Accounting standard introduced for forest management

JAKARTA (JP): The draft of an accounting standard specially designed for forest concessionaires has been introduced to businessmen to supplement the general principles of accounting which have been applied by the Association of Indonesian Accountants (IAI).

During a public hearing introducing the draft here yesterday, Minister of Forestry Djamaloedin Soeryohadikoesoemo said the Special Accounting Standard for Forest Management (SASFM) was designed to ensure that forest-concession holders manage their forests in an ecologically responsible manner and to help the ministry assess the company's financial condition and obligations.

"The absence of a standard accounting system in forest management has resulted in a variety of methods to calculate a company's economic rent. The government has also experienced difficulty in assessing a company's fulfillment of its financial and environmental obligations," Djamaloedin said.

According to him, a forest concessionaire's financial report currently does not clearly show whether it has fulfilled various obligations to the government, such as paying production and reforestation fees, presenting an asset valuation report and an environmental impact analysis.

According to the Director General of Forest Management Hendarsun Suryasanusiputra, the draft of SASFM was formulated by a joint team of the Ministry of Forestry, the IAI and the Faculty of Economics at the University of Indonesia.

The team started its work in February last year and the draft was presented to a steering committee in October.

"SASFM and two other adjoining principles, which are the Guidelines for Financial Reporting and the Guideline for Financial Control, are expected to be completed by the end of this year," he said.

Improvement

Hendarsun said the public hearing was intended to collect input for the draft's improvement.

"After the draft of SASFM has been passed and implemented, the team can start working on the other two principles," he said.

Despite the implementation of SASFM in the near future, the general principles of accounting will still be applied.

Under SASFM, forest concessionaire holders are required to specify their activities and expenditures in implementing the selective logging and planting system, the row logging and planting conservation system, their forest conservation activities, their plantation projects on vacant land and other nature preservation efforts.

The company must also report its share equity in wood and non- wood industries, the management of its wood-processing system and the area of remaining virgin forest.

It must also disclose the remaining term of the concession, heavy equipment used, the area planted in the current year and the cumulative area already planted. The forest concessionaire must also present a list of the company's managers and shareholders, its transactions with parties with whom it has special relationships and its efforts to conserve fauna, flora and water. (10)