A comparison of IFRS, Indonesian GAAP and US GAAP
January 2005
Similarities and Differences
A comparison of IFRS, Indonesian GAAP and US GAAP
Published by Kantor Akuntan Publik Haryanto Sahari & Rekan - PricewaterhouseCoopers Gedung PricewaterhouseCoopers Jl HR Rasuna Said Kav. C-3 Jakarta 12920 – INDONESIA Tel: +62 21 5212901 – 06 Fax: +62 21 5212911/12
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© 2005 PricewaterhouseCoopers. All right reserved. PricewaterhouseCoopers refer to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate legal entity.
January 2005
Cover: Photo courtesy of Camelia Siagian, Senior Associate, Assurance Services.
Contents
Preface
Since 1994 the accounting profession in Indonesia, through the Indonesian Preface
Page
Institute of Accountants, has committed to harmonizing the Indonesian accounting standards (called the “PSAK” or “Indonesian GAAP) with the
Introduction
ii
International Financial Reporting Standards/the International Accounting Summary of similarities and differences
Standards (“IFRS/IAS”). Consequently there are many PSAK issued by the Accounting framework
Indonesian Institute of Accountants that are based on the existing IFRS/IAS.
Financial statements
In 2004, the Indonesian accounting profession took one more significant Consolidated financial statements
step toward convergence with IFRS by launching a program, expected to be Business combinations
finalised in 2008, to eliminate the differences between PSAK and IFRS/IAS. Once this stage is completed, the Indonesian Institute of Accountants will
Revenue recognition
decide whether it will, going forward, fully adopt IFRS/IAS. Expense recognition
Assets
This publication is intended as a tool to identify key similarities and differences between IFRS/IAS, Indonesian GAAP and US GAAP. It is not
Liabilities
meant to provide a detailed comprehensive comparison amongst the three Equity
sets of accounting principles. This will be a living document, one which will Derivatives and hedging
be updated from time to time to reflect changes in each reporting regime. Other accounting and reporting issues
Hopefully this publication will be useful for our clients, our staff and public in Foreign currency translation
general, whether based in or outside of Indonesia.
Foreign currency translation – hyperinflationary Economy
Earnings per share
Kind regards,
Related-party transactions
Segment reporting
Discontinued operations
Post-balance-sheet events
Interim financial reporting
Haryanto Sahari
Insurance
Country Senior Partner
Index
PricewaterhouseCoopers
Introduction
Summary of similarities and differences
This publication by KAP Haryanto Sahari & Rekan (PricewaterhouseCoopers) is for those who wish to gain a
US GAAP PAGE broad understanding of the key similarities and differences between International Financial Reporting
SUBJECT
IFRS
Indonesian GAAP
Accounting framework
Standards (IFRS), Indonesian Generally Accepted Accounting Principles (Indonesian GAAP) and US
Similar to IFRS. However, No revaluations, except 21 Generally Accepted Accounting Principles (US GAAP). The first section provides a summary of the
Historical cost
Uses historical cost, but
some securities and similarities and differences and then refers to individual sections where key divergences are highlighted and
intangible assets,
revaluations are more
property plant and
restricted to certain items
derivatives at fair value.
equipment (PPE) and
such as PPE, derivatives
the likely impact of recent proposals explained.
investment property may
and certain types of
be revalued. Derivatives,
investments in securities.
No summary publication can, of course, do justice to the many differences of detail which exist between
biological assets and
Presently there is no
most securities must be
specific requirement to
International Financial Reporting Standards and those in Indonesia and USA. We have, in particular,
revalued.
revalue biological assets.
focused on the differences most commonly found in practice; detailed rules may apply very differently in the
Conceptually similar to 22 case of specific transactions. When applying the individual accounting frameworks, readers must consult all
Fair presentation
In extremely rare cases,
Not explicitly mentioned
IFRS, but not used in the relevant accounting standards and, where applicable, their national law. Listed companies must also
override
entities should override
in the GAAP. However,
the standards where
override of standards is
practice.
follow relevant securities regulations, such as the Indonesian Capital Market Supervisory Board (BAPEPAM)
essential to give a fair
possible although rarely
presentation.
exercised.
requirements or the US Securities and Exchange Commission requirements.
First-time adoption of
Requires full
No specific guidance on
First-time adoption of US 22
GAAP requires International harmonisation of accounting is a current issue. This publication demonstrates that although
accounting frameworks
retrospective application
the first-time adoption of
retrospective application. progress is being made towards comparability between the underlying principles of IFRS, Indonesian
of all IFRS effective at
accounting framework.
the reporting date for an
However, most
In addition, particular
GAAP and US GAAP, important differences remain to be addressed. This publication takes account of standards specify
entity’s first IFRS
standards require
treatment for first-time authoritative pronouncements issued under IFRS and US GAAP up to June 2004. For Indonesian GAAP
financial statements with
retrospective
adoption of those pronouncements taken into account are those issued up to December 2004.
some exemptions and
application.
limited mandatory
standards.
exemptions.
