BPK wants greater jurisdiction over SOEs
Tony Hotland, Jakarta
The Supreme Audit Agency (BPK) wants greater authority in auditing publicly listed state-owned enterprises (SOEs), and that appointed public accountants consult the agency first before conducting an audit.
"The problem is how to ensure that the public accountants' audit covers public interests and company information required by legislators," BPK chairman Satrio "Billy" Joedono said on Friday.
"The BPK is not sure that public accountants actually audit the vital sections. We'll be more pleased if they consult us first on auditing standards and principles to ensure the audits cover the essential parts," he explained.
He said the BPK had made the request during the deliberation of the draft law on state financial accountability, along with another: that the agency be allowed to audit all state companies -- both listed and unlisted -- even if the government held only a minority share in the companies.
Governmental officials and legislators initially rejected the request, saying it would conflict with Law No. 8/1995 on capital markets, which stipulates that listed companies be audited by public accountants.
They later reached a compromise to include an article that state-owned firms must submit their financial reports to the BPK for review after being audited by public accountants.
The House was to have passed the draft into law early this week, but had to postpone its enactment due to poor legislator attendance.
Billy expected the House to review the bill to accommodate the BPK's requests before it was enacted.
BPK auditor Amrin, who accompanied Billy to the weekly press conference, cited the case of ailing pharmaceutical firm PT Indofarma as one which underlined the necessity for the BPK to audit listed state-owned companies.
He said Indofarma refused to be audited by the agency after the government pared its ownership to 81 percent and sold the remaining shares to the public.
The firm suffered a hefty loss of Rp 129 billion (US$13.72 million) last year despite an earlier projection by the management that it would make a big profit, based on the assumption of a huge existing stock of medicines and medical tools. Auditors found, however, that the medicines had expired and the medical tools were useless.
"Now you see what has happened to the company. Even though it became a publicly listed company, it still holds the government's money and so should be audited by the BPK," he said.
The government plans to merge Indofarma with another state owned drug firm, PT Kimia Farma, which is financially healthy, as part of a dual divestment program.
Meanwhile, Billy said the House had asked the BPK to audit the two companies prior to divestment.
"Actually, such a request conflicts with the (capital market) law. In any case, it's up to the House and the government. We'll just wait," he said.