House endorses final bill on foundations

House endorses final bill on foundations

The Jakarta Post, Jakarta

The House of Representatives endorsed on Tuesday the amendment
bill to Law No. 16/2001 on Foundations, but no changes were
established regarding the authority of the Supreme Audit Agency
(BPK) in auditing financial reports of foundations.

Legislator M. Akil Mochtar, who chairs the House special
committee deliberating the bill, said on Tuesday that the changes
to the existing law were essential for the development in the
sector of education and health, which were the common scope of
foundations.

The amendment bill was submitted by the government to the
House on March 6 last year.

Basically, only three significant changes were made. The
changes concern the remuneration of foundation executives, the
time line within which a foundation must obtain body corporate
status, and the tenure of foundation management.

"The amendment bill now allows only full-time executives of
foundations and those who are neither founders nor affiliated to
the founders, patrons or trustees to receive monthly
remuneration. The amount is determined by the patrons and depends
on the capability of the foundations," said Akil.

The existing law says that the assets of a foundation, whether
in the form of cash, property or other types of assets, cannot be
transferred either directly or indirectly to its patrons,
executives or trustees as they are supposed to devote their labor
to the foundation voluntarily.

The amendment bill also provides in details the time line
within which a foundation must obtain body corporate status,
which is not clear under the existing law.

According to the bill, a foundation must now apply for body
corporate status to the minister (of justice) no later than 10
days after the establishment of the foundation.

"The minister must then seek advice from related institutions
within seven days. Final approval or rejection must be bestowed
not later than 30 days after the submission of the application,"
Akil said.

Unlike in the current law, the amendment bill now imposes
charges for the notarial document, the amount of which will be
determined by a government decree.

However, no changes were made regarding the authority of the
BPK to audit financial reports of foundations.

The amendment bill keeps the requirement for foundations whose
assets are valued at Rp 20 billion (US$2.15 million) or more, or
which receive Rp 500 million or more in donations from the
government or foreign institutions within one fiscal year, to
have their accounts audited by public accountants and to publish
their accounts in at least one Indonesian newspaper.

The BPK has repetitively demanded to the government that the
agency should be entitled to such an authority, given that most
foundations are units of state institutions and operate with
state funds.

"Foundations here are just the receiver of the government's
aid, so the BPK has no right to audit how the aid is used. The
BPK audits government institutions that give the aid. Besides,
the government never forwarded the BPK's demand to us," Akil told
The Jakarta Post.

The amendment bill also says that all foundations that have
been registered with the court or have had their establishment
recorded by the government must bring themselves into line with
the amended law within three years.

After the endorsement on Tuesday, the bill will later be
handed to the president to be signed and legalized as a new law
replacing the existing one.