Similarities and Differences - A Comparison of IFRS, Indonesian GAAP and US GAAP is designed for
Financial statements
Similar to IFRS, except 23 comprehensive and information may have been omitted which may be relevant to a particular user. In
the information of readers. While every effort has been made to ensure accuracy, this publication is not
Components of financial
Two years’ balance
Similar to IFRS.
statements
sheets, income
three years required for
particular, this publication is not intended as a study of all aspects of accounting practice under IFRS, public companies for all
statements, cash flow
statements except Indonesian GAAP and US GAAP, nor as a substitute for reading the local accounting standards and other
statements, changes in
balance sheet. official pronouncements when dealing with specific issues. No responsibility for loss to any person acting or
equity and accounting
policies and notes.
Entities may present 24 & Rekan (PricewaterhouseCoopers). Recipients should not act on the basis of this publication without
refraining from acting as a result of any material in this publication can be accepted by KAP Haryanto Sahari
Balance sheet
Does not prescribe a
Requires current/non-
particular format; an
current presentation
either a classified or non-
classified balance sheet. seeking professional advice.
entity uses a liquidity
except for certain
presentation of assets
industries such banking.
Items presented on the
face of the balance sheet No part of this publication may be reproduced by any method without prior consent of KAP Haryanto Sahari
and liabilities, instead of
a current/non-current
Less comprehensive list
are generally presented
in decreasing order of & Rekan (PricewaterhouseCoopers).
presentation, only when
of items to be presented
a liquidity presentation
on the face of the
liquidity. Public
provides more relevant
balance sheet.
companies must follow
and reliable information.
SEC guidelines regarding
Certain items must be
minimum disclosure
presented on the face of
requirements.
the balance sheet.
US GAAP PAGE Financial statements (continued)
SUBJECT
IFRS
Indonesian GAAP
US GAAP
Indonesian GAAP
Financial statements (continued)
Income statement
Does not prescribe a
Similar to IFRS.
Present as either a
26 Cash flow statements –
Standard headings, but
Similar to IFRS. Listed
Similar headings to IFRS, 28
standard format,
However, there are
single-step or multiple-
format and method
limited flexibility of
entities are required to
but more specific
although expenditure
differences in details of
step format.
contents. Use direct or
use direct method.
guidance given for items
must be presented in one
items to be presented on
indirect method.
included in each
of two formats (function
the face of the income
Expenditure must be
category. Use direct or
or nature). Certain items
statement.
presented by function.
indirect method.
must be presented on the face of the income
Cash flow statements –
Cash includes overdrafts
Similar to IFRS.
Cash excludes
statement.
definition of cash and
and cash equivalents
overdrafts but includes
cash equivalents with Exceptional items
cash equivalents
with short-term
Does not use the term,
Similar to IFRS.
Similar to IFRS, but
maturities (less than 3
short-term maturities.
but requires separate
individually significant
months).
disclosure of items that
items should be
are of such size,
presented on the face of
Cash flow statements –
No exemptions.
Similar to IFRS.
Limited exemptions for 28
incidence or nature that
the income statement.
exemptions
certain investment
require separate
entities.
disclosure to explain the
Changes in accounting
Restate comparatives
Similar to IFRS.
Include effect in current- 29
performance of the
policies
and prior-year opening
year income statement.
Disclose pro-forma Extraordinary items
entity.
retained earnings.
Prohibited.
Extraordinary items still
Defined as being both
comparatives. Include
need to be reported
infrequent and unusual,
retrospective
when meeting the
and are rare. Negative
adjustments for specific
definition.
goodwill is presented as
items.
an extraordinary item.
Correction of errors
Restate comparatives.
Similar to IFRS.
Similar to IFRS.
Definition of extraordinary item is
Changes in accounting
Reported in income
Similar to IFRS.
Similar to IFRS.
similar to US GAAP.
estimates
statement in the current period.
Statement of recognised
Present the statement of
Recognised gains and
Disclose total
gains and losses/other
recognised gains and
losses are presented
comprehensive income
Consolidated financial statements
comprehensive income
losses as either in notes
within the primary
and accumulated other
or highlight separately in
statement of changes in
comprehensive income,
Definition of subsidiary
Based on voting control
Definition is similar to
Controlling interest 31
primary statement of
shareholder equity.
either as a separate
or power to govern. The
IFRS. However, no
through majority
changes in shareholder
primary statement or
existence of currently
explicit requirement to
ownership of voting
equity.
combined with income
exercisable potential
consider currently
shares or by contract.
statement, or with
voting rights also needs
exercisable potential
Consolidate variable
statement of changes in
to be taken into
voting rights.
interest entities (VIEs) in
stockholders’ equity.
consideration.
which a parent does not have voting control but
Statement of changes in
absorbs the majority of shareholders’ equity
Statement showing
Similar to IFRS.
Similar to IFRS. SEC
capital transactions with
rules allow such
losses or returns.
owners, the movement in
information to be
accumulated profit and a
included in the notes.
Special purposes entities Consolidate where the
Similar to IFRS.
Consolidate SPEs if 31
reconciliation of all other
(SPEs)
substance of the
consolidation
components of equity.
relationship indicates
requirements for VIEs are
The statement must be
control.
met. To avoid
presented as a primary
consolidation, the SPE
statement.
must be a qualifying SPE.
