Content of BPK Audit Report Information

8.1.1 Content of BPK Audit Report Information

There are significant changes in the BPK scope of auditing before and after audit reform. Before reform, BPK had a very limited scope of auditing as indicated by the following three examples. Firstly, the internal audit institution, BPKP (Financial and Development Supervisory Board) under the Executive, had a much larger number of auditees from State Owned Enterprises (SOEs), Regional Owned Enterprises (ROEs), and government agencies at both the local and central level. BPK had far fewer auditees than BPKP and only audited the central government, but not regional governments. Secondly, BPK only focused on financial and compliance auditing limited only to the expenditure from the state budget (APBN). Thirdly, BPK was prohibited from au diting the ‗gold mining state‘, such as the Central Bank of Indonesia, the National Airline Company (PT. Garuda Indonesia Airways), the National Oil Company (PT. Pertamina), state-owned banks, ROEs, and other SOEs.

Since audit reform, BPK has had an expanded mandate from the Constitution and the Law on State Finances (2003), the Law on Audit (2004), and the Law on BPK (2006). Its scope of auditing now includes all state finances (both central and local governments, SOEs, ROEs, the Central Bank of Indonesia, public services agencies and other agencies using statemoney. Additionally, it has a broader scope of audit that covers three types of audits (financial, performance and specific purposes audits). Moreover, BPK has been confirmed as the only external audit institution for all public sector agencies in Indonesia, while BPKP is the internal auditor. As a result, the number of BPK auditees has increased dramatically.

In terms of access for reliability of audit evidence, before audit reform BPK had no power to seek, search and seize documents and other related items for auditing. In short, BPK had insufficient access to relevant information and data from auditees. After audit reform, BPK gained the authority to access any data and information for auditing purposes. Moreover, under the new Law on BPK (2006), sanctions apply for auditors, officials and Members of BPK who misuse their power in accessing data and information. However, the Law on Taxation, SOEs and Supreme Court prevents BPK from accessing tax revenue data, and SOE and Supreme Court (Mahkamah Agung) revenues. This situation indicates a lack of transparency and accountability of government agencies.

Before audit reform, BPK could not examine the accountability of government in managing public resources. There was no transparency, objectivity and credibility of audit reports. Audit reports were tailored to suit the government‘s interests and had to be

checked and sorted by the State Secretary Office (Kantor Sekretariat Negara-Sekneg) in order to prevent the instability of national security. Conversely, since reform, the Law on BPK (2006) and BPK audit standards (2007) has provided basic rules and standards for reporting audit findings objectively and credibly. The quality of information and performance of BPK audit reports are reviewed by the Auditor General of New Zealand in 2004 and the Netherlands Court of Audit in 2009. However, the study found that auditors who were pressuredby auditees (for example the Policy Department and the Ministry of National Army to not publish audit findings for national stability reasons) found a lack of protection from BPK to help them perform objectively.