IFAC-IAPI Indonesia Public Sector workshop

1. PUBLIC SECTOR ACCOUNTING
IAPI EXPERIENCE IN COMPLYING WITH SMO 5 - IFAC
April 20th, 2022

2. IAPI ROLE IN THE ACCOUNTING PROFESSION IN INDONESIA
• Based on Public Accountant Act No 5 year of 2011, IAPI has been designated as Public
Accountants Professional Association in Indonesia (APAP) by Minister of Finance of RI
• As APAP under the Act, IAPI has role to do:
• Setting and approving the Public Accountants Professional Standards which is
standards that should be implemented when a Public Accountant serving the clients
• Conducting professional examination (CPA Exam) as one of the requirements to
obtain a public accountant license from Minister of Finance
• Conducting continuing professional development for members
• Quality reviews for members
• CPA holders and Public Accountants license holder in Indonesia must be members of IAPI

3. What’s IAPI
Responsibility on
SMO 5 – IFAC ?
IAPI is “no responsibility” status in
relation with the SMO 5, accordingly
IAPI use best endeavors to encourage
those responsible for the
requirements to follow this SMO and
assist in the implementation where
appropriate.

4. Why IAPI is no responsibility status ?
• SMO 5 is issued by IFAC Board with respect
to International Public Accounting
Standards (IPSAS) and other
pronouncements issued by IPSASB, an
independent standards-setting body
supported by IFAC.
• IPSASB focuses on the accounting and
financial reporting needs of national,
regional, and local governments, (b) related
governmental agencies, and © the
constituencies they serve.
• In Indonesia, the agency who incharged in the accounting
and financial reporting standards is Komite Standar
Akuntansi Pemerintah (KSAP), The Government
Accounting Standards Committee, an independent
standards-setting body which is formed by the
Government of RI based on State Treasury Act 2004
• KASP members are professional in government
accounting/public sectors accounting from government
institution, PAOs, and academicians.
• Government accounting standards Republic Indonesia
prepared by KASP and set by government regulations.
IAPI has no representative as member of the KSAP nor other requirements

5. Indonesian Experience on Government Accounting and Financial Reporting
2003-2005 2015
As state financial reform, the Gov of RI has set:
• State Finance Act No 17/2003 (SFA)
• State Treasury Act No 1/2004 (STA)
• Auditing on State Finance Management and Accountability Act No 15/2004 (Aud)
• Before these Act was effective, the government prepared financial reports in the forms of Budget Realization Report which was cash
basis report plus details of cash balance and list of state-goods.
• Under STA, in 2005 gov introduce financial report model by issued Government Accounting Standards (GAS) under cash towards
accrual basis with the financial statements which consisted of:
• Statements Budget Realization
• Statements of Financial Position;
• Statements of Cash Flows; and
• Notes to the Financial Statements
• Cash towards accrual basis is an accounting approach that starting from cash basis and then moving steps by steps to be an accrual
basis. Starting 2005, the Gov was physically re-checking, recalculating and revaluing their asset to be able in preparing balance sheet,
and starting to make depreciation on fixed assets, and introduce equity in FS.
• The Gov of RI, every ministry, government agency, including house of representative and other state high institution, local
government (province, regency and city) must be prepared its FS based on GAS.
• State-owned enterprise, local gov –owned company, and other separate legal entities have prepared the FS based on Indonesia SAK
(IFRS based) and be audited by Public Accountants.
Long journey from cash basis to fully accrual basis financial reporting

6. Indonesian Experience………continued
2003-2005
• Starting 2008, the Gov also introduce Badan Layanan Umum (BLU), government agency which is operated in the
form of flexibility like business entity as usual, like hospital or other public service agency, according to the STA
Act required BLU prepared FS in accrual basis accounting using Indonesian SAK. BLU FS has been audited by
Public Accountants.
• Starting 2005, Badan Pemeriksa Keuangan (BPK), Supreme Audit Institution di Indonesia was auditing the FS of
government and giving auditor opinions on the FS. Until 2010, most of gov entities FS has issued with disclaimer
opinion or adverse opinion from BPK, has getting better, and since 2010 mostly of the gov entities FS has been
audited with unmodified opinion from BPK.
• Beside audit BLU, starting 2005, Public Accountants also appointed by House of Representative to audit the
BPK’s FS that has been prepared using GAS. The BPK’s FS would be consolidated to the FS of Gov RI together
with other ministry or central agencies FS. FS of SOE, local SOE, and local government FS have not consolidated
to the FS of the Gov of RI.
• In auditing the Gov FS and other examination, BPK RI has issued Standar Pemeriksaan Keuangan Negara/SPKN
(State Auditing Standards), for audit of FS the SPKN using Auditing Standards issued by IAPI as reference.

7. Indonesian Experience …..continued
2015
• In 2010, KSAP has issued the new GAS using fully accrual basis which must be implemented by government
institution, central or local, lately in 2015.
• In the new GAS based on accrual basis, the gov institution should prepared the FS which consisted of:
• Statements of Budget Realization
• Statements in Change in the Excess Budget Balance
• Balance Sheet
• Statement of Cash Flows
• Statements of Operations
• Statements of Changes in Equity
• Note to the Financial Statements
• At first time adoption, many gov entities have failed to comply with new GAS and obtained modified opinion
from BPK. After that, these gov getting better in the implementation of GAS and obtained better audit opinion.
• Since the fiscal years of 2016 up to 2021, FS of the Gov RI has been audited by BPK with unmodified opinion.
Before 2016, the BPK’s audit opinion was modified opinion, qualified opinion or disclimer.

8. Indonesian public accountants experience on the government environment – BLU
• Since 2008, Public Accountant has audited the FS of BLU. The FS using Indonesia SAK (IFRS based) due to no GAS with
accrual basis. But, BLU also prepared FS with the purpose of consolidation of the gov FS using GAS. Accordingly, BLU
should prepare dual FS using difference standards.
• In 2015, the KASP issued GAS on BLU which specifically regulates the FS of BLU. Under the new GAS, the BLU must
prepare FS that consisted of:
• Statements of Budget Realization
• Statements in Change in the Excess Budget Balance
• Balance Sheet
• Statement of Cash Flows
• Statements of Operations
• Statements of Changes in Equity
• Note to the Financial Statements
• The GAS for BLU is accrual basis, accordingly BLU no longer required to prepared dual FS. The FS of BLU using new GAS
also to be consolidated with the FS of the Gov RI that being audited by BPK.
• Public Accountants also required by the MoF to audit the FS of BLU, using new GAS.
• Total asset of all BLU about 8-9% of total asset of FS of Gov RI, and 13% of gov revenue other than tax.

9. Public accountants experience
• Beside audit of FS BLU, public accountants also involving as join team in the BPK
team audit to become auditor of FS of certain FS ministry or central gov agency or
local government. In the model, professional staf of accounting firms become
audit team member of BPK, the auditor opinion will be signed of BPK officers.
• To become auditor of BLU, BPK, or other gov sector accounting, Public
Accountant must be registered at BPK and pass the examination including on
GAS.

10. KASP governance
• KASP set by government regulation with the member are professional in government accounting
and reporting from government institution, PAOs, and academician.
• KASP has two tiers model:
• Working Committee with main function is to setting the strategic objective of KASP, including approval on ED
and GAS before set by government.
• Working Group with main function is to assist and giving support function to Working Committee on technical
in processing the standards.
• KASP also has consultative committee with the main function is to advice Working Committee on
strategic objective including giving comments on ED or GAS before finalized.
• In setting a new standards, KASP has define the due process starting from identifying the area
need a standards, research, discussion, drafting ED, approval on ED to published, public hearing,
discussion on comment from public and BPK, and finalization.
• Before finalized, the ED also should send to BPK to obtained formal comments.
• Since establishment on 2005, KASP has committed using IPSAS as main reference in setting the
standards.

11. List of Indonesia GAS
Indonesia GAS in English version is available at www.ksap.org

12. IAPI ROLES IN IPSAS IMPLEMENTATION IN INDONESIA
Profile all IAPI’s members or graduated CPA of Indonesia which worked in Government Institution to promote
IPSAS’s/SAPs
Notify members of IPSASs/SAPs document, including exposure drafts and encourage comments.
Publish IPSASs/SAPs on the IAPI’s website to promote IPSASs/SPAs
Conduct CPD related to Public Sector Accounting Standards (IPSASs/SAPs) and its implementation through
seminars, dialogues and workshops.
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13. IAPI Approach
• IAPI has an MOU with BPK in relation with accounting and auditing in
government sector including speakers for CPD, setting the auditing
standards or SPKN, certification etc
• Closely relationship with MoF and KSAP, inviting them in the IAPI session
CPD or meetings on certain issues
• Actively comment or proposal on ED-GAS
• Determining certain committee in IAPI to in-charged in the area.
• IAPI has advantage from the member who audited the BLU and other gov
institutions with depth experience in accrual accounting basis. Sometimes
accrual basis concepts accounting is significant problem for government
officers.

14. Thank you