Bapepam to stop accounting scams

Bapepam to stop accounting scams

Dadan Wijaksana, The Jakarta Post, Jakarta

Learning the lessons from a string of financial scandals in the
U.S., the Capital Market Supervisory Agency (Bapepam) is drafting
new regulations for accounting firms.

Bapepam chairman Herwidayatmo said the new rules would provide
clearer guidelines for accounting companies in maintaining
relations with their corporate clients without harming the
interests of public investors.

"It's now under intense deliberation ... Hopefully, the
regulations will be effective in the middle of October," he told
reporters on the sidelines of the 25th anniversary of the
country's capital market.

Only recently, the world was stunned by a series of major
bookkeeping scams, especially conducted by publicly-listed
companies in the U.S.

Pharmaceutical giant Merck, for example, posted US$12.4
billion in revenue from its pharmacy-benefits unit over the past
three years that the subsidiary had actually never collected.

The cases have proven contagious, not only did it rock U.S.
markets but it also shook the world business community and
shattered investor confidence around the world, including in
Indonesia.

Calls for tighter regulations on accounting firms in the
country has been mounting ever since. They are considered crucial
in providing investors here with more protection.

Some experts have even warned that if such fraud could take
place in the U.S., whose regulations and control mechanisms are
already quite sound, there is no reason that similar cases would
not happen in Indonesia.

Therefore, tighter regulations are badly needed to prevent
possible fraud.

The regulations should also provide stiff punishment for
accountants found guilty of committing fraud, to deter other
accountants from deceiving the public in the future.

Addressing these calls, Herwidayatmo said that was exactly why
the capital market watchdog came up with the idea to draft the
regulations in the first place.

In the new regulations, a company would not be allowed to keep
using one accounting firm to audit its financial reports, a move
which would help prevent collusive deals between the two sides at
the expense of investors.

The existing regulations did not provide for such
restrictions, Herwidayatmo added.