Government drafts new bill on accountancy profession

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"The current law on the accountancy profession was out-of-date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.