Government drafts new bill on accountancy profession

Fitri Wulandari, The Jakarta Post, Jakarta

The government is drafting a new bill on the accountancy profession in a bid to help prevent misstatements and misrepresentations in audited financial reports.

Mirza Mochtar, director of public accounting and appraisal services at the Ministry of Finance, said the new bill would provide better legal protection for both clients and accountants.

"The bill aims to provide a stronger legal foundation for both clients and accountants, including protecting clients from being defrauded by their accountants," Mirza told The Jakarta Post on Wednesday.

In the wake of the Enron and WorldCom scandals involving Arthur Andersen, one of the world's big five accounting firms, public accountants worldwide have been under fire for allegedly cooking their clients' books.

However, Mirza claimed that the bill did not have anything to do with the latest financial scandals.

"The current law on the accountancy profession was out-of-date even when it was put on the statute books in 1954. It is no longer appropriate for current conditions. That's why we need to draft a new one," he said.

According to Mirza, his directorate had set up a team to draft the bill. After the draft was finished, the next step would be to form an inter-ministerial team to discuss the draft.

The inter-ministerial team would consist of officials from the Ministry of Justice, the Ministry of Finance, and the State Secretariat.

Mirza said that according to the bill, any public accountants found violating professional ethics and standards would have their licenses revoked by the government without prior notice.

He added that the bill would also open the possibility for criminal charges to be laid against accountants or accounting firms who deliberately made misstatements or misrepresentations in financial reports.

"It is difficult to bring accountants before the criminal courts as the current ministerial decree does not authorize the filing of criminal prosecutions," he explained.

The new bill also provides that a company may only retain an the services of an accounting firm for a maximum of four years. Under the current law, there is no such limitation.

Mirza added that the new bill would also force accounting firms to give up their consulting services to avoid conflicts of interest.

Another crucial change under the bill, Mirza said, was that the government would conduct a regular review of accounting firms.

The reviews would be held annually to asses the performance of the firms and to see if they had carried out their work in accordance with the set standards and rules.

He added that in the wake of complaints from the public, the government could also institute special reviews.