Institutions to formulate standards for internal auditing,

JAKARTA (JP): Bank Indonesia, the central bank, yesterday assigned American and domestic institutions to formulate standards for internal bank auditing.

Amir Abbas Sabrudin, a spokesman for Bank Indonesia, said cooperation with the Institute of Internal Auditors of the United States and the Indonesian Accountant Association will help improve the internal auditing systems of banks in the country and the quality of their financial reports.

Under an agreement signed yesterday, the American institute will standardize the internal auditing system of Indonesian banks by formulating general standards on policy, professionalism, organizations, management, supervision and administration.

In relations to general policies, for example, the concept will have to describe the mission and authorities of internal auditors as well as the scope and norms of auditing.

The concept will also include the criteria for internal auditors and the formulas for the planning, implementation and reporting of auditing.

The American institute is also required to design a curriculum for an internal auditors course.

"The internal auditing of Indonesian banks is expected to be more effective after the implementation of the auditing standards to be formulated by the Institute of Internal Auditors," Amir said.

Accounting

Under the other agreement signed yesterday, the central bank wants the Indonesian Accountant Association to formulate standards for financial accounting and reporting of banks.

The standards can also be used by companies which list their shares on the capital market.

Amir explained that the standards to be formulated by the association will include those for the integration of the financial reports of a company and its subsidiary or subsidiaries in a consolidated report and for interim financial reports.

The association is also required to formulate the standard for investment accounting, which describes revenues from investment in shares, bonds and other securities, and the standard for the accounting of mergers and share acquisitions.

The standards to be formulated will also explain how to calculate the earnings per share of a company and how to disclose data on transactions among companies with special relations.

"We hope the central bank's cooperation with the accountant association will help banks and publicly-listed companies to formulate their financial reports in a standardized way," Amir said.

According to Law No. 7/1992, banks and publicly-listed firms are required to publish their financial reports in the mass media quarterly and semi-annually respectively. (riz)