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)