Showing posts with label accounting. Show all posts
Showing posts with label accounting. Show all posts
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Transparency leads to blackmail?

Wednesday, December 15, 2010

The Jakarta Post reported several months ago, that the State Audit agency (BPK) cease the publication of companies financial audit report due to blackmailing concerns. According to the article:



The Supreme Audit Agency (BPK) has stopped publishing online reports, to the dismay of freedom of information proponents. The agency said the state institutions it audited had complained that it was “too open”. BPK provided reports through the Internet even before the 2008 Law on Freedom of Information was implemented this year.


But reports of blackmail prompted the agency to close the online access, requiring information seekers to submit official letters to obtain a hard copy of reports. A public relations staffer of BPK, who requested anonymity, said, “The state institutions have been complaining that we were too open.” “[The institutions] said the reports had been used to blackmail them,” the source said recently.

Why fear blackmail if you are right? One of the possible reason is the corruption witch-hunt. The eradication of corruption in Indonesia is somewhat turning into a witch-hunt (a colleague in the UK is researching this for his Ph.D in Anthropology). Dealing with KPK and the Prossecutor office is cumbersome. This provides a disincentive for being transparent.

How do we handle this? Well, we need to provide more incentive for being more transparent. Transparency should not be used only for displaying the rotten apples of an organization, but also in highlighting the hidden jewels. This is what expert called a ‘targetted transparency’, which are conducted through, among other, publication of performance target benchmarked against certain a set of indicators.


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House to further regulate accounting services

Friday, October 29, 2010

Legislative Update 01/2010


Earlier this year, the House of Representative presented the academic draft on the Law on Public Accountants (download the academic draft here, in Bahasa). The current version of the draft law in its preamble does not seem to provide enough justification on why accounting services has to be regulated. It only states that at present, there is not enough regulation on the profession and that more rules are required to provide ‘legal certainty’ for clients and public accountants.

The academic draft does contain some justifications on why the accounting industry needs to be regulated, among other, that the profession attempts to reduce information asymmetry between principal and agents of an undertaking and provide them with financial information to back up their business decision. However, this is not adequately enshrined in the draft Law.

ILR’s sources at the House of Representative commented that the real aim of the draft law is to curtail the ever expanding growth of foreign accounting firms and provide opportunity for local firms to grow. Provisions regulating foreign accounting firms (Articles 17 and 13 of the current Draft) will become a contentious subject to be debated. On these articles, the number of foreign partners and foreign workers in an accounting firm is limited.

ILR will closely monitor the Draft Law on Public Accountant. If you require more information or tailor made service, please contact