BPK to use better audit procedures

JAKARTA (JP): The Supreme Audit Agency (BPK) yesterday promised to adopt more comprehensive procedures in auditing the state budget and state-owned companies to ensure the economy, efficiency and effectiveness of public spending.

However, speakers at a panel discussion here yesterday suggested that the country also adopt a principle of balance of power and implement procedures for performance audit to ensure maximum benefits from public spending.

The agency's chairman, J.B. Sumarlin, told the meeting which discussed "Performance Audit" that the agency, with planned comprehensive procedures, will deal not only with the compliance to regulations of the government and its companies but also with economy, efficiency and effectiveness of their spending.

"In regard to the growing complexity of development and the budget for it, it is high time for auditors to pay attention to the economy, efficiency and effectiveness of public spending," Sumarlin said.

BPK, the Government Audit Agency (BPKP) and inspectorates of government institutions have for the last five decades adopted the conventional auditing method, dealing mainly with the regularity and financial aspects of government institutions and state companies.

BPK usually audits financial reports of governmental projects and state-owned companies by taking samples to be examined. With such a method, for the last three successive fiscal years the agency could respectively audit only 457, 456 and 192 projects throughout the country.

During the period of April 1 to Sept. 30, 1993, BPK found a number of corruption cases involving a cumulative amount of Rp 600 billion.

Suggestion

Speakers at yesterday's discussion suggested Indonesia follow other countries which have abandoned the old method and adopted a new and more comprehensive one.

P.Th. Schure, a consultant of the Dutch BMB Group, defined the performance audit as an independent appraisal of an organization, program, project, operation, activity or function to determine the extent to which resources are managed with regards to economy, efficiency and effectiveness, generally called the three E's.

Schure said performance audits still relate to regulations, rules and procedures.

Another speaker, Muhammad Murni, a vice chairman of the Budgetary Commission of the House of Representatives (DPR), said auditing work will never reach an optimal level if a balance of power between the executive and the legislative bodies does not exist.

"Worse than that, most of the time DPR has been harassed," Murni said, referring to the habit of BPK to consult its findings with the government before submitting its annual financial report to the DPR.

"What is the use of analyzing a financial report which has been updated?" he said, adding that the Trias Politica principle should be established for the long-term benefit of Indonesia.

Schure said an appropriate audit procedure is an audit that deals with regularity, performance and sustainability of a project as well as the environment, spatial conditions, social fabric and economic performance.

"An economic analysis tends to overvalue project benefits whereas negative effects are ignored. Strains on the health of people and erosion of land are examples of such side effects. Auditing may reveal a better location for a project or may show improvements which still can be effected," he said.

The Dutch consultant said the Indonesian government should develop prototype guidelines for performance audit and design training modules.

Other speakers in yesterday's panel discussion were Director General of Tax Fuad Bawazier, deputy chairman of BPKP Irsan Yani, a member of BPK Gandhi and Inspector General of the Ministry of Public Works E.L.M. Malonda.(09)