Human Resources

6.3.2 Human Resources

This section describes BPK‘s organisational reform and the quantity and quality of human resources pre and post audit reform.

Organisational Reform

Before audit reform, the Bureau for Personnel organised and managed BPK personnel. The role of this bureau was not complex for the following reasons: (i) BPK had very limited numbers of personnel, (ii) there was no clear development of a professional code of ethics for auditors,(iii) the criteria for recruitment was not as specific as needed, (iv) levels of appointment were based on seniority rather than on performance, and (v) BPK had only two types of auditors (trained and certified).

In addition, the administration and management of BPK personnel was regulated by MENPAN and the State Personnel Board (BKN), exactly the same as the system applied for public service personnel administration 90 . This situation made it difficult for BPK to recruit qualified and professional accountants as auditors and to develop its personnel‘s

qualifications.

Since audit reform, each BPK auditor became an officer of Parliament rather than being an officer of government. Since 2007, the Personnel Bureau that has only liabilities in personnel administrative functions, has been replaced by the Human Resources Bureau (HRB) and with its strengthened functions it plays an important role in managing human resources as capital and an asset for BPK. The reform of human resource functions includes improvements in recruitment numbers and in the qualifications of auditors and staff to support BPK in conducting its functions for financial and performance audits. However, according to BPK auditors who joined the secondment program at the Australian National Audit Office (ANAO), BPK the organis ation has not been divided according to auditors‘

90 This is regulated by the Law Number 43 of the Year 1999 on Principles of Employment. However, the management of Indonesian civil service is still encountered many obstacles and problems, because the Law has 90 This is regulated by the Law Number 43 of the Year 1999 on Principles of Employment. However, the management of Indonesian civil service is still encountered many obstacles and problems, because the Law has

Since 2004, BPK‘s organisation has expanded with the opening of new representative offices in different provinces. The HRB has a special section for human resource planning and rotation. This section is responsible for planning and analysing the

quantity and quality (competencies) needs of human resources in BPK for general and specific position qualifications. Excellent human resource planning can improve efficiency in recruitment new employees and development career in the future. As argued by Fearnley and Beattie (2001: 117- 138), auditor rotation has significantly influenced the auditors‘ independence and development competencies. The section is now one of the most significant in BPK for its work conducting planning, recruitment, rotation, dismissal, position analysis and human resources information.

Table 6-3 Number of Employees who Received Rewards and Punishments (2004-08) Year

Rewards* 29 18 28 4 10 89 Punishment

7 35 25 93 41 201 Source: website of BPK ( www.bpk.go.id . Accessed on 27/07/2009)

Note: * Satya Lencana Wira Karya Award

Since 2004, BPK began employing a reward and punishment system for its personnel in separate functional and structural positions, HRB has had a special section for evaluating and developing competition between staff and auditors and for managing functional positions (BPK RI 2007f). Table 6.3 (above) shows the numbers of BPK Since 2004, BPK began employing a reward and punishment system for its personnel in separate functional and structural positions, HRB has had a special section for evaluating and developing competition between staff and auditors and for managing functional positions (BPK RI 2007f). Table 6.3 (above) shows the numbers of BPK

broke BPK rules and the Code of Ethics). The table indicates that evaluation was conducted by HRD. For implementing the remuneration system for the welfare and fairness of BPK personnel, there is a welfare section that is responsible for managing the remuneration system and providing consultation and health for BPK personnel.

Quantity and Quality of Personnel

An insufficient number of auditors was a key factor causing BPK to be ineffective in performing its audit functions. As mandated by the Law on State Finances (2003), BPK was required to implement auditing for financial statements of all public sector agencies by 2007. However, until 2008, BPK still had insufficient auditors. In 2003, BPK had only 100 audit teams from 2000 auditors in Jakarta and 500 auditors at seven regional offices, which covered only thirty per cent of all auditees (Ciantrini 2004:17-19 and Arif 2004: 13-16). Meeting the increasing demand for qualified and professional auditors in the public sector agencies is crucial for managing and reporting state finances in Indonesia.

By 2010, BPK still needed about 5000 auditors to meet the mandate of the Constitution (Supriyanto 2006b). This was based on the number of entities in 2007, which was about 719, including 86 central government entities, 466 regional government entities,

and 161 SOEs. Member IV of BPK (Bisnis Indonesia 9 th March 2006) described that to audit a single regional government entity; BPK needs four or five auditors, or more than

5000 auditors to audit all public sector entities. However, in 2004, BPK only had 2851 auditors. He also argued that if the IT infrastructure is developed in all regions, the required

91 This award is from the government for BPK employees who perform well achievements and dedication.

number could be reduced to about 3000-4000 auditors. This means that the lack of regional government ability in managing and reporting public resources by applying modern technology and network systems resulted in the need for more auditors.

