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.