SOEs uncommitted to fight corruption, BPK says

SOEs uncommitted to fight corruption, BPK says

Rendi A. Witular, Jakarta

The Supreme Audit Agency (BPK) criticized state-owned
enterprises (SOEs) and public accountants for being reluctant to
support the agency's drive to fight corruption and collusion by
refusing to conduct special audits to spot any irregularities.

"The managements of some SOEs order the accountants not to
conduct compliance audits for fear that irregularities in the
SOEs may become public knowledge. Some of the accountants agree
with the request," said Amrin Siregar, a BPK auditor overseeing
SOEs, on Friday.

The Indonesian Accountants Association has a regulation
obliging public accountants to check that SOEs comply with
existing regulations, such as those on the tender process,
dividend allocations and payments, and goods procurement.

However, Amrin said most public accountants ignored the
regulations, putting many SOEs at risk of becoming victims of
corruption and collusion.

Amrin said the SOEs technically complied with the audits on
financial, performance and administration, but such audits were
deemed insufficient to ensure good corporate governance and
prudent management of state assets.

To protect the interests of the public and ensure good
corporate governance, the BPK sent letters to the Office of the
State Minister for State Enterprises, the Ministry of Finance and
some 164 SOEs in May 2003, announcing that the agency would audit
the compliance of SOEs with existing regulations and their
internal controls.

At its own initiative, the BPK has audited some 23 SOEs, while
the remaining 141 SOEs were ordered to submit their 2003 audited
financial reports to the agency by July 2004. The audited
financial reports should include audits of regulation compliance
and on internal controls.

However, according to the BPK's first semester report, which
submitted to the House of Representatives last week, some 47
SOEs, both listed and non-listed, failed to submit their
financial accounts by the July 2004 deadline.

The report said the listed SOEs argued the BPK order was in
conflict with Law No. 8/1995 on capital markets, which stipulates
that listed companies must be audited by public accountants (not
the BPK).

Among the listed companies that have not submitted their
accounts to the BPK are PT Bukit Asam, PT Timah, PT Perusahaan
Gas Negara, PT Indofarma, PT Kimia Farma, PT Semen Gresik, PT
Telkom and PT Aneka Tambang (Antam).

Antam corporate secretary Dohar Siregar said, however, that
the company had never received a request from the BPK, and had
never been given any warning letter from the agency.

"It is impossible for Antam not to meet the BPK demand. Maybe
their letter did not reach us," said Dohar.

The report also said the BPK had rejected the financial
accounts of Bank Negara Indonesia, Bank Rakyat Indonesia, Bank
Mandiri, Bank Tabungan Negara, PT Adhi Karya and PT Danareksa for
failing to include audits on regulation compliance and internal
controls.

Based on the state financial accountability law, the BPK is
allowed to audit all SOEs.

However, for publicly listed SOEs, the BPK can only audit the
companies after receiving their financial reports audited by
public accountants.

The BPK report also said non-listed SOEs had refused to submit
their financial reports to the agency after the deputy to the
Office of the State Minister for State Enterprises, Ferdinand
Nainggolan, issued a letter suggesting that SOEs should be
audited solely by public accountants.