New accounting standard may still leave doubts
New accounting standard may still leave doubts
Sandy Darmosumarto, The Jakarta Post, Jakarta
Supreme Audit Agency (BPK) Chairman Satrio Budihardjo (Billy)
Joedono said on Friday the new state accounting standard to be
implemented in all state-related institutions nationwide in 2005
will not guarantee that auditors will clear financial report
disclaimers.
Billy explained that the disclaimers were attached to state
budgets in past years during discussions on the new accounting
standard, which is currently being drafted by the agency and the
finance ministry.
He said, "a disclaimer means the auditor has no basis on which
to declare that the figures presented in budgets are accurate.
"Over the past four years the agency has not been convinced of
the numbers reported by the government. We could not affirm
whether state transactions were conducted in an appropriate way."
Billy added that despite the new standard, it would still be
possible for the agency to attach disclaimers to any budget.
BPK noted that there are two reasons why BPK would attach a
disclaimer. One is the effect of different accounting systems
adopted by different government institutions. Another is an error
in calculations.
A disclaimer would be attached based on whether or not the
agency felt that a particular state institution has applied the
new mechanism to check the accuracy of the reported state
financial balance and assets owned by the government.
Under the current standard, "all expenditure for fixed assets
such as buildings is considered lost spending," stated Billy.
This results in a distorted value for state inventory. On the
contrary, the new standard, when implemented across the country,
will have new asset measurement mechanisms that allow the agency
to more accurately value assets, including buildings and foreign
currency.
Once the new standard comes into effect, "there will not be an
inventory of the state's wealth; instead, there will just be a
list of the government's assets," stated Billy. "These include
banks, fixed and variable assets, claims, savings, cash, and
banks." why is banks mentioned twice?
Additionally, Billy said, "the problem lies in the
government's failure to follow a standard that it ought to use in
calculating state budgets.
"Government financial reports do not exist. Instead, what
exists now are calculations on state budget," stated Billy.
The current state accounting practices utilize a single-entry
method, not double-entry as planned in the new standard. The
double-entry method will resemble the financial reports produced
by private companies, in which a single transaction is recorded
twice in terms of debit (loss) and credit (gain).
The new bookkeeping standard is currently it its last stages
of completion and is expected to be completed in June next year.
It will become the guideline for BPK to grade the completeness
and clarity of government financial reports.