Figure 6.6Number of BPK Employees for the Period 2000-2008

Number of

Sources: Adapted from: 1. BPK RI, BPK RI Dalam Angka (BPK Statistics) 2003 (BPK RI 2004). 2. BPK RI, BPK RI Dalam Angka (BPK Statistics) 2004 (BPK RI 2005b). 3. BPK RI, BPK RI Dalam Angka (BPK Statistics) 2005 (BPK RI 2006b). 4. BPK RI, BPK RI Dalam Angka (BPK Statistics) 2006, (BPK RI 2007b). 5. BPK website ( www.bpk.go.id Accessed on 17/07/2009).

Figure 6.6 (above) shows the total number of BPK personnel from 1998/99-2008 and reveals yearly increases in the number of employees. According to the head of human resources of BPK (6/12/2006), in 2007 BPK recruited more than 1700 auditors, mainly for the representative offices, to fulfill its audit mandate. Compared to the number of employees before audit reform, the number of employees was increased by about 2600 personnel by 2008. Member IV of BPK argued to a national newspaper that it was a priority for BPK to continue to recruit personnel to provide adequate auditors and administrators for new representative offices throughout Indonesia (Supriyanto 2006b).

Table 6-4 Recruitment of New BPK Personnel for the Financial Year 2007-08 No

Financial Management

Human Resources Management

Development Studies

2 Law

Law Science

3 Engineering

Civil Engineering

Industrial Engineering

Mining Engineering

Informatics Engineering/

Computer Science

5 Social and

Communications

Political Science

International Relations

Indonesian Literature

English Literature

French, German, Dutch and Russian

4 (1 for each

literature) Total

Literature

Recruitment as of 469 Year 2007/2008 Source: BPK Announcement Number: 01/S.Peng/X-X.3/12/2007 on Recruitment of Candidate Public Officials for Bachelor Degree at BPK, the financial year 2007/2008 (BPK RI 2007i).

In addition, Table 6.4 (above) presents data on the recruitment of new personnel of BPK for the financial year 2007/08. The figures indicate that the priority was for auditors with a background in professional accountancy, in addition to other educational backgroundssuch as financial and human resources management, development studies, law, civil engineering and public relations.

The purpose of BPK‘s recruitment is to meet its needs for auditing the finances and performance of public sector entities. To support its internal administration, BPK recruits personnel with backgrounds in literature, social and political science, psychology and law. The highest number of recruitment is still for auditors with an accounting education The purpose of BPK‘s recruitment is to meet its needs for auditing the finances and performance of public sector entities. To support its internal administration, BPK recruits personnel with backgrounds in literature, social and political science, psychology and law. The highest number of recruitment is still for auditors with an accounting education

The Law on BPK (GOI 2006b) allows it to employ auditors with the status of civil servant or non civil servant, giving it ―the authority to employ experts and/or auditors outside BPK who shall work for and on behalf of BPK ‖. Therefore, BPK employed auditors from KAP for financial audits. KAP auditors are trained and certificated by BPK to meet the required standards and regulations. BPK auditors focused on developing performance audits to be implemented on public sector agencies and on strategic audit matters.

In the case of BPK, the contracting out of financial audit services to auditors from KAP raised some criticism. One criticism was related to the high fees for KAP auditors, which are much higher than for BPK auditors and placed a burden on the BPK budget. Another criticism is related to the quality of KAP auditors who are not familiar with audit systems in the public sector and also with the bureaucratic culture, which can affect their audit opinion. As argued by Mulgan (1997: 106), ―Contracting out has the potential to reduce the extent of public accountability by transferring the provision of public services to Members of the private sector who are generally not subjected to the same accountability requirements as public officials ‖. BPK auditors have direct accountability to the public through the Parliament, while KAP auditors do not.

In addition, Table 6.5 shows the responsibilities and functions of each BPK Member (excluded the Chairman and the Vice Chairman).

Table 6-5 Fields of Duties and Function of Individual BPK Members, 2007 BPK Members

Fields of Duty and Function

Member I Politics, law, defense and security Member II

Economics and national development planning Member III

State institutions, people’s welfare, state secretary State apparatus, research and technology

Member IV Environment, natural resources, and infrastructure Member V