Communication of and Acting on Audit Report Information

8.1.2 Communication of and Acting on Audit Report Information

BPK reports in the past were difficult to understand because of too many technical financial, accounting and auditing terms. These were difficult to understand for stakeholders with no knowledge or background in finance and accounting. Since audit reform, BPK has provided guidelines for auditors to provide clear and understandable reports for stakeholders. This is described under the new BPK state finance standards (2007). Moreover, BPK provides summary reports that stakeholders find easier to read, not least because they contain a glossary of technical terms.

In terms of the audit report format, before reform, BPK audit reports were difficult to read, were too complicated, were long and were poorly formatted. Since audit reform, BPK reports are presented more simply and precisely in a user-friendly way with an elegant layout, pictures, diagrams and charts. This has ensured many stakeholders are more interested to read BPK reports.

Before audit reform, information in BPK reports was out of date because the reports were too late for sending to Parliament (as this was just a formality and BPK was

only a ‗rubber stamp‘ for the government). Furthermore, the Indonesian government was very closed and BPK reports were not made public as the reports were included in state confidential documents. There was no transparency. As a result, the media had no freedom

to disclose information. In addition, the public had a limited understanding about the importance of the roles and functions of BPK in examining the accountability of government and the performance of public sector agencies in using public funds and other resources.

Since audit reform, audit reports are issued and published on time, are printed and also presented electronically on the BPK website. New laws have required auditees to submit their reports to BPK and auditors to submit the audit reports to Parliament on time. The publication of audit findings has raised the participation of the public in controlling the performance and openness of government agencies. However, the study also found the misuse of published audit reports by the media or opponent parties in regard to sensitive cases such as those involving corruption.

In terms of realistic audit opinions and recommendations, this study found that before audit reform, there was no audit opinion from BPK because auditees did not provide financial reports. Besides, there was no standard for providing realistic audit recommendations. Since audit reform this situation changed; all auditees were required to provide financial reports that include reports on budget revenues and expenditure, balance statements, cash flows, and notes to the financial statements. As mandated by the Constitution and regulations, BPK audits all state agencies and provides opinions for their financial reports and recommendations for better performance in public administration, management and results. However, the study revealed that BPK auditors still lack the ability to provide constructive and realistic recommendations as a part of their expertise and professionalism.

Evidence indicates that the follow up of BPK audit reports is still low. Before audit reform, there was no obligation for auditees to follow up BPK audit findings or recommendations. The Parliament never followed up BPK reports that did not indicate corruption, fraud or misuse of public funds (the reports had been previously screened by the government). Since audit reform, the follow up of BPK audit findings and

recommendations is mandated by an amendment to the Constitution (2001), the Law on Audit (2004) and the Law on BPK (2006). Members of Parliament are the main stakeholders of BPK, and are mandated to follow up audit reports as part of their function to oversee the performance and accountability of government. Follow up of audit recommendations and findings are very important for providing better performance in public administration and management. BPK communicates with auditees and Members of Parliament (at both central and regional levels) to discuss and explain BPK recommendations and findings that have to be followed up. Additionally, BPK signed joint agreements with the Parliament and regional Parliaments. Moreover, BPK monitors and reports on the follow up to Parliament. As BPK has no power to give sanctions or to prosecute auditees who do not follow up audit reports, BPK also signed joint agreements with authorised investigators including the Police, the Attorney General and the Corruption Eradication Commission.