BPK to audit SOEs to curb financial irregularities

BPK to audit SOEs to curb financial irregularities

Rendi A. Witular, The Jakarta Post, Jakarta

The Supreme Audit Agency (BPK) will audit all state-owned
enterprises (SOEs), both those under the central government and
those under regional administrations, starting in 2006 as
stipulated in the new state finance bill.

BPK Chairman Satrio B. Judono said on Friday that the audit
would focus on finding financial irregularities at the SOEs,
which for many years had been treated as cash-cows by people who
were well-connected in political circles.

He also said that the move was crucial to help minimize state
losses.

"Under the new bill, state audit of SOEs, which is currently
unorganized, will all be handled by BPK," said Satrio at a press
conference, adding that the audit would also cover publicly
listed SOEs.

The state audit of 144 SOEs under the central government has
been conducted by either the State Finance and Development
Comptroller (BPKP) or the Directorate General of Financial
Institutions. BPK has only audited specific SOEs by special
request.

BPK previously revealed that throughout 2001 and 2002, it had
found Rp 456.3 trillion worth of irregularities and abuse of
state funds, mostly in the implementation of the 2001 and 2002
state budgets.

BPK said that the findings were the result of an inspection
which covered the implementation of budgets in 2001 and 2002 for
the central and regional governments, and state companies
operating under the central and regional governments.

The uncovering of irregularities in the past had mostly passed
by unheeded, partly due the absence of a strong legal basis.

The House of Representatives, however, last month approved the
state finance bill, which is to ensure transparency and
accountability in managing state finances.

It is hoped that the move will help curb the massive
corruption at state institutions, including SOEs.

Under the Finance Law, if any irregularities in the use of
state funds are found, not only will the officials in charge of
the funds have to pay for the losses, they can also be jailed for
the crime.

The Law also emphasizes the principle of equality before the
law, which means that any official, even the leader of an SOE who
has committed the wrongdoing, will be punishable equally under
the law and that they would be accorded no special concessions
nor privileges.

BPK is expected to start the audit in 2006, after all SOEs
have submitted their financial reports to the agency at the end
of the 2005 budgetary period.

Satrio said that in accordance with Chapter VIII of the state
finance bill, all SOEs operating under the central government
must attach their financial reports with the government state
budget accountability report, which would then be submitted to
the House of Representatives.

BPK is to audit the financial report first, before it is
passed on to the House.

In the case of SOEs operating under regional governments, they
must attach their financial report to the local government's
budget accountability report, which will then be tabled at the
local legislative council.