BPK finds discrepancies in 2004 budget

BPK finds discrepancies in 2004 budget

Urip Hudiono, The Jakarta Post, Jakarta

The Supreme Audit Agency (BPK) has again put a disclaimer note on
the government's financial report of the state budget, despite
the implementation since last year of what was hailed as a "new
and improved" state accounting system.

Delivering BPK's four-month audit result on the government's
financial reporting for the 2004 state budget to a House of
Representatives plenary session on Tuesday, BPK chief Anwar
Nasution said BPK had decided not to give an opinion on the
report as it still contained some discreprancies.

"The government's report of last year's state budget is
actually a breakthrough to further establishing transparency and
accountability in the country, as it is the first to be based on
the new state accounting system, which has brought many
improvements from previous budget reports," Anwar said.

"However, BPK has still found several weaknesses in the
report, which include existing weaknesses within the government's
internal audit system, non-compliance of related financial
reporting regulations, and a discrepancy in unspent budget
expenditures."

President Susilo Bambang Yudhoyono had submitted the report --
which was compiled in line with Law No. 17/2003 on State Finance
-- to BPK in May for auditing.

The BPK report consists of a budget realization report, a
current accounts report, a cash-flow report and related
appendices, which include the financial reports of state-owned
enterprises (SOE) and other state agencies.

A disclaimer note, while it does not challenge the legitimacy
of the budget, still exposes flaws within the state accounting
system that could undermine rating performances and perceptions
of the country's economy.

With this year's disclaimer, BPK has for the fourth
consecutive time since 2001 gave a "no opinion" mark on the
government's report of the state budget.

While BPK's previous disclaimers could be understood as the
state accounting system was indeed in the process of being
improved, with differences between the government's and BPK's
auditing system, this year's disclaimer could undermine the
government's efforts to showing that the country had clearly
adopted a better state financial reporting system.

Explaining the weaknesses within the government's internal
audit system, Anwar said that several state agencies had yet to
implement the new state accounting system in verifying their
revenues and expenditures.

"The problem in determining the value of state assets --
particularly land assets -- also came up, as many were based on
historical prices and not the current market price," he said.

Meanwhile, on non-compliance with reporting regulations, Anwar
highlighted possible misuses in the Attorney General Office's
(AGO) Rp 6.67 trillion of bail money and the disbursement of Rp
2.89 trillion in reforestation funds.

BPK had also found discrepancies in unspent budget
expenditures, in which the funds amounted to Rp 31.56 trillion in
the financial report, but was stated as Rp 24.59 trillion in the
current accounts report.

"An explanation of this was also missing in the report's
appendices," Anwar stated.