US GAAP PAGE Consolidated financial statements (continued)
SUBJECT
IFRS
Indonesian GAAP
US GAAP
Indonesian GAAP
Business combinations (continued)
Similar to IFRS, but 39 subsidiaries
Non-consolidation of
Dissimilar activities or
Subsidiaries are not
Only if control does not
32 Purchase method – fair
Fair value the assets,
Similar to IFRS.
temporary control are not consolidated if control is
rest with the majority
values on acquisition
liabilities and contingent
specific rules for
a justification for non-
temporary (short term) or
owner and the owner is
liabilities of acquired
acquired in-process
consolidation.
if there are long-term
not the primary
entity.
research and
restrictions to transfer
beneficiary of a VIE.
development (generally
funds to the parent.
expensed) and contingent liabilities.
Dissimilar activities are not a justification for non-
Only recognise liabilities
Similar to IFRS.
Some restructuring
consolidation.
for restructuring activities
liabilities relating solely to
the acquired entity may Definition of associate
when the acquiree has
Based on significant
Similar to IFRS.
Similar to IFRS.
an existing liability at
be recognised in fair
influence: presumed if
acquisition date.
value exercise if specific
20% interest or
Prohibited from
criteria about
participation in entity’s
recognising liabilities for
restructuring plans are
affairs.
further losses or other
met.
Presentation of associate Use equity method.
Does not specifically
Similar to IFRS.
costs expected to be
results
Show share of post-tax
require showing share of
incurred as a result of the
result.
post-tax result.
business combinations.
Disclosures about
Not recognised until the 40 significant associates
Give detailed information
Less disclosure
Similar to IFRS.
33 Purchase method –
Include in cost of
Similar to IFRS.
on significant associates’
compared to IFRS.
contingent consideration combination at
contingency is resolved
assets, liabilities,
Information on
acquisition date if
or the amount is
revenue and results.
significant associates’
adjustment is probable
determinable.
assets, liabilities,
and can be measured
revenue and results not
reliably.
Generally state at share 41 Presentation of joint
required.
Purchase method –
State at minority’s
Similar to US GAAP,
of pre-acquisition ventures
Both proportional
Current guidance only
Equity method is
35 minority interests at
proportion of the net fair
generally state at share
consolidation and equity
covers Jointly Controlled
required except in
acquisition
value of acquired
of pre-acquisition
carrying value of net
method permitted.
Operations and Jointly
specific circumstances.
identifiable assets,
carrying value of net
assets.
Controlled Assets and is
liabilities and contingent
assets.
comparable to IFRS.
liabilities.
However, for Jointly
Purchase method –
Capitalise but do not
Goodwill is amortised
Similar to IFRS; however, 42
Controlled Entity, IFRS
goodwill and intangible
amortise. Review
over its useful life,
impairment
measurement model is Business combinations
approach is acceptable.
assets with indefinite
goodwill and indefinite-
normally not longer than
useful lives
lived intangible assets for
5 years, unless a longer
different.
impairment at least
period of not exceeding
Types
All business
Most business
Similar to IFRS.
annually at the cash-
20 years can be justified.
combinations are
combinations are
generating unit level.
acquisitions.
acquisitions. Pooling of
Purchase method –
Acquirer to reassess the
Reduce proportionally
Reduce proportionately 43
interests still allowed if
negative goodwill
identification and
the fair value assigned to
the fair values assigned
certain criteria are met.
measurement of
non-monetary assets,
to non-current assets
acquiree’s identifiable
record any remaining
(with certain exceptions).
assets, liabilities and
excess as deferred
Any excess is recognised
contingent liabilities.
income and recognise as
in the income statement
Any excess remaining
income over a period of
immediately as an
after that reassessment
not less than 20 years.
extraordinary gain.
is recognised in income statement immediately.
US GAAP PAGE Business combinations (continued)
SUBJECT
IFRS
Indonesian GAAP
US GAAP
Indonesian GAAP
Expense recognition
55 subsequent adjustments
Purchase method –
Fair values can be
Fair values can be
Similar to IFRS. Once the
43 Interest expense
Interest expense
Similar to IFRS.
Similar to IFRS.
adjusted against
corrected against
fair value allocation is
recognised on an accrual
to fair values
goodwill within 12
goodwill up to the end of
finalised, no further
basis. Effective yield
months of the acquisition the year after acquisition,
changes are permitted
method used to amortise
date. Record subsequent if additional evidence of
except for the resolution
non-cash finance
adjustments in income
values becomes
of known pre-acquisition
charges.
statement unless they
available. Record
contingencies. Record
are to correct an error.
subsequent adjustments
against goodwill the
Employee benefits –
Use projected unit credit
Similar to IFRS.
Similar to IFRS
in income statement
adjustments made
pension costs – defined
method to determine
conceptually, although
unless they are to correct
during the allocation
benefit plans
benefit obligation.
several differences in
an error.
period relating to data for
detail.
which management was
Employee share
Recognise expense for
Basically all share-based
Two alternative methods 59
waiting to complete the
compensation
services acquired. The
compensation measured
for determining cost:
intrinsic value (market Purchase method –
allocation.
corresponding amount
at fair value.
price at measurement disclosure
Disclosures include
Disclosures include
Similar to IFRS, with
will be recorded either as
names and descriptions
names and descriptions
additional disclosures
a liability or as an
date less any employee
of combining entities,
of the combining entities,
regarding the reasons for
increase in equity,
contribution or exercise
date of acquisition, cost
method of accounting for the acquisition and
depending on whether
price) or fair value at
of combination,
acquisition, date of
details of allocations.
the transaction is
issue using option
summary of fair values
acquisition and any
determined to be cash-
pricing model.
and pre-acquisition IFRS
operations resulting from
or equity-settled. The
Recognise cost of share
values of assets and
the business
amount to be recorded is
awards or options over
liabilities acquired, and
combination which the
measured at the fair
period of employee’s
impact on results and
entity has decided to
value of the shares or
performance.
financial position of
dispose off.
share options granted.
