BPK to review financial reports of SOEs
BPK to review financial reports of SOEs
Dadan Wijaksana, Jakarta
The House of Representatives is expected to approve on Monday
a draft law on state financial accountability, which requires all
state-owned enterprises (SOEs) to submit their audited financial
reports to the Supreme Audit Agency (BPK).
The bill forms the final part of a three-law package proposed
by the government in 2000 on the management of state finances --
the first legislation of its kind since the country's
independence. Two other laws on national finance and the treasury
have already been passed.
A House special committee together with Ministry of Finance
and BPK representatives have taken more than three years to
deliberate the bill, which could not be approved until the
national finance and treasury laws were passed.
Debate on the bill was also slowed by a disagreement about the
role of the BPK in auditing state companies.
The BPK had previously demanded a role in auditing all state
companies -- both non-listed and publicly listed -- even in cases
where the government had become a minority stakeholder in the
firms following divestment or privatization.
The agency argued the BPK audit was necessary to protect the
interests of the public and ensure good corporate governance.
However, other officials and legislators said the proposal
would put the law at odds with Law No. 8/1995 on Capital Markets,
which stipulates listed companies be audited by public
accountants, not the BPK. Others doubted whether the BPK had the
resources to audit all state firms.
A compromise was then reached where the BPK was given the
authority to review all state firms' audited financial reports.
It would then submit this review to the House.
"I'm satisfied (with the law) because it guarantees the public
access to information about the financial conditions of state
companies," BPK chairman Satrio B. Joedono said last week.
"What's important to us is not our authority to audit but
protecting the public's right to know about state finances," he
said.
Minister of Finance Boediono has repeatedly said the passage
of the three bills would mark a milestone in the reform of public
funds management, which could prevent further corruption and
minimize state losses.
Many surveys and reports have shown the misuse of public funds
is rampant in state institutions and companies nationwide.
However, these reports have rarely been followed up with legal
action and most of those responsible for misusing funds have gone
unpunished, many still serving in their government posts.
Irregularities are defined as any differences in the use of
state funds between the figures set out in the estimated budget
and the amount used at the implementation stage, which are not
properly accounted for.