BPK offers rare praise to Bank Indonesia

Zakki P. Hakim, Jakarta

The Supreme Audit Agency (BPK) has praised Bank Indonesia for showing goodwill in improving its financial statement by adopting proper accounting standards.

In contrast, BPK chief Satrio Budihardjo Joedono said that most government institutions kept repeating the same mistakes in reporting their financial position.

Satrio said that, during the past couple of years, Bank Indonesia had gradually started to improve the transparency of its financial statement.

"BI is (now) quite responsible as an auditee," he said.

According to Satrio, during his first two years leading the BPK, the agency declined to give an opinion on Bank Indonesia's annual report, creating public suspicion that the central bank's report could not be trusted.

"Apparently, BI improved itself and in the third year we gave an unqualified opinion. This year the report is clean and the figures can be trusted," he said, pointing out that the report was now in accordance with accounting standards.

BPK also gave an unqualified opinion on BI's 2003 financial report.

Satrio was quick to add, however, that this did not mean the central bank was completely free of irregularities. He said there were suspected irregularities in the purchase of expensive artwork or paintings for the offices of top Bank Indonesia officials.

BPK's latest report shows the central bank spent in 2002 Rp 6.28 billion (US$748,000) on artwork, of which some was bought from prestigious auction houses likes Christie's and Sotheby's.

The agency said due to the lack of transparency in the purchase of the expensive paintings and poor management of the artwork, there was suspicion that the paintings would likely fall into the hands of outgoing members of the Bank Indonesia board of governors.

Satrio said with such a huge expense on artwork, no wonder the central bank had a high overhead cost, which could be seen in its general, administration and other expenses statement.

In BI's financial statement, which was released to the public on Friday, the central bank's general, administration and other expenses increased by 152 percent to Rp 5.8 trillion (US$685.68 million) in 2003 from Rp 2.26 trillion the previous year.

Meanwhile, Satrio criticized the government's poor management of the state budget, saying it appeared unwilling to do anything to improve transparency and accountability in the use of state funds.

During the past few years BPK discovered massive irregularities in the use of the state budget, but until now the government has seemed reluctant to improve the situation.

The BPK disclosed, for example, that in 2001 the agency found irregularities amounting to about Rp 387.1 trillion in the use of the state budget. The sum is much greater than those totaling Rp 32.96 trillion in the 2000 state budget.