Similar to IFRS for post- 61 Uniting of interests
acquirer.
Termination benefits
Account for post-
Similar to IFRS.
retirement benefits. More method
Prohibited.
Still allowed when it is
Similar to IFRS.
retirement benefits as
difficult to identify the
pensions. Rules also
detailed guidance given
acquirer and if meeting
given for termination
for termination benefits.
certain criteria.
benefits arising from
Termination indemnity
accounted for as pension Revenue recognition
redundancies and other
post-employment and
plans and calculated as
either the vested benefit Revenue recognition
long-term employee
Based on several criteria,
Criteria are similar to
Four key criteria. In
benefits. Account for
obligation or the actuarial
which require the
IFRS. However, there are
principle, similar to IFRS.
termination indemnity
present value of the
recognition of revenue
less detailed guidance
Extensive detailed
plans as pensions.
vested benefits.
when risks and rewards
and examples for
guidance exists for
have been transferred
specific transactions.
specific transactions.
Assets
and the revenue can be
Acquired intangible
Capitalise if recognition
Similar to IFRS, except
Capitalise purchased 63
intangible assets, Construction contracts
measured reliably.
assets
criteria are met;
that useful life of an
Accounted for using the
Similar to IFRS.
Percentage of
intangible assets must be intangible asset is always
amortise over useful life
percentage of
completion method is
amortised over useful life. finite.
and review for
completion method.
preferable; however,
Intangibles assigned an
impairment. Intangibles
Completed contract
completed contract
indefinite useful life must
assigned an indefinite
method prohibited.
method permitted in rare
not be amortised but
useful life must be not be
circumstances.
reviewed annually for
amortised but reviewed
impairment.
for impairment annually.
Revaluations are
Revaluations are not
Revaluations are not
permitted in rare
permitted.
permitted.
circumstances.
US GAAP PAGE Assets (continued)
SUBJECT
IFRS
Indonesian GAAP
US GAAP
Indonesian GAAP
Assets (continued)
Impairment is assessed 72 intangible assets
Internally generated
Expense research costs
Similar to IFRS.
Expense both research
63 Impairment of assets
If impairment indicated,
Similar to IFRS except
as incurred. Capitalise
and development costs
write down assets to
the requirement to
on undiscounted cash
and amortise
as incurred. Some
higher of net selling price
reconsider useful lives
flows for assets to be
development costs only
software and website
and value in use based
when no loss arises is
held and used. If less
if stringent criteria are
development costs must
on discounted cash
not specified.
than carrying amount,
met.
be capitalised.
flows. If no loss arises,
measure impairment loss
using market value or Property, plant and
reconsider useful lives of
discounted cash flows. equipment
Use historical cost or
Use historical cost.
Revaluations not
those assets. Reversals
revalued amounts.
Revaluation is generally
permitted.
of losses permitted in
Reversals of losses
Regular valuations of
not permitted unless
certain circumstances.
prohibited.
entire classes of assets
allowed by government
are required when
regulation.
For assets held for
revaluation option is
disposal, impairment is
chosen.
Current proposal is
based on lower of
carrying amount and fair Non-current assets held
similar to IFRS.
value less cost to sell. for sale
Non-current asset is
No specific guidance.
Similar to IFRS.
classified as held for sale
Capitalisation of
Permitted, but not
Required for qualifying
Required.
if its carrying amount will
borrowing costs
required, for qualifying
assets.
be recovered principally
assets.
through a sale transaction rather than
Investment property
Measure at depreciated
Usually classified as part
Treat the same as for 74
through continuing use.
cost or fair value and
of long-term
other properties
Measure a non-current
recognise changes in fair
investments. Measured
(depreciated cost).
asset classified as held
value in the income
at cost but not
for sale at the lower of its
statement.
depreciated.
carrying amount and fair value less costs to sell.
Inventories
Carry at lower of cost
Similar to IFRS except
Similar to IFRS; however, 75
use of LIFO permitted. Leases – classification
and net realisable value.
LIFO method may still be
A lease is a finance lease
Finance lease if certain
Similar to IFRS, but with
Use FIFO or weighted
used.
if substantially all risks
criteria, which are more
more extensive form-
average method to
Reversal of write-down is
and rewards of
form-driven
driven requirements.
determine cost. LIFO
prohibited.
ownership are
requirements, are met.
prohibited. Reversal is
transferred. Substance
required for subsequent
rather than form is
increase in value of
important.
previous write-downs.
Not specified. Generally 76 accounting
Leases – lessor
Record amounts due
Similar to IFRS.
Similar to IFRS, but with
71 Biological assets
Measured at fair value
Not specified. Generally
under finance leases as a
specific rules for
less estimated point-of-
historical cost used.
historical cost used.
receivable. Allocate
leveraged leases.
sale costs.
gross earnings to give
Current proposal is
constant rate of return
similar to IFRS.
based on (pre-tax) net investment method.
