Many accounting firms caught misbehaving

Many accounting firms caught misbehaving

JAKARTA (JP): A number of registered public accounting firms
involved in the auditing of several closed banks' assets
committed malfeasance, according to a senior official at the
Ministry of Finance.

Darmin Nasution, director general for the supervision of the
financial institutions, said the irregularities were found during
a joint audit conducted by the Ministry of Finance and the
Development and Finance Audit Agency (BPKP) last year.

As a consequence, many of the audit reports issued by the
accountants did not reflect the true condition of the banks,
Darmin said following a meeting with Supreme Audit Agency head
Satrio Budihardjo Joedono.

Between 1998 and 1999, the government appointed several
registered public accountants to audit about 200 commercial
banks, as part of the restructuring program for the country's
battered banking industry.

Based on the audit results, the government undertook a number
of measures, including closing down several private banks and
recapitalizing other banks to improve their performance.

However, BPKP later discovered that several public accountants
appointed to carry out the due diligence process did not conduct
their duties properly.

Although several accountants were involved in the malfeasance,
the Ministry of Finance did not impose any sanctions on them,
Darmin said.

"Instead, the government only issued warning letters, as the
procedure suggested," he added.

According to Darmin, the Ministry of Finance is drafting a new
regulation that will allow it to impose adequate sanctions,
inluding permit cancellation or closure of the accountant's
office, in order to prevent similar impropriety from occurring in
the future.

The accountants' malpractice has also caused significant
losses to the state, especially in relation to the extension of
Bank Indonesia liquidity support. (03)