession in a bid
to put stricter sanctions in place.

"We are aware of the weaknesses in the system, but we're
trying to fix them," he said.

In the revised decrees, he said, public accountants would risk
having their licenses revoked without prior warning if they were
guilty of significant violations of accounting standards.

SOEs facing accounting woes: (1) PT Pupuk Sriwidjaja,
(2) PT Iglass, (3) PT Semen Baturaja, (4) PT Industri Kereta
Api (INKA), (5) PT LEN Industri, (6) PT Pupuk Kujang, (7)
PT Rekayasa Industri, (8) PT Krakatau Engineering, (9)
PT Kawasan Industri Cilegon, (10) PT Perkebunan Nusantara VIII,
(11) PT Perkebunan Nusantara IX, (12) PT Perkebunan Nusantara X,
(13) Perum Sang Hyang Sri, (14) PT Taman Wisata Candi Borobudur,
Prambanan, Ratu Boko, (15) PT Pos Indonesia, (16) PT Perhotelan
dan Perkantoran Indonesia, (17) Perum Jasa Tirta, (18) PT Amarta
Karya, (19) PT Adhi Karya, (20) PT Virama Karya, (21) PT Wijaya
Karya, (22) PT Bank Ekspor Indonesia, (23) PT Bank Mandiri, (24)
PT Asuransi Kredit Indonesia, (25) PT Asuransi Jasa Indonesia,
(26) PT Jasa Raharja, (27) PT Asuransi Ekspor Indonesia, (28) PT
Batam, (29) PT Kawasan Berikat Nusantara, (30) Perum Peruri,
(31) Perum Pegadaian, (32) PT SIER, (33) PT Jamsostek, (34) PT
Permodalan Nasional Madani.