US GAAP PAGE Liabilities
SUBJECT
IFRS
Indonesian GAAP
US GAAP
Indonesian GAAP
Liabilities (continued)
Similar to IFRS, but 86 measurement
Financial assets –
Depends on
Similar to IFRS.
Similar to IFRS; however,
77 Deferred income taxes –
Use full provision
Similar to IFRS.
classification of
no ability to designate
general approach
method (some
recognise all deferred tax
investment – if held to
any financial asset or
exceptions) driven by
assets and then provide
maturity or loan or
liability as at fair value
balance sheet temporary
valuation allowance if
receivable, then carry at
through profit or loss.
differences. Recognise
recovery is less than
amortised cost,
deferred tax assets if
50% likely.
otherwise at fair value.
recovery is probable.
Unrealised gains/losses
A number of specific
on fair value through
differences in
profit or loss
application.
classification (including trading securities)
Deferred income taxes –
No temporary
Similar to IFRS.
Similar to IFRS regarding 86
recognised in the income
main exceptions
differences on non-
non-deductible goodwill.
statement and on
deductible goodwill and
Initial recognition
available-for-sale
initial recognition of
exemption does not
investments recognised
assets and liabilities that
exist.
in equity.
do not impact on accounting or taxable
Derecognition of financial Derecognise financial
No general guidance for
Derecognise based on
profit.
assets
assets based on risks
derecognition of financial
control. Legal isolation of
and rewards first; control
assets in general (except
assets even in
Government grants
Recognise as deferred
No specific guidance.
Similar to IFRS except 90
is secondary test.
for some financial assets.
bankruptcy is necessary
income and amortise.
long-lived asset
For example, those
for derecognition.
Entities may offset
contributions recorded
arising from factoring).
capital grants against
as revenue.
However, IFRS approach
asset values.
Similar to IFRS. Specific 90 Provisions – general
is acceptable.
Leases – lessee
Record finance leases as
Broadly similar to IFRS.
Record the provisions
Similar to IFRS.
Similar to IFRS, with
83 accounting
asset and obligation for
However, there are some
rules must be met to
relating to present
rules for specific
future rentals. Depreciate differences in
record a finance or
obligations from past
situations (employee
over useful life of asset.
determining the amount
capital lease.
events if outflow of
termination costs,
Apportion rental
of obligation and interest
resources is probable
environmental liabilities,
payments to give
rate.
and can be reliably
loss contingencies, etc.).
constant interest rate on
estimated.
outstanding obligation. Charge operating lease
Provisions – restructuring Recognise restructuring
Similar to IFRS.
Recognition of a liability
rentals on straight-line
provisions if detailed
based solely on
basis.
formal plan announced
commitment to a plan is
or implementation
prohibited. Must meet
Leases – lessee
For a finance lease, defer
Similar to IFRS, i.e. defer
Timing of profit and loss 91
effectively begun.
the definition of a liability,
accounting: sale and
and amortise profit
and amortise profit.
recognition depends on
including certain criteria
leaseback transactions
arising on sale and
whether seller
regarding the likelihood
finance leaseback. If an
relinquishes substantially
that no changes will be
operating lease arises,
all or a minor part of the
made to the plan or that
profit recognition
use of the asset.
the plan will be
depends on sale
Immediately recognise
withdrawn.
proceeds compared to
losses. Consider specific
strict criteria if a property Contingencies
fair value of the asset.
Disclose unrecognised
Similar to IFRS.
Similar to IFRS.
Consider substance/
transaction.
possible losses and
linkage of the
probable gains.
transactions.
US GAAP PAGE Liabilities (continued)
SUBJECT
IFRS
Indonesian GAAP
US GAAP
Indonesian GAAP
Derivatives and hedging (continued)
Similar to IFRS, except 102 classification
Financial liabilities –
Classify capital
Broadly similar to IFRS;
Where an instrument is
93 Derivatives and other
Gains/losses on hedges
Similar to US GAAP.
instruments depending
however, guidance is
not a share, classify as
financial instruments –
of foreign entity
all hedge ineffectiveness
on substance of the
less comprehensive.
liability when obligation
measurement of hedges
investments are
is recognised in the
issuer’s obligations.
to transfer economic
of foreign entity
recognised in equity,
income statement.
benefit exists.
investments
including hedge ineffectiveness on non-
Mandatorily redeemable
No guidance for
Similar to IFRS.
derivatives. For
preference shares
mandatorily redeemable
derivatives, record hedge
classified as liabilities.
preference shares.
ineffectiveness in the income statement.
Convertible debt
Account for convertible
Convertible debt is
Convertible debt is
debt on split basis,
usually recognised as a
usually recognised as a
Gains/losses held in
allocating proceeds
liability.
liability.
equity must be
between equity and debt.
transferred to the income statement on disposal of
Derecognition of financial Derecognise liabilities
Generally similar to IFRS;
Similar to IFRS.
investment.
liabilities
when extinguished. The
however, guidance is
difference between the
less comprehensive.
Other accounting and reporting topics
carrying amount and the amount paid is
Functional currency
Currency of primary
The currency mainly
Similar to IFRS.
recognised in the income
definition
economic environment in
used in the entity’s
statement.
which entity operates.
operation.
