Fri, 11 Aug 2006

Minister throws down gauntlet to corporations

Urip Hudiono, The Jakarta Post, Jakarta

The finance minister seems to have run out of patience with the sort of dodgy, opaque and misleading accounts that are regularly submitted by the nation's firms.

Speaking at an event titled the 2006 Annual Report Awards, Finance Minister Sri Mulyani Indrawati said that a corporation had, in fact, a much easier task than the government -- which had to compile accounts for the entire country.

She said that under the recently enacted State Finances Law (No. 17/2003), the government had to submit its budgetary spending accounts within three months of the end of the fiscal year -- a requirement similar to that applied in developed countries.

Then, within the following three months, the Supreme Audit Agency (BPK) had to complete its audit of the budget accounts for presentation to the House of Representatives.

Starting this year, Sri Mulyani said, the government would also have to consolidate the state budget accounts with the accounts of some 160 state-owned enterprises. In the future, it might also have to include the accounts of the country's 33 provinces and more than 400 regencies and municipalities.

"So, if the finance minister can perform such a Herculean task, I don't see any reason why corporations cannot come up with more transparent and representative accounts," she said.

"The government has been served with disclaimers by the BPK in respect of our latest budget accounts. But I think this is reasonable as we have only recently started to do things properly. We are improving, and we hope that private companies will do likewise."

Mulyani also lamented the fact that the number of firms participating in the Annual Report Awards had declined to 105 this year compared with 120 last year.

"With the Jakarta Stock Exchange having 340 publicly listed companies, it is clear that less than half are participating. We are also concerned by the fact that no foreign firms entered the competition this year," she said.

"What's going wrong with our corporate society?" she demanded to know.

The opaque accounts presented by public companies were ironic, she said. Such firms were supposed to be more transparent and accountable in their governance and accounting practices given that they raised capital from the public at large.

Mulyani acknowledged that firms might be reluctant to provide more transparent accounts as this could lead to "certain types of financial harassment from unscrupulous tax or capital market officials". She stressed, however, that the government was determined to crack down on such officials.

The finance minister's remarks come hard on the heels of a suggestion by the BPK director, Anwar Nasution, that the government close down accountancy firms found guilty of irregularities in the auditing of state firms.

The Annual Report Awards 2006, now in its fifth year, was organized by the Finance Ministry's Directorate General of Taxation and the Capital Market Supervisory Agency (Bapepam), in collaboration with the State Ministry for State Enterprises, the Jakarta Stock Exchange, the National Committee on Governance Policy, and the Indonesian Accountants Association.

In the event, Indonesia's largest publicly listed oil and gas firm, PT Medco Energi Internasional, received the award for the overall best accounts. Other awardees included state construction firm PT Adhi Karya, the state auctioneer Perum Pegadaian and private lender Bank Niaga.