By Vincent Lingga

By Vincent Lingga

JAKARTA(JP): The government's commitment to improve the
efficiency and effectiveness of its budget management and its
financial accountability remains largely a verbal pledge, as
shown by the findings made by the Supreme Audit Agency (BPK).

The report on BPK's audit of the 1999/2000 budget and the
financial accounts of several state companies conducted in the
first semester of this year discovered 1,933 instances of
deviations from budgetary rules and irregularities in financial
management, involving Rp 3.3 trillion (US$371 million).

The auditors also found irregularities involving over Rp 1
trillion in potential losses to the state.

But what makes the prospect for a higher standard of
accountability look even poorer is the fact that most of the
ministries and government institutions that were audited do not
see the deviations and irregularities as serious wrongdoings.

Budget Director General Anshari Ritonga said the
irregularities could not immediately be blamed on the audited
institutions, further arguing that the deviations did not
automatically cause state losses.

Ritonga even admitted that no significant progress had been
made regarding BPK's recommendations for better financial
accounts in the public sector.

"I have not yet read the audit report. But I assume the
findings were very much similar to BPK's previous audits, namely
deviations from rules or breaches of procedure that did not
necessarily inflict losses on the state," Ritonga said, in
commenting on the BPK report to the House of Representatives last
week.

The Ministry of Mines and Energy, where BPK found
irregularities involving almost Rp 79 billion, said the BPK
report to the House was outdated because it did not include "the
clarifications and correction we made immediately at a follow-up
meeting with BPK auditors."

"The clarifications and correction we made have reduced the
amount involved of what BPK considered as irregularities to a
mere Rp 150 million. We are now further investigating these few
cases of deviations," Minister Purnomo Yusgiantoro added.

According to Purnomo, projects under construction often cannot
fully meet budgetary rules or procedures due to unexpected
problems in the field, such as delays in the delivery of
materials or equipment, or land acquisition.

The question now is: Does the Supreme Audit Agency, the sole
agency mandated by the Constitution to conduct an independent
audit on state finances, and the government institutions, speak a
different language or use different terms of reference in reading
the audit findings?

"Not at all," asserted BPK Chairman Satrio Budihardjo 'Billy'
Joedono.

"We strictly apply the State Treasury Law and other
regulations, rulings and presidential decrees on budget
management and financial accounts," Joedono said in an interview.

The problem, according to him, is that the government's
tolerance of breaches of rules or deviations from regulations
seems to have been stretched to such a level that things which
cannot immediately be classified as malfeasance, can simply be
justified post hoc.

"But as an auditor that wants to build a high standard of
accountability we always insist on zero tolerance on any
aberrations or deviations from rules, even though they do not
immediately inflict losses on the state. We always check what was
done against what is required by the law or regulations", Joedono
added.

"After all," he said, "good discipline starts with strict
adherence to the rules of the game, to every provision of the
law, however petty it might seem to be."

The fact that the Agency auditors often find, time and again,
similar breaches of rules, shows that most government
institutions seem ignorant of BPK audit findings and
recommendations.

Even the House itself rarely uses BPK's audit reports as a
reference to exercise its control over the government.

"The bulky report (consisting of hundreds of pages) usually
ends up in the House archive immediately after delivery by the
BPK chairman," Benny Pasaribu, Chairman of House Commission IX
for state finances and banking, said.

Pasaribu added that if House members thoroughly read the BPK
reports they could be more informed and focused in the exercise
of their oversight of the various ministries.

But the technical jargon and such vague or unintelligible
phrases in the report such as "deviations from austerity and
budget efficiency", "deviations from order and discipline in law
enforcement" or "deviations from the effectiveness of financial
management" do not help attract the attention of House members.

Obscure phrases even make the report boring and hard to
digest.

Joedono argued that the Audit Agency could not use bombastic
or pompous words or make wild accusations simply to attract the
attention of House members, otherwise BPK or its auditors might
end up in messy litigation, on charges of defamation.

"After all, we are not a judicial agency that makes
investigation and formulates charges.

"But we have made some improvements in our reports to make
them much easier to comprehend. The reports are now supplemented
by executive summaries on the various sectors that were audited,
and each of the House Commissions was given the summary that
covers the sectors under its oversight," he said.

The main problem seems to be rooted in the lack of enforcement
power and follow-up mechanisms of BPK. Moreover, there is a lack
of clarity in the mandate, scope, role and degree of independence
of BPK, the Development Finacne Comptroller (BPKP) and the
inspectorate generals, which serve as internal auditors at
ministries.

There is no systematic follow-up mechanism to ensure
implementation of audit findings, and BPK audit findings are not
made available to the general public.

That is because the Constitution's provision that requires BPK
to report its audit results to the House is interpreted narrowly
and rigidly as if to mean that only the House can have access to
its audit findings.

After the establishment of BPKP in 1983, the government did
not pay much attention to the role of BPK, as evidenced by the
meager resources allocated to the agency to develop its human
resources.

"Some institutions sometimes object to giving access to our
auditors, arguing that they have been audited by BPKP. And we can
do nothing about it," Joedono said.

Until now, he added, the Audit Agency, like other state
institutions, remains subject to zero growth in new recruitment,
despite the extension of its auditing work to include individual
income tax revenues and state banks, which were previously
inaccessible to BPK auditors.

There is also an urgent need to review the internal audit
framework of the government and to rationalize the roles and
responsibilities of both BPK and BPKP.

Joedono acknowledged the work of both audit agencies often
overlapped, causing inefficiency.

Joedono confirmed that the government had recently introduced
accounting standards for public accounts, but it would likely
take some time before the accounting system in the public sector
was fully integrated.

No wonder, therefore, that the government is not yet able to
produce a consolidated report that captures all budgetary and
non-budgetary transactions as well as state companies' and local
administrations' finances.

This certainly inhibits effective monitoring of government
financial transactions.

"The annual budget implementation report to the House consists
only of a cash flow statement. It is not a balance sheet in the
real sense," Joedono asserted.

Worse still, the general public has never been informed that
even this cash flow statement rarely gains a clean bill of health
from BPK.

"We did not give any opinion regarding the government budget
report to the House for fiscal year 1999/2000 (ended in March,
2000)," Joedono disclosed.

Needless to say that catchwords such as "transparency and
accountability" that the government often pronounces as the basic
principle of good governance require appropriate institutions and
public reporting requirements and a central agency, which can
enforce fiscal discipline in a transparent and accountable
manner.

Enhanced transparency in the reporting of the government's
financial position also requires an appropriate integrated
government accounting system that is not yet in place in the
country.

The House must ensure that BPK, as the sole independent audit
agency of the government, is not only maintained but
strengthened.

Proper exercise by the House of its oversight role over the
work of BPK and its audit findings and implementation of its
recommendations would go a long way to curbing malfeasance in the
public sector.

The writer is a senior editor at The Jakarta Post.