Equity
Functional currency –
If indicators are mixed
Functional currency if
Similar to IFRS; however, 105
no specific hierarchy of Capital instruments –
determination
and functional currency
meeting all the following
factors to consider. purchase of own shares
Show as deduction from
Similar to IFRS.
Similar to IFRS.
is not obvious, use
indicators: cash flows,
equity.
judgement to determine
selling prices and costs.
Generally the currency in
which the majority of Derivatives and hedging
the functional currency
that most faithfully
revenues and expenses
represents the economic
are settled.
Derivatives and other
Measure derivatives and
Similar to US GAAP.
Similar to IFRS, except
results of the entity’s
financial instruments –
hedge instruments at fair
no ‘basis adjustment’ on
operations by focusing
measurement of financial
value; recognise
cash flow hedges of
on the currency of the
instruments and hedging
changes in fair value in
forecast transactions.
economy that
activities
income statement
determines the pricing of
except for effective cash
transactions (not the
flow hedges, where the
currency in which
changes are deferred in
transactions are
equity until effect of the
denominated).
underlying transaction is recognised in the income
Presentation currency
When financial
The presentation
Similar to IFRS.
statement.
statements are presented currency is Indonesian in a currency other than
Rupiah. Other currencies
Gains/losses from hedge
functional currency,
may be used as a
instruments that are
assets and liabilities are
presentation currency
used to hedge forecast
translated at exchange
provided they meet the
transaction may be
rate at balance sheet
functional currency
included in cost of non-
date. Income statement
criteria.
financial asset/liability
items are translated at
(basis adjustment).
exchange rate at dates of transactions, or use average rates if rates do not fluctuate significantly.
US GAAP PAGE Other accounting and reporting topics (continued)
SUBJECT
IFRS
Indonesian GAAP
US GAAP
Indonesian GAAP
Other accounting and reporting topics (continued)
110 economy – definition
Hyperinflationary
Hyperinflation indicated
No specific guidance.
Currency in highly
Related-party
Disclose name of related
Disclose name of related
Similar to IFRS.
by characteristics of
inflationary environment
transactions –
party, nature of
party, nature of
economic environment
(three-year inflation rate
disclosures
relationship and types of
relationship and types of
of country, which
of approximately 100%
transaction. For control
transaction if there have
include: population’s
or more).
relationships, give
been transactions
attitude towards local
disclosures regardless of
between related parties.
currency and prices
whether transactions
Also disclose volume of
linked to price index; and
occur.
transactions,
if cumulative inflation
outstanding items and
rate over three years is
pricing policies.
approaching, or exceeds, 100%.
Some exemptions
Some exemptions
Exemptions are narrower
than under IFRS. Hyperinflationary
available for separate
available, including
Entities that have as
No specific guidance.
Generally does not
financial statements of
exemption for intragroup
economy – measurement functional currency the
permit inflation-adjusted
subsidiaries.
transactions in
currency of a
financial statements;
consolidated financial
hyperinflationary
instead requires the use
statements and
economy must use it for
of a more stable currency
exemption for
measuring transactions.
as functional currency
transactions between
However, re-
(usually the presentation
state-controlled entities.
measurement of the
currency). However,
measurement unit at the
foreign issuers that use
Segment reporting –
Public entities: report
Similar to IFRS.
Public entities: report 111
balance sheet date is
IFRS permitted to omit
scope and basis of
primary and secondary
based on operating
required.
quantification of any
formats
(business and
segments and the way
differences that would
geographic) segments
the chief operating
have resulted from
based on risks and
decision-maker
application of FAS 52.
returns and internal
evaluates financial
information for purposes Earnings per share –
reporting structure.
of allocating resources diluted
Use weighted average
Similar to IFRS.
Similar to IFRS.
potential dilutive shares
and assessing
as denominator for
performance.
diluted EPS.
Segment reporting –
Use group accounting
Similar to IFRS.
Use internal financial 112
Use ‘treasury share’
accounting policies
policies.
reporting policies (even if
method for share
accounting policies differ
options/warrants.
from group accounting policy).
Related-party
Determine by level of
Similar to IFRS; however,
Similar to IFRS.
Similar disclosures to 112 – definition
transactions
direct or indirect control,
joint control is not
Segment reporting –
Disclosures for primary
Similar to IFRS.
joint control and
specifically mentioned.
disclosures
segment include
IFRS (primary segment)
significant influence of
revenues, results, capital
except liabilities and
one party over another or
expenditures, total
geographical capital
common control of both
assets and liabilities, and
expenditures not
parties.
other items. For
required. Depreciation,
secondary segment,
amortisation, tax, interest
report revenues, total
and exceptional/
assets and capital
extraordinary items
expenditures.
disclosed if reported internally. Disclosure of factors used to identify segments is required.
US GAAP PAGE Other accounting and reporting topics (continued)
SUBJECT
IFRS
Indonesian GAAP
US GAAP
Indonesian GAAP
Other accounting and reporting topics (continued)
If issued, the contents of 116 – definition
Discontinued operations
Operations and cash
A component of a
Similar to IFRS.
