Timely Reporting

5.3 Timely Reporting

Timely reporting is the third criterion related to the communication of information in audit reports. Reporting audit findings and recommendations within a specific timeframe for stakeholders or users is essential for communicating the report effectively.

5.3.1 Basic Laws and Rules on Timely Reporting of Information

Before the issuance of the Audit Law (2004), there were no regulations on the timeframe for reporting BPK audit results. There was no required timeframe when BPK reported its findings to Parliament; the regulation only stated ―audit findings or reports must be issued to the Legislature ‖ (Soedibyo 2003:22-24).

Since the Audit Law (GOI 2004b) was issued, audit reports need to be submitted by BPK to Members of the Legislature no more than two months after BPK has accepted financial statements from the government entities. For performance and specific purpose audits, the timeframe depends on the agreement with the Legislature. The Audit Law also stipulated the latest timeframe to submit BPK semester audit report summaries to the Legislature, the President and the head of regional governments, as no later than three months after the semester ends. In addition, the new auditing standards (BPK RI 2007g) accommodate guidelines to provide timely audit reports. In order to maximise information, audit reports must be presented in a timely manner,as audit reports presented late will not

be valued by the users.

Hence, the Audit Law (2004) stipulates that once BPK has received the financial statements from government bodies (both central and regional) they then have two months in which to submit the audit reports to Parliament and government heads. Moreover,

summaries of semester audit reports 56 are to be submitted not more than three months after the semester ends.

5.3.2 Survey Results on Timely Reporting

Figure 5.3 (below) shows respondent‘s perceptions regarding timely reporting of BPK reports. Of the BPKaudito r group, 43 per cent ‗strongly agree‘ and 30 per cent ‗agree‘. Largely positive responses from auditees were also indicated by 65 per cent responding to ‗agree‘ and 3 per cent responding to ‗strongly agree‘ on the punctuality of

BPK audit reports. These positive responses indicate optimism of respondents about the timeliness of audit reports from BPK since the Audit Law (2004) stipulated the relevant timeframes. Since 2005, BPK has also submitted its audit report summaries every semester.

Figure 5.3 Survey Results on ‘BPK Reports its Audit Results in a Timely Fashion’

Strongly Agree

Pe rce ptions

Auditors

Auditees

Members of Parliament

Overall responses

Source: Fieldwork survey 5 th November 2006 to 25 th March 2007

56 Some SAIs provide annual audit reports of legislative bodies and the government, while in Indonesia, BPK provides semester audit reports.

The study also received negative responses. Thirty-nine per cent of Legislature Members interviewed ‗disagreed‘ and 15 per cent responded ‗neutral‘, while 29 per cent of auditees responded ‗neutral‘ and 3 per cent ‗disagreed‘ that BPK reporting was punctual. The negative responses were supported by arguments from auditors as follows:

 “The audit reports were mainly submitted on time, however, a few audit reports were late due to the late submission of financial statements from audited entities ” ( Interview B22 an auditor of AKN IV).

 “BPK audit reports were not issued on time, because we did not have enough

auditors but a huge number of audited entities ” (Interview B18, an auditor of AKN I).

These excerpts indicate delays in auditees providing financial statements caused the late submission of BPK reports to stakeholders. Another constraint was the expanding number of BPK auditees, which did not balance with the number of available auditors. This situation also caused late audit reports. Moreover, auditees also provided negative views such as the following:

 “BPK audit reports were sometimes late and were not done on time, which

influenced follow-up and feedback from the management ” (Interview A4).  “BPK audit reports from BPK were often late” (Interview A20).  “BPK audit reports from BPK were out of date and too slow, not on time

whenever auditees or Parliament needed them ” (Interview A15).  “Audit reports from BPK were too late and out of date; we need more truly useful audit reports ” (Interview A18).

These excerpts affirmed the statements from auditors that BPK reports were usually late. Therefore, BPK audit reports information had overdue data and information. This suggests that the BPK reports cannot be helpful to provide recommendations and input for public sector institutions to reform their performance. The reports seemed only as the output of the formality audit results and lacked of their functions to improve the performance and accountability of public sector institutions. Additionally, criticisms from the Members of Legislature are as followed:

 “The Members of Parliament need factual and up-to-date audit reports. We need

the issuing of audit reports immediately. Auditing reports from BPK were too old and not interesting to the Members ” (Interview C3, a Member of Parliament from Commission VI).

 “If possible, we need audit results of BPK faster” (Interview C4, a Member of

Parliament from Commission I).  “BPK audit reports were not timely” (Interview C11, a Member of Parliament

from Commission IX).  “The timing for audit reports was not timely, in particular at the regional level.

Lack of transparency and accountability from the Governor (Interview A1, Head of West Java Provincial Government)

 “Political willingness of regional government was the central problem of regional level auditing ” (Interview C9, a Member of Kuningan regional Parliament from Commission C).

 “BPK audit reports have to be on time according to the schedule. This is important so it will not affect the budget plan of regional government ” (Interview C10, a Member of West Java Province regional Parliament).

These excerpts indicate that Members of Parliament as main stakeholders of BPK found that audit reports were not timely. This condition disappointed reports‘ readers as the

information was provided outdated. They believed that timely audit reports were useful for following up on the information in the reports. They suggested faster and timelier audit results to be reported to ensure up-to-date information for the Members. A Member of a regional Parliament (Interview C9)argued that the late BPK reports were due to the heads of regional governments not submitting their financial statements on schedule. This in turn also caused delays in auditing financial statements and contributed to the late submission of audit reports to Members of Parliament.

Since 2007, BPK has committed to submitting timely audit report summaries to Parliaments at both the central and local level. Although 105 regional governments did not

submit their financial statements on time, BPK submitted its audit report summary 57 to Parliament on time on 10 October 2007 (BPK RI 2007c). Thus, lateregional government

57 This is BPK audit results which had been summarised or provided only the importance information. Complete data and information can be seen in the BPK audit reports.

financial statements did not prevent BPK from submitting audit report summaries of central and local governments on time to Legislative institutions.

To summarise, timely audit reporting is stipulated by the Audit Law (2004) and is included in audit standards. The survey results indicated more positive responses from auditors and auditees‘ groups than from Members of Parliament who doubted the timeliness

of audit reports. Negative views were also revealed which suggested BPK did not successfully fulfill the requirements to provide up-to-date and timely audit reports for stakeholders, in particular Members of Legislative institutions.