Govt drafts bill on accounting

Govt drafts bill on accounting

The Jakarta Post, Jakarta

The Ministry of Finance is currently drafting a new bill on
the accountancy profession, which will replace the existing
outdated law issued in the 1950s.

The Ministry of Finance said, in a press statement on Sunday,
that the new bill would not only provide better protection for
both clients and accountants, but also accommodate the complex
development in trade liberalization and technology.

The drafting of the new bill comes amid rising financial
scandals both at home and overseas, involving huge companies and
giving rise to allegations that accountants have often cooked
their clients' books.

The statement said that the new bill will prohibit public
accountants from doing their jobs if they are not independent.

Individually, public accountants will not be allowed to make a
general audit for a particular client for more than three years
in a row.

Public accountants will not be allowed to have a side job at
another institution -- both state and private -- unless it is a
teaching job at a university.

In addition, public accounting firms will not be allowed to do
audit work for a client for more than five successive years. And
in doing audit work, the firm must be independent, meaning that
it must not have a conflict of interests.

Public accounting firms will be banned from providing services
outside finance, accounting and management. This will force
accounting firms to end additional consultancy services, thus,
avoiding a conflict of interests.

It will also be required that working papers must be kept for
10 years, and an accountant's office must be isolated from other
activities.

Public accounting firms will be immune from legal charges if
disclosing a crime committed by a client.

But, both public accountants and public accounting firms will
be held legally responsible for all services they provide.

Sanctions for violating the law range from an administrative
sanction to a financial penalty and a jail term of between one
year and six years.

Administrative sanctions include freezing the accountant's
license and revoking the accountant's license.

A client, or other parties who have suffered losses as a
result of misstatements or misrepresentations in audit reports,
can file legal charges.

Criminal charges include a penalty of between Rp 50 million
and Rp 300 million for an accountant, and between Rp 100 million
and Rp 2.5 billion for a public accounting firm.