Regulations and Rules for Objectivity and Credibility of Information
4.3.1 Regulations and Rules for Objectivity and Credibility of Information
Since audit reform, state finance audit standards (SPKN 2007 48 ) have stipulated the operational basis for requiring auditors to maintain their objectivity in performing audits
consistent with the public interest. This means auditors must provide an objective audit report, respond objectively to officials responsible for following up audit reports, and disclose confidential information on audit reports objectively. The standards give clear
48 The standard was issued in January 2007 and was implemented on 7 th March 2007.
guidelines for auditors to provide audit reports that are informative, professional and objective. The standards emphasise that auditors must not exaggerate in their reports the deficiencies of auditee performance. This regulation adopts from the United States of government auditing standards concerning objectivity (US GAO 2005).
Guidelines for auditors to objectively evaluate and review officials‘ responses are also stipulated in the audit standards (BPK RI 2007g: 88-89). This means that auditors should not only present their findings and opinions clearly and directly, but also objectively in reviewing auditees to encourage further improvements. The audit standards also provide guidelines regarding disagreements between auditors and auditees on audit findings. Discussion and communication with audited entities or auditees shall not change
to a ‗negotiated‘ mode of report that risks compromising the findings and recommendations that would normally part of an audit report.
Article 29, Paragraph 1 of the Law on BPK (GOI 2006b) refers to the norms in the Code of Ethics that must be complied to by the Board Members and auditorsof BPK in carrying out their duties to preserve their dignity, honor, image and credibility. Article 35 of this law (GOI 2006b) also mandates that the quality control system of BPK shall be reviewed by the Audit Board of a Membercountry of the International Organisation of the Supreme Audit Institutions (INTOSAI).
To ensure the general quality of audit reports, auditors present their results based on the guidance provided by the audit standards (BPK RI 2007g). The audit standards provide new guidelines for the credibility of audit reports. The basic rule of providing a credible report is based on Paragraph 48, of the standard (BPK RI 2007g: 93):
To be convincing, a report must be able to answer questions in regard to auditing, to present logical findings, conclusions and recommendations. The presented information must adequately convince report users to acknowledge the validity of the findings and the benefits of the recommendations. Reports prepared in such a manner may assist the officials in charge to stay focused on matters requiring attention and may assist in taking corrective measures in accordance with the recommendations in the audit report.
Thus, to be credible, the report has to fulfill the audit objectives by presenting valid findings, and the summary and the recommendations logically. Moreover, the credibility of
a report is also determined by the presentation of evidence, so that audit report users are confident of the facts and analysis presented.
SPKN 2007 provides clear guidelines for presenting a credible audit report. Auditing that is conducted based on standards can provide credible information in the reports through the objective collection and testing of evidence from auditees (BPK RI 2007g: 10). If an auditor carries out the assignment in this manner and reports the results in accordance with the auditing standards, then the report will be able to demonstrate the quality improvement in the management and accountability of state finances and government decisionmaking.
Therefore, post ReformationEra, the regulations demonstrate the responsibility of auditors to provide objective and credible reports. The following section analyses the objectivity and credibility of BPK audit reports.