Interim financial reporting Not mandatory to
Mandatory for listed
flows that can be clearly
company that is,
Component that is
prepare interim
entities and other entities
interim statements are
distinguished for
pursuant to a single plan,
clearly distinguishable
statements but must use
as stipulated by
prescribed and basis
financial reporting and
will be disposed of or
operationally and for
the standard if prepared.
prevailing laws and
must be consistent with
represent a separate
abandoned. That
financial reporting can be
Basis should be
regulations. Similar to
full year statements.
major line of business or
component represents a
a reporting segment,
consistent with full year
IFRS, basis should be
Quarterly reporting
geographical area of
separate major line of
operating segment,
statements and include
consistent with full year
required for SEC
operations, or is a
business or geographical
reporting unit, subsidiary
comparatives.
statements and include
registrants (domestic US
subsidiary acquired
area of operations and
or asset grouping.
comparatives.
entities only).
exclusively with a view to
can be distinguished
resale.
operationally and for
Insurance and
Provides definition of
No single definition of
No single definition of 118
financial reporting
reinsurance contracts –
insurance and
insurance contract.
insurance contract. The
purposes.
definition
reinsurance contracts.
Guidance is provided of
resulting population of
insurance contracts is a Discontinued operations
two types of insurance
subset of the IFRS – measurement
Measured at the lower of
Measured at carrying
Similar to IFRS.
companies: life and loss
carrying amount or fair
amounts (determined
insurance.
classification due to
value less costs to sell.
based on prevailing
stricter criteria for
Indonesian GAAP) less
reinsurance. Accounting
any impairments.
requirements for ‘universal-life-type’
Make provisions for
insurance contracts is
some costs if considered
deposit accounting
a restructuring and
rather than deferral and
criteria for recognising a
matching.
provision met.
DPF not specifically 118 Discontinued operations
Discretionary
Provides definition of
No specific guidance.
covered, other than – presentation and main
Disclose at a minimum a
Give details of
Similar to IFRS. Report
participation feature
DPF and introduces
implicitly in SOP 95-1 for disclosures
single amount on the
discontinuing operation.
discontinued and held-
(DPF)
certain requirements for
face of the income
Disclose (on face of
for-sale operations as a
financial instruments that
insurance contracts only.
statement with analysis
income statement) pre-
separate line item on
contain such feature.
further disclosed in the
tax gain or loss from
face of income statement
Insurance contracts or
Insurance contracts and
notes for both current
discontinuance. Also
before extraordinary
financial instruments
financial instruments
and prior periods.
disclose revenue,
items and cumulative
with DPF may have a
with DPF are measured
Assets and liabilities of a
expenses, pre-tax profit,
effect of accounting
compound nature and
under existing GAAP and
discontinued operation
total assets, total
changes. Assets and
present a DPF equity
resulting equity
to be presented
liabilities and cash flows
liabilities of held-for-sale
component.
component is not
separately from other
attributable to
disposal groups
separately disclosed.
assets and liabilities on
discontinuing operation.
segregated on balance
Consideration received
the balance sheet.
sheet.
for financial instruments
Financial instruments
with DPF are deposit Post-balance-sheet
with DPF may be
Adjust financial
Similar to IFRS.
Similar to IFRS.
recognised as revenue
accounted.
events
statements for
with an expense
subsequent events,
representing the increase
providing evidence of
in the liability.
conditions at balance sheet date and materially affecting amounts in financial statements (adjusting events). Disclose non-adjusting events.
US GAAP PAGE Other accounting and reporting topics (continued)
SUBJECT
IFRS
Indonesian GAAP
US GAAP
Indonesian GAAP
Other accounting and reporting topics (continued)
Disclosure requirements 120 reinsurance contract –
Insurance and
Subject to a few
No specific guidance.
Detailed measurement
Insurance and
Extensive disclosure
Disclosures
are less demanding. measurement
minimum requirements.
bases for the different
reinsurance contracts –
requirements focussed
requirements are less
The most important
types of insurance and
disclosures
on the accounting
demanding. Required
However, a number of
requirements are the
reinsurance contracts.
policies adopted,
disclosures, among
disclosure items are
tests on insurance
material amounts
others, a loss insurance
covered in the MD&A and
liability adequacy and
Also prescribes liability
reported and factors that
company or a life
other non-audited
reinsurance asset
adequacy test and
affect the uncertainty of
insurance company
sections of annual report.
impairment. Equalisation
reinsurance impairment
the amounts and timing
must describe their
and similar provisions are
test and prohibits
of insurance and
accounting policies for
Claims development
prohibited.
equalisation provisions.
reinsurance cash flows.
recognition of income
tables are disclosed
and expenses and
outside financial
Insurance and
Deposit accounting
No specific guidance.
Concept of
Claims development
reinsurance
statements.
reinsurance contracts –
required when
policyholders’ account
tables are required.
transactions.
deposit accounting and
measurement of deposit
balance has been
FAS 60 and SOP 03-1 121 components
unbundling of deposit
component is reliable
developed, and detailed
Separate accounts
Single line presentation
No specific guidance.
and rights and
rules require deposit
not permitted.
allow single line
obligations arising from it
accounting (under FAS
presentation in the
are not reflected in
balance sheet and
balance sheet.
offsetting of investment
Deposit accounting for a
results with changes in
Unbundling permitted if
component of a contract
policyholder liabilities in
deposit is reliably
is covered by EITF 93-6.
the income statement.
measurable. If
Reinsurance contracts
unbundling is not
that transfer only timing
required, deposit
risk or only underwriting
components may be
risk are deposit
recognised as revenue.
accounted.
Insurance contracts sold
Eliminate and do not
No specific guidance.
No specific guidance;
by an insurer to its own
treat as plan assets in
however, practice is to
defined benefit plan
pension obligation
treat such contracts as
accounting.
plan assets under FAS 87.
Insurance and
Exemptions from
No specific guidance.
Embedded derivatives
reinsurance contracts –
separation and fair value
must be separated and
embedded derivatives
are given for certain
fair valued unless they
embedded derivatives.
are clearly and closely related.
Persistency bonuses are
Fixed dollar persistency
considered embedded
bonuses are not
derivatives.
embedded derivatives but a variation of interest rates.
Accounting framework
Conceptual framework
IFRS, Indonesian GAAP and US GAAP each include a conceptual framework. The principles set out in the three frameworks provide a basis for setting accounting standards, and a point of reference for the preparation of financial information where no specific guidance exists.
Qualitative characteristics of financial information IFRS
Financial information must possess certain characteristics for it to be useful. The IFRS Framework requires that financial information must be understandable, relevant, reliable and comparable.
Indo GAAP Similar to IFRS. US GAAP
A series of concept statements set out similar characteristics to IFRS, with greater emphasis placed on the consistency of financial information.
Reporting elements IFRS
The IFRS Framework presents five reporting elements: assets, liabilities, equity, income (includes revenues and gains) and expenses (includes losses).
Assets are resources controlled from a past event. Liabilities are present obligations arising from a past event. Assets and liabilities are recognised on the balance sheet when it is “probable” that economic benefits will flow in to or out from the entity, and those benefits must
be able to be measured reliably. Equity is the residual interest in the assets after deducting the entity’s liabilities. Income is increases in economic benefits that result in increases in equity other than those
relating to contributions from equity participants. Expenses are decreases in economic benefits that result in decreases in equity other than those relating to distributions to equity participants.
Indo GAAP Similar to IFRS. US GAAP
Reporting elements and the definition and recognition criteria are similar to IFRS. US GAAP concept statements contain additional elements: investments by and distributions to owners, comprehensive income and fair value measurements used in accounting. Other comprehensive income includes all changes in equity during a period, except those resulting from investments by and distributions to owners.
Historical cost IFRS
Historical cost is the main accounting convention. However, IFRS permits the revaluation of intangible assets, PPE and investment property. IFRS also requires fair valuation of certain categories of financial instruments and certain biological assets.
Indo GAAP Similar to IFRS. However, the types of assets measured at their fair values, or those that can
be revalued, are more limited.
US GAAP
Prohibits revaluations except for certain categories of financial instrument, which have to be carried at fair value.
Financial statements
Conceptual framework (continued)
A. General requirements
Fair presentation override
Compliance
IFRS Entities may depart from a standard in extremely rare circumstances in which management
Entities must disclose that financial statements comply with IFRS. Compliance with IFRS concludes that compliance with a requirement in an IFRS or an Interpretation of a Standard would be
IFRS
should not be disclosed unless the financial statements comply with all the requirements of so misleading that it would conflict with the objective of financial statements set out in the
each applicable standard and each applicable interpretation.
Framework for the Preparation and Presentation of Financial Statements. IFRS requires disclosure of Indo GAAP Companies with securities registered in Jakarta Stock Exchange (“JSX”) are required to the nature of and the reason for the departure and the financial impact of the departure. The override comply with Indonesian GAAP and Indonesian Capital Market Supervisory Board does not apply where there is a conflict between local company law and IFRS; in such a situation, the
(“BAPEPAM”) s rules and regulations. ’
IFRS requirements must be applied. There is a regulatory reporting requirement for certain non-public Indonesian companies
Indo GAAP Indonesian GAAP does not address this issue specifically. However, existing Indonesian auditing including those that accumulate funds from the public (such as financial institutions) and standard indicate the possibility of overriding an accounting standard in rare situations in which
have assets exceeding a certain amount.
compliance with standard could result in a misleading financial statements. Such an override would require disclosure of the nature of and reason for departure and the financial impact thereof.
US GAAP
US companies with registered securities must comply with US GAAP and the SEC’s rules and regulations and financial interpretations. Non-US companies with registered securities
US GAAP Extremely rare in practice. SEC will generally not accept such an override. in the US may issue financial statements under US GAAP or another comprehensive basis
of accounting principles (such as IFRS), provided that a reconciliation of net income and
First-time adoption of accounting framework equity to US GAAP is given in the notes, together with US GAAP and SEC disclosures.
There is no regulatory reporting requirement for non-public US companies. However, certain IFRS
First-time adoption of IFRS as the primary accounting basis requires full retrospective application of
regulated entities are subject to statutory reporting.
all IFRS effective at the reporting date for an entity’s first IFRS financial statements, with optional exemptions primarily for PPE and other assets, business combinations and pension plan accounting and limited mandatory exceptions. Comparative information must be prepared and presented on the
Components of financial statements
basis of IFRS. Almost all adjustments arising from the first-time application of IFRS must be adjusted against opening retained earnings of the first period presented on an IFRS basis. Some adjustments