New audit system sought to eliminate 'tactical funds'

Ridwan Max Sijabat, The Jakarta Post/Jakarta

A review of the audit systems in this country are necessary to eliminate the raising and usage of slush funds, which have become a common practice in the bureaucracy, experts say.

They say the current audit methods could not usually detect the presence of funds coming from sources other than the state budget, which is against the principles of good governance.

"We need a comprehensive audit system, which requires the Supreme Audit Agency (BPK) to examine annual financial reports submitted by all state institutions, state agencies and state enterprises and verify their assets," said Ngadisah, the rector of the state-run Institute of Public Administration (IIP).

Under the current audit system, BPK scrutinizes only book reports of state institutions and of state enterprises.

"BPK has never followed up its investigations into alleged financial leakages, verified state institutions' expenditures and assets, or audited state officials' wealth," she said.

She said the collection and use of tactical funds was prone to corruption or at least unaccounted for, as evidenced by the case of the General Elections Commission (KPU).

The Corruption Eradication Commission found the KPU officials raised Rp 20 billion (US$2.1 million) in "tactical funds" from kickbacks collected from companies that won tenders to provide election materials.

"Slush funds come from numerous sources, including kickbacks, seminars, public service events and 'gifts' from individuals or companies, and are commonly used not only to cover unexpected spending, but also to increase officials' income," Ngadisah said.

Dedi Haryadi, a researcher and chief editor of bimonthly bulletin Bujet in Bandung, West Java, urged a phasing out all non-budgetary funds and verification of all spending by state institutions and enterprises by the BPK.

"Amid the intensive campaign for transparency and good governance, the President should take concrete measures to scrap off-budget revenues and expenditures because any use of funds must be expected and predicted and accounted for.

"Therefore, all public officials from the President, ministers, senior officials to local officials are required to report their operational costs, including the use of tactical funds," he said.

Ngadisah said it was mandatory for state officials to submit a draft budget in their institutions and spell out the revenue sources in order to eliminate tactical funds.

"Revenue sources should be limited to the state budget and money collected from legal sources, while the use of funds for unexpected spending should be limited to extreme emergency payments," she said.

She also suggested greater authority for internal comptrollers to supervise the spending of all budgetary funds in all state institutions.

Both Ngadisah and Dedy said the country was in need of a regulation governing the fee system in development projects and a new remuneration system of state employees to prevent them from raising tactical funds, thereby